Obsidian Energy Ltd T.OBE

Obsidian OBE vs Cardinal CJ

[arnolddiver]

Wow. Cardinal Energy had stellar results and its market cap is 53% higher than OBE's ($1.2B cdn vs $785m cdn. Some quick Cardinal positives:
1) Funds flow ratio 0.4 (obe still above 1)
2) Monthly dividend in q2 (more color from Loukas with refinancing news)
3) In the Clearwater (so is obe)
4) Unhedged (obe is undhedged for the most part esp 2nd half 2022)
5) Netbacks $50.47 (higher than obe at $42.45. both are above avg in industry)
6) $1.5B in tax pools (similar to obe)

So we have some catching up to do regarding debt. However, we have two major advantages over Cardinal. First, our share count is much lower, only 82m compared to cj's 150m. That is 83% more. Also, our production at 33k last quarter was 53% higher than cj's at 21.5k. Loukas will get us there!

[TheRexmember]

Cardinal really shows where OBE can get to very quickly. Their low decline rate is pretty impressive and tge cost control got a lot better when Cardinal cut backon the ridiculous number of high priced managers on the payroll.  OBE has far more land, 70% more production and 50% bigger tax pools. Higher gas cut offsets part of that.  Like them both too, should be more torque with OBE

[rascallion]

Royalty rate for CJ is 19.8% per last quarter's results. CJ and OBE are my faves in this sector for sure.

[kavern23]

CJ having only 19.6% royalty rate instead of much higher in last oil spike should mean it hard good recent drilling results...more new production is making up a greater percentage of overall production. And theory works.... Cj drilled alot of 250-400 barrels of oil per day wells in southern alberta in 2021. As obe is a heavy driller...royalty rates should start too creep slowly down per quarter

[JohnJBond]

CJ is now trading at a dividend yield of 6.75%. Thats a good indication of the current market valuation of a dividend coming from a similar sized Canadian company in the oil/gas sector. Very good for OBE's estimated share price once a dividend it introduced.   

[kavern23]

Cardinal and OBE management strategy seems to be different in time frames.... CJ seems to do be doing everything possible to show best possible numbers for short term. Be interesting too see if any CJ insider selling from now until dividend is in place or shortly after. CJ still has 10m warrants outstanding.  So those will get excisered bringing share count to 160M range. 160m * 0.60 cent

[Hendrick3]

FFO per share compared to share price was substantially less than OBE m. 58 cents to 8 vs 97 cents to 9.50. So the results are actually weaker but we learned something. Dividends attract new investors. I am sure OBE is watching. 

[kavern23]

Other nice thing is OBE has the optionality too increase either light or heavy oil... Heavy oil is so much easier too crank up....OBE has done this in PROP and CJ has done this in 2021 drilling. The heavy differential of 14-15 bucks doenst matter so much right now at 100 plus oil. But in lower oil prices...light oil prices keeps funds flow decent...as light oil differential always stays around

[JohnJBond]

Note that CJ has increased in price to a dividend yield of 7.5% - on just the announcement of a future dividend a month out OBE should be able to achieve that yield or something lower.  A similar yield for OBE would mean a $13 share price on a $1 dividend or a $26 share price on a $2 dividend  Later this year OBE will start a dividend.    Their H2 capex will

[arnolddiver]

So that is $82m for $1.00 dividend per share and $164m for $2.00. Actually, Cardinal Energy has 160m shares outstanding on its latest presentation. Much harder for them to dole out $320m for $2.00 dividend per share with 1/3 less production than obe.

[JohnJBond]

Yes that is the reason for holding OBE at this time.    They have the potential/ability to add a dividend into the mix that would be sufficient to significantly increase the share price And this is a near term thing