Q1 cash flow of CAD$587 million after interest expense of CAD$53 million = CAD$640 million times four quarters is CAD$2,560 million rounded to $2.5 billion. Debt is falling fast, oil price is higher than in Q1, so $2.5 billion is (in my opinion) a conservative number for ongoing cash flow.
What valuation do you give to Surmont? What do you think the present day costs for another plant would be? With your comment "With oil prices in the CAD$100 range" did you mean USD?
Confirmation bias tells me to like this article as MEG is a massive portion of my portfolio.
Nice writeup Michael. Curious on how you came up with the $2.5bn in annual cash flow figure?
Q1 cash flow of CAD$587 million after interest expense of CAD$53 million = CAD$640 million times four quarters is CAD$2,560 million rounded to $2.5 billion. Debt is falling fast, oil price is higher than in Q1, so $2.5 billion is (in my opinion) a conservative number for ongoing cash flow.
What valuation do you give to Surmont? What do you think the present day costs for another plant would be? With your comment "With oil prices in the CAD$100 range" did you mean USD?
Confirmation bias tells me to like this article as MEG is a massive portion of my portfolio.
Surmont developed is worth billions. I put no value on it today other than as a long term option. You can value that using Black Sholes.