Post by
Adonis1411 on Feb 23, 2021 1:56am
Excess Free Cash Flow
From the Shell (Feb 17th) Kaybob acquisition investor presentation:
"At $50 - $60 WTI, 2021 expected excess cash flow generation of $375 - $600 mm".
Current spot price is $62+ and WTI monthly forwards for the rest of 2021 is over $60. Goldman out with a forecast today of ~$66 average WTI price for the rest of 2021. Forget about any increase to excess FCF from higher prices - even at a sustained $60 WTI level, this is a 25% FCF to equity yield in a year where they've got meaningful volumes hedged below current prices.
If the math follows, a $10 change in WTI from their presentation suggests an incremental $225 mil of FCF (considering hedged volumes). If you saw Goldman's $66 average for the year, implies that there could be an extra $100 - $150 mil incremental (assuming no big change in royalties or FX). That would buy back 5% of the shares at this level.
Fast forward to 2022 in even a flat commodity price environment (Goldman forecasting $67 WTI for 2022) with hedging more in line with prevailing spot prices (less backwardation) and CPG will be absolutely printing cash. After years of being a dog, this dog is about to regain its bite.
Comment by
Backinblack1000 on Feb 23, 2021 6:14am
This post has been removed in accordance with Community Policy
Comment by
Backinblack1000 on Feb 23, 2021 10:40am
This post has been removed in accordance with Community Policy
Comment by
Moemoney42 on Feb 23, 2021 10:47am
Lets see... if CPG can generate $600 million FCF at $60 WTI in simple terms they could pay off the Shell purchase in 1.5 years... the rest is gravy... now if WTI holds around $65-$70 for the year.. well then... BOBS YOUR UNCLE..!!
Comment by
Backinblack1000 on Feb 23, 2021 10:51am
This post has been removed in accordance with Community Policy
Comment by
Moemoney42 on Feb 23, 2021 11:59am
Yup both him and Marley are RIP... my platform seems fine this AM.. I would imagine with the sell off early in the AM the systems were overloaded a bit though..?