Agreed - I think the market is pricing no growth in EBITDA. I am...

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tt2000

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19/02/19

23:54

Post #: 37492161
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Originally posted by moremoneyplease ↑

Originally posted by tt2000
"We view SEA as well funded using a combination of operational cash flow and current facilities. We do not anticipate any need for additional equity so long as oil prices stay above US$40/bbl for the next 12 months. Stress testing our cash flow model on SEA under a number of conservative assumptions has shown its current liquidity of US$50m (cash and undrawn debt) is an adequate buffer. "

My model concurs with this view, and I think additional liquidity (to accelerate drilling further) could potentially come for the revolver facility increase.

"We struggle to understand what assumptions are factored into SEA's current share price, which we view as at a material discount even testing a range of scenarios."
Simple - the market is assuming there will be no growth from last years EBITDA - and is applying a 7x EBITDA multiple - giving the $0.40 valuation. This is because of SEA's announcements regarding an uncertain drilling plan for 2019 (despite SEA indicating an additional 6 wells in Q1 alone).
actually its very simple what assumptions market is using its not even assumptions

Its not that there forecasting no growth its just they not going to get ahead of themselves - based on current ebitda sp is not that far out so basically we being priced at trailing PE rather then PEG or forward PE - whatever the equivalents that you use/want to use etc.

Why would market do this rather then at least meeting 1/2 way ie 70-80c given they are running at around 14,000boepd - well many reasonable answers to this given track record of company / management and downside mrkt risks as noted previously.

One just has to be patient but its better to be 40c now then still at 40c one yer down the road when sea actually has an eibtda around 200 - then u in trouble

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Agreed - I think the market is pricing no growth in EBITDA.

I am quite comfortable that the growth rate will come so long as we continue developing 6 wells per quarter and oil remains around US$60.

Even 50% growth in EBITDA = US$120 x 6.5 multiple = $780 - $315 = US $465M = AUD$664 / 690 is around $1.00.

I really think any update that affirms this growth (that we are assuming) will see us re-rated. The question is when will this announcement come...

SEA Price at posting: 42.5¢ Sentiment: Buy Disclosure: Held
5 Upvote

2 Great analysis

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Agreed - I think the market is pricing no growth in EBITDA. I am...

Top Stories

BCI reaches close of funding facility for salt-first part of Mardie project

Coda Minerals (ASX:COD) enters rights issue to further exploration in South Australia

White Cliff jumps 24% on 'bonanza grade' copper rock chips at Rae project, Canada

Buxton projects new graphite province discovery at WA Narryer play

Solstice Minerals to ramp up drilling campaign at Yarri Gold Project

Cokal upgrades infrastructure for BBM ramp-up in Indonesia

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