TEG Cash flow positive leveraged oil producer

Felt we needed to discuss this under a new thread


Owns majority of Cliff Head Oil field and production facilities which have had Cap Ex of around $350m+ spent on them to date

Is a stable mature predictable asset

Is breaking even at low oil prices with huge leverage to increased oil price due to its higher cost nature

Has a $5m Mkt Cap



A couple of points to keep in mind

First oil produced vs actual oil sold per qtr will differ due to timing factors

Second TEGs interest is 57.5%

Third and this is the most important takeaway coming out of a low price oil environment the company was still able to generate free cash flow from production of $900k for the qtr

$3.65m receipts - $2.75m production costs = $900k free cash

Sure admin development and other expenses ate up $800k of that and only left the company slightly cash flow positive for the qtr but most specs and with a sub $5m Mkt Cap TEG is priced as a spec, most specs are constantly burning cash on admin and other matters constantly needing funds to keep them going

So the big takeaway from all that should be just how leveraged TEG and Cliff Head are to the oil price
At previous oil prices TEG will have around $3.5m-$4m in annual free cash flow from production to spend on development admin and exploration matters which they will but if Oil prices go for a run then just imagine how much actual free cash the company will start to accumulate

To put this in perspective TEG is targeting Opex of $35/bl US and I'm assuming currently they are closer to $40/bl
Which means with a Brent Crude Oil price avging
$45/bl their margins are around $5/bl
$50/bl and margins double to $10/bl
$55/bl and margins triple to $15/bl

Well you get the point

This is why TEG and Cliff Head are so leveraged to the oil price


All this for a $5m Mkt Cap????? The market will wake up soon enough