More recently WCP and CPG(now VRN) were always neck and neck, the last 3 months or so WCP has risen or hung in there while VRN has dropped a fair amount. Sure, steady and boring Grant is doing a great job, CPG was selling some assets at fire sale prices and paying up for new assets......
Thanks again for your thoughts and supporting information, Michael. I expect WCP will lag for awhile due to many investors not liking what I believe is a good acquisition for the next number of years; similar to the one done by TVE. I will be adding to these 2 on anticipated weakness. And MEG, which I believe will dip due to it not paying a dividend at present. O & G investors are not immune to the "I want it now" mentality common in today's society. 2023 and 2024 could not be shaping up better for Cdn O and G imo.
My estimates of hedging losses are based on the company's disclosed hedge book. I don't provide estimates of "fair value", just my own conclusions based on modern valuation techniques at the commodity prices I see prevailing for the time being. Readers can do their own homework. My articles are not recommendations, just opinions.
Substack has no mechanism to do that. In any event, readers can use their own formulas. They are just arithmetic and pretty self-evident. The only wrinkle is that added production is equal to capital expenditures divided by capital efficiency and is BOE/day.
Appreciate your extending the analysis horizon all the way into the next fiscal year! I hope the clamour for maximal payouts (or else!) begins to subside as the material reality of the commodity, as opposed to an abstract bull thesis, sets in and prudent investments become less toxic to share price.
Fast work!
More recently WCP and CPG(now VRN) were always neck and neck, the last 3 months or so WCP has risen or hung in there while VRN has dropped a fair amount. Sure, steady and boring Grant is doing a great job, CPG was selling some assets at fire sale prices and paying up for new assets......
Thanks again for your thoughts and supporting information, Michael. I expect WCP will lag for awhile due to many investors not liking what I believe is a good acquisition for the next number of years; similar to the one done by TVE. I will be adding to these 2 on anticipated weakness. And MEG, which I believe will dip due to it not paying a dividend at present. O & G investors are not immune to the "I want it now" mentality common in today's society. 2023 and 2024 could not be shaping up better for Cdn O and G imo.
Hi Michael, thanks for the article. Few questions on understanding your assumptions, just trying to learn from your thought process.
1) What are the basis of your predictions for hedging losses? How do you estimate those for 2022 and 2023?
2) How does the fair value change at a commodity price of $60 CAD (perhaps the worst case scenario till 2023)
My estimates of hedging losses are based on the company's disclosed hedge book. I don't provide estimates of "fair value", just my own conclusions based on modern valuation techniques at the commodity prices I see prevailing for the time being. Readers can do their own homework. My articles are not recommendations, just opinions.
much appreciated again. Would be able to share your model with formulas so the readers can play with the model with their own assumptions
Substack has no mechanism to do that. In any event, readers can use their own formulas. They are just arithmetic and pretty self-evident. The only wrinkle is that added production is equal to capital expenditures divided by capital efficiency and is BOE/day.
Appreciate your extending the analysis horizon all the way into the next fiscal year! I hope the clamour for maximal payouts (or else!) begins to subside as the material reality of the commodity, as opposed to an abstract bull thesis, sets in and prudent investments become less toxic to share price.
Good info! Thanks for the news and timely analysis - well done!