Post by
zack50 on Jan 28, 2023 10:34am
The time is ripe...
When Eric Nuttall was asked about Surge Energy on BNN's Market Call with Andrew Bell yesterday, he began his comments with... "We recently bought 9.9% of Surge...". In the background, Andy could be heard saying... "Ohhhh!!!", lol.
I guess everyone is aware that Eric has had a "love-hate" relationship with PC and Surge for several years. In any case, EN indicated that his reasoning for not taking a past position in Surge has never really been about the inventory quality or inventory depth issue, but rather because there's just been other noise that has caused him to stay away from the stock.
He believes Surge’s implementation of a redesign on how they are drilling their heavy oil wells is resulting in meaningful improvements in productivity and therefore capital efficiency and the ability to generate more and more FCF which can be used to buy back shares and pay dividends.
Other positive comments included... a 38% FCF yield next year, conditional on US$100 WTI with a $15 WCS differential and a 22% FCF at US$80 WTI. Nuttall sees a gradual ramping-up of the amount of FCF that will be given back to shareholders in the coming quarters… to a high of 75%.
Additionally, EN has a strong preference for a meaningful share buyback that will provide a rerating. He has placed a 4 multiple on the stock and he suggests a target price of $22.58 in 12 – 24 months.
Hate him or love him... one thing is for sure... EN does not take a 9.9% position in any oil stock just to watch it go south. I think the time has come!
Comment by
harvester on Jan 28, 2023 2:14pm
His company is also the largest shareholder in Athabasca. I think he said $4 on it.
Comment by
zack50 on Jan 28, 2023 7:53pm
Nuttall's target price on ATH is $6.80.