Post by
JohnJBond on May 06, 2022 1:51pm
Potential Capex for H2/22
Last year H2 Capex was
Q3 45.1 million
Q4 44.8 million
Total $89.9 million.
This year they have tentatively budgeted $45 million for H2, with the expectation it will be increased within the next 6 weeks based on prices.
So what will it be this year?
What it was last year is a good point estimate to start with.
Add in inflationary costs, and now last year becomes about $100 million this year.
The question is how much will they add to that?
That is a big unknown. It will depend on how much they have lined up and ready to drill.
They will have the money.
They may have some PC11 payments (their share of the Whitecap block), if Whitecap starts work on this land.
If we guess an extra $50 million over last year, then that means capex for H2 would be $150 million ish.
What may be the share price impact?
Increasing capex in H2 from $45 million to $150 million is a bullish signal.
It would suggest a higher exit production number, and an upward revision in 2022 average production (above the current 30,800 forecast). That should have a positive share price affect.
It would also suggest free cash flow in H2 of another $150 million.
That is when things get interesting share price wise.
$150 million in H2 free cash flow means lots of room for a dividend.
If $50 million were to go to working capital and $100 to a dividend for example, it would be an annualized dividend of $2.40 ish. Applying the 5-10% estimated dividend yield, means a share price in the $24-48 range.
That is a share price driver.
Putting the dividend yeild in perspective. Surge (SGY) presenlty has 2024 debintures yeilding about 6.7% in the market.
OBE's upcoming debintures would probably be similar in market yield to SGY's
Dividend yields on growing companies, tend to be less than their debinture yields.
Comment by
fortunefavorsus on May 06, 2022 2:24pm
If you think they could do $150 millon in second half do you think they should start hedging to assure that FCF. I know that is a touchy subject with some but a bird in the hand is worth two in the bush.