The Sept presentation was affirming. Production up in Sept and on track for year end projections. The company has a lot of debt but very manageable. Of the $2 billion, $750 million is a 3% convert not due until 2016. The other debt is well covered. The netback to Petro is one of the highest in the industry at $60/bbl. Cash flow is $600 million/yr at $83 oil covering interest 6x. At this price, it is selling at NPV of reserves and all the land is free. The drilling locations are development so low risk and at current recovery rates are worth $32/shr.
I think there is some concern that year end production numbers will not be reached. It does not matter. There is fear the dividend will be cut. It does not matter. Cash is gushing in and they are spending it on completion and infield drilling. The ROI on new locations is 65% based on the presentations. Cardium is a huge field with a long life. They also have prime locations in Montana Bakken. There land is worth over $1 billion in Montana based on recent transactions.
This is great buying opportunity. The stock could easily be $20 in a year and the chance of it going lower is small. I fear Petrobank will try to buy in the balance of the stock and we will get zilch for it. So far, no effort just buying their own shares.
BMO rated it underperform today so big dumping by their clients. If this is not making the bottom I do not what would.
Classic BMO short selling downgrade. The dividend might be cut, and PBN does have high debt. But $700-$900 million free cashflow next year solves a lot of issues. Just cut capex to $500 million, maintain production, cut dividend and the debt problem goes away. This is a $15 stock with $75 oil.
The Convert can be refinanced with a subordinated debt instrument at higher interest rates. They have plenty of reserves and land position upon which to borrow. BMO analyst forgot about refis. He wrongly assumes conversion. He is in the banking business here is a deal on his lap.
The company has a low debt/equity ratio which is less than 0,5.
has anybody noticed that the equity is 3,5 billion $ and it is growing every q?
has also that analyst noticed that the value of the CARDIUM land of PBN has increased more than 5 times since early 2011 once the Cardium land was de-risked and proved to be very productive with the new technology?
has that analyst that the payout ratio is one of the lowest among the canadian oil plays since the cash flow will be 750 million $ for 2011 once the target of 46-49000 barrels is hit ?
they are at 41,000 barrels in early september.