Post by
kavern23 on May 04, 2022 10:37pm
Good, the bad, the ugly from Q1
The Good
I think it is an easy trap too cut back on capex too much...just to pay a token dividend.
High capex in 100 plus oil and 8 plus ng is acutally strength.
Obe on the shale curve still had too spend lots in 2022 to make up for the low 50M capx in 2020 during covid. Think it was 50m too lazy too look but I know 2020 was crazy low capex. Going to have to have the piper at some point when you cut back on drilling for a year.
Gear energy is trying opposite apprach of OBE...they are going crazy low capex...their producton actually declined alot on oil basis and ng makes them look better.
Gear is also drilling cheaper wells that produce instantly but not much in 12 months...dont lower corporate decline curve drillng the cheapies.
This is what is interesting about the direction OBE will go. What do they likely up the capital budget too.
Hard me too guess as it depends on if they do cheapie viking to get short production burts for realtively low capex compared to cardium. I have always felt OBE would spend 200-220m this year.
They could though make it 170-190m if they scale back Cardium drilling and do more viking development.
The bad
Wow did they run up their accounts payable to an insane f*cking number. Lol they must owe precision drilling millions....its smart on OBE's part to run that number up.
Instead of waiting to have debt already refinanced before gunning the capex...Obe did it anyway and suppliers "finance" it until pays it down over springbreak.
Why I list this as a bad thing...is OBE currently doesnt have crazy space on their debt faculty....over the next 6 weeks...OBE likely will go down % more then other peers because of how exposed it is too an oil drop. Remote that anything happens in next 6 weeks...but it is still risk...and on any bearish days investors punish the risk.
The Ugly
Nothing ugly. OBE has had such a horseshoe with luck.
I expect OBE to be extra rollercoster like both on up and down movements over next 6 weeks.
Comment by
Kramerkarma on May 04, 2022 11:11pm
what are the viking wells like cost and on the oil/gas and ip 30/90
Comment by
kavern23 on May 04, 2022 11:53pm
''meant 1200 boe a day for first 90 days total and 10-40 boe a day level out is per well [/quote]
Comment by
fortunefavorsus on May 05, 2022 10:18am
If oil prices stay up and they get to 2.000 BOE might be easy to flip Viking to someone like Baytex and greatly reduce debt.
Comment by
rascallion on May 05, 2022 1:59pm
Debentures A debenture is a type of debt instrument that is not backed by any collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds. Some debentures can convert to equity shares while others cannot.
Comment by
JohnJBond on May 05, 2022 3:07pm
Which book did you get that out of? Debentures can be secured or unsecured. In OBE's case, they will probably have some of each (becuase they've already said so). They can be any term, but 5 year is my guess for OBE. They may stagger the maturies. It will depend on their future debt plans - ie do they anticipate paying out some earlier than others.
Comment by
fortunefavorsus on May 05, 2022 3:46pm
What will be the interest rate in this environment. I don't see anything less than 8.5%. Surge had to pay 8.85% for 130 million term debt facility. Isn't the wait to see how little they have to finance. With the higher oil and gas prices maybe go with not as much financed.
Comment by
JohnJBond on May 05, 2022 5:33pm
A debt facility from a group of banks is not the same as a market traded bond (debenture). Baytex Energy Corp 5.625% 1jun2024 is trading just over par. BTE has a B+ rating by Fitch (Upgraded from B in April). Will be interesting to see the coupon on OBE's debt. Very unlikely it will be 8.5% plus
Comment by
fortunefavorsus on May 05, 2022 10:06am
OBE probably got much cheaper rates to drill so running accounts payable was smart on their part. They can always cut back on capex now and generate hugh FCF. At these prices will have a massive 2nd quarter FCF. I am guessing they are hedging some more now to cover these additional 1st quarter cost.
Comment by
TheRexmember on May 05, 2022 8:40pm
If you listen to the conference call on the website they ststed months ago that they would spend about 105 million in Q1. the only surprise was the land purchase for 14 million.