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Bullboard - Stock Discussion Forum Veren Inc T.VRN

Alternate Symbol(s):  VRN

Veren Inc. is a Canada-based oil producer with assets in central Alberta and southeast and southwest Saskatchewan. The principal activities of the Company are acquiring, developing and holding interests in petroleum and natural gas properties and assets related thereto through a general partnership and wholly owned subsidiaries. Its core operational areas include Kaybob Duvernay and Alberta... see more

TSX:VRN - Post Discussion

Veren Inc > Excess Free Cash Flow
View:
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 Adonis1411 on Feb 23, 2021 9:54am
Long time shareholder and another body on the pile of the Saxberg carnage on the way down. Been adding to the pile as we come through this recovery recently. Nowhere am I saying they should buyback their stock. I'm using the reference to show how absurdly undervalued this stock is. $600 million of FCF (their number, not mine) implies an almost 25% FCF yield to equity on a $2.5 B market cap ...more  
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..?
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