It will be interesting to see what OBE decides to do with CAPEX in 2023. Putting off the announcement of the 2023 budget until January was a smart move. After 26% production growth in 2022, my bet is that they rein in growth given the weak pricing on heavy oil. I would like to see them harvest cashflow to pay down additional debt. At the end of Q3, net debt was 323 million. The recent refinancing secured the debt capital, but at a high price. With interest expenses pushing 12%, the sooner they pay down debt the better.

I could be off base on these numbers but here is how I am thinking about OBE's growth capital. Production grew from 24k boed in 2021 to 30k for 2022. I am thinking that the growth cost them about 10 million per 1k boed increase. So 365k annual production at 44 netback yields 16 million or so in operating CF. Maintaining this production going forward with a 20% decline rate would likely cost about 2.5 million or so. By not growing for a year, OBE could likely reduce CAPEX in 2023 by 50 million or so compared to 2022 and maintain production.

Of course, with 2.5 billion in tax pools, bringing forward production makes sense.

I am fairly bullish on the oil price outlook in 2023. 90 WTI is my best guess. I thought the RBC numbers on the market balance were bullish. RBC has a balanced market in H1 2023 and then a 1.7 million daily draw in H2. Given where inventories are currently if the market starts getting visibility on big H2 draws, prices will surge back to 95+ on Brent. Goldman is at 97.50 on Brent for 2023 and this sounds about right to me.