Obsidian or Saturn?
Two oil names, similarly undervalued in my opinion
I have written a couple of articles about Saturn (SOIL.TO), one with a Black Scholes valuation and one comparing it to rival Surge (SGY.TO). Another interesting oil name is Obsidian Energy (OBE.TO), the Phoenix rising from the ashes of Penn West, its predecessor that danced on the edge of bankruptcy owing to debt level and rapid but reckless expansion. I lost a bundle on Penn West (full disclosure).
Both companies seem undervalued based on the trading price of their shares, quite deeply undervalued at that.
As I have posted before, the Black Scholes estimate of the value of Saturn shares come to $16.69 a share and the similar analysis of Obsidian comes to $28.68 a share, as shown below.
By any measure, both companies appear significantly undervalued in the market, and investors can choose either or both to add to energy portfolios based on valuation alone. I have decided to avoid Obsidian owing to my concern that old habits die hard and my scar tissue from Penn West still smarts, although the new CEO is earning my respect bit by bit. Given the somewhat deeper discount on Saturn, that is where I have paced some bets, buying 65,000 shares.
You keep making SOIL look better and better, the big diff with OBE seems to be capital cost, SOIL seems to be holding steady and OBE growing approx 3k shares in 2024 for the extra $200m in capital cost, works out to about $70k per share.
Mr. Blair, are you able to share a google spreadsheet link to all the Black Scholes estimates you've been posting?