Energy Investing - HFI research on OBE-added a little - Energy Investing - InvestorVillage


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Msg  536495 of 550931  at  12/7/2023 12:07:24 PM  by

romm

The following message was updated on 12/7/2023 12:24:45 PM.

 In response to msg 536466 by  Naamkat
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Re: HFI research on OBE-added a little

What is good for OBE is not necessarily is good for other producers.
SL is non-traditional oil man, he is razor-focused on raising shareholder value extracted from currently large assets.
 
OBE has very large 500 acre PR asset, and SL has the plan to capitalize on it. He created a 3-year plan for raising production to 24K bpd there, about 98% oil overall. He purchased NG plant at the heart for operating cost reduction.
 
Unlike basically all other CEOs SL has a pro view on oil and gas prices. He's bearish on AB gas prices and hedges typically for entire year, but he's bullish on oil prices and typically doesn't hedge at all....just a front month for current operations.
 
OBE recently drilled 4 exploration wells in various PR locations in Dawson, HVS (Harmon Valley South) and Nampa for further delineation...in addition to several prior wells last year and earlier this year.
OBE already defined the first area to drill heavily - Walrus.
 
OBE is currently working mostly on Bluesky horizon, identified 309 unrisked locations,
but exploring Clearwater as well  - identified 560 unrisked inventory locations.
OBE is working on more to add. 34 sections only out of 500 are under development.
 
OBE plan includes a comprehensive E&D its PR land. Drilled locations are already identified and ready to drill in Walrus, Seal, Cadotte, Nampa, HVS, Dawson...more will be added. 
3-year plan assumes PR production to rise to 24K bpd, but I think it was conservative as OBE has room for 30K bpd in PR...at least...
 
SL is not stubborn, he is opportunistic depending on oil prices. At low prices like today he's buying back shares aggressively, reduced share count from 82.4mm to 78mm this year...and continues exploration and delineation while using AB Viking as a short cycle play and leveraging light oil vs. heavy oil.
 
OBE share count at 78mm or 546mm pre-split is barely exceeds 510mm sharers back in 2017  - after share-based compensations in 6 years and small addition by buying 45% PR stake from CFC.
OBE share count basically didn't rise since 2013, or in 10 years. 
 
OBE is on its way back to 510mm pre-split....6.5% buyback is needed for a such milestone. But this is not a goal. This depends on stock price. Low price will be bought.
I don't see any other producer who didn't raise share count materially in 6-10 years...plus warrants. 
 
The 3-year plan is carefully designed, it is not front-loaded, but exponential along with production and cash flow. TMX start plays the important part. OBE doesn't jump production growth before TMX starts. 
 
OBE is a low debt company, ~$300mm at 32.4K boed productions. Compare to basically all others except ATH - CPG, BTE, WCP, MEG, VET and many others - debt per flowing.
OBE netbacks are at the top 5% of all small/junior independents. 
So OBE debt is not a concern at all. 
 
And the above are at the baseboard valuation. Don't see any to compare.
 
OBE is not for dividend-oriented investors, it is hard for traders as short term catalysts are not clear.
OBE is for LT investors who are looking for fast growing shareholder value extracted internally from current assets, sustainable operation defined conservatively at 50K boed production and without adding (actually reducing) share count.
 
romm 
 
 
 
 


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