Cmon & all, I've tried to respond in order of your points and all below is my opinion only:
Atm the value is in the research and benchmarking, I think this has been the case for the past few years in O&G because fundamentally the numbers never made sense. Strange as it seems some of these oilers are in better position now because they have stopped spending money and now is a great time to form opinions. Also costs have come down which is an advantage long term if they can build strategic relations with the suppliers & help each other cover fixed costs. Doesn’t mean it’s a bullish position however if they are undervalued at given OP we can be selective on any rebound.
If your model gives the 205,148 personally I would stick with that number, we don’t have enough info to be exact so you’re number is probably as good as mine plus at these prices the difference is won’t make much difference. I think it is better to be consistent in modelling as understanding the difference from actual to model helps identify the driver and improve the model. Over time the model gets more accurate and for us that same logic can help identifying other stocks and also opportunities in their company narratives.
I haven’t incorporated OAS yet so can’t comment as haven’t really looked at it.
The acquisition is important as it possibly shows a confidence in the company and also the relationship with the bank. If the debt increase is improved I have confidence that the numbers both for acquisition and core existing business have been scrutinized. In saying that they may not be great but good for the current environment and would flag this as a company to stay on watchlists in the event of sign of improvement or market taking more interest in O&G
I’m not overly confident on my hedging calc. I watch the op advise and the sept qtr only had $20k receipts from hedging. There was 73,500 bbls 2015 hedging in August (Floor $45,Sub Floor $32.5, Ceiling $70.25) so at some point that value less the $20k will have to hit. I think only realised hedges are included in the EBITDA calc so this point is will have a big effect in Dec and I think you’re calc will be right if all the above is not realised.
Looks like either way the covenants are pretty hard to achieve in this environment, I’m assuming bank would have some tolerance due to the environment as long as the price effect is fully explained with the planned steps and achievement in cost fully explained to support ongoing support. Accept that may be a big assumption.
Also November NDgov production report has been issued, I've updated on of my models but not the other one's so can't add much yet. These are some of the charts from that exercise for info: Usual disclaimer as it's my interpretation of information provided in that production report and adjustments may have been made which I don't know of:
Cheers
SSN Price at posting:
0.4¢ Sentiment: Hold Disclosure: Held
