Post by
kavern23 on May 10, 2022 2:45am
Missed it.....
I missed a common sense obvious thing...but with this drop I am more excited and energized to look at stock again as things are getting closer to my buy ranges.
But I figured out an obvious thing on which companies will likely over and under perform....over next 6 months.
One key thing to keep mind....which most analysts dont talk about enough....the Alberta Royalty rules.
-max of 5 percent royalty rate for first 12 months on new drilled wells.
Horizontal wells can add an additional 36 months depending on the depth.
But new cardium wells would qualify to be 5 years total at this 5 percent max royalty rate no matter what oil price is. Production caps but usually month that meet as they are so high.
Rules for old wells is 0-40% based on oil prices so fairly obvious too guess that old wells are near 30-40% royalties at current commodities.
When oil prices were lower and old wells were at 6-7 percent the new well 5% didnt matter much....but it does now....
This is why Yangarra crushed it. Have so much new production at 5% as they started drilling in like 2017.
OBE isnt bad at 17% actually.....but BNE and CJ will have really high royalty rates as they dont drill as much capex wise over the last few years. CJ will be over worst here. It will may alot of armchair forecasters numbers out.
500 BOE a dayof old production produces alot less cf then 500 of production at 5% cap.
125 dollar oil makes it really crazy to be paying 5%....
So I am going to buy YGR for sure....just waiting for lower. OBE still like. CJ and BNE wont look at as the royalty rates already make it a no go....
Royalty rate on new wells by government will make this so attractive...and older production doesnt have same mick per barrel
Comment by
rascallion on May 11, 2022 11:19am
Hope it's Ok with you, but I want to post this on the CJ board. Valuable info as always...thx