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Comments (10)

Naysay Analysis profile picture
How does it do at $45 oil? Average breakeven in North America is below $40 now.
@Naysay Analysis given BCEI’s performance in 2020, looks like they would do quite well at $45. Held production flat, halted the capex program more swiftly than anyone in the business, took the balance sheet to net cash. I see no concerns at $45...
Just Myself profile picture
@Native of Colorado @Naysay Analysis @soostefan @Fossilfuel

What do y’all know about mostly Colorado producer PDCE (has some Texas Delaware Basin production...but primarily in Wattenberg Field)?

Using figures from Yahoo Finance finance.yahoo.com/...

PDCE’s share price is about 10% higher than BCEI and is expected to earn $0.89/share in 1Q 2021 vs. $0.75 for BCEI. But, PCDE’s earnings are estimated to lag BCEI over FY2021 and FY 2022. PDCE’s estimates for FY2021 and FY2022 are currently $3.99 and $4.47 whereas the current estimates for BCEI are $4.72 ad $6.05.

PDCE seems to have $1.6 billion in debt which they have been paying off nicely and has talked about a capital return policy late this year or in 2022 when they reduce their debt. BCEI did not have debt but seems to have assumed about $150 million in debt from their merger with Highpoint and issued $100 million in bonds. The article states that they expect BCEI to exit 2021 with around $50 million in debt.

So, it would seem I should perhaps consolidate my investments in both to BCEI. What are your thoughts and comparisons on these two? I will wait until I see the reports from both as PDCE consolidated with SCRI about a year ago and BCEI consolidated with Highpoint recently....so I will want to validate all these figures with updated balance sheets.

Thanks in advance for anyone who can provide additional insight into these two. BCEI reports on May 3rd and PDCE reports on May 5th.
@haschultz I’ve already moved my holdings from PDCE into BCEI. BCEI has higher oil exposure, lower debt, and rural acreage.
soostefan profile picture
It seems that fee rates paid by shorts to borrow BCEI shares have exploded to almost 300% (IB is showing a fee rate of 284.8%).
Those who were short HPR before the merger have to deliver the BCEI shares now. Interesting...we could see a short squeeze if they decide to cover.
What a stark contrast in EUR per 1000 feet of lateral between BCEI and Highpoint! That summarizes the justification for this "merger" quite well.
Is 3.0X EBITDAX your valuation metric for a "distressed value" investment or does this valuation metric apply to all going concerns? Are there any companies similar to BCEI trading for under 3.0X EBITDAX? I sold my position in BCEI when it spiked higher than its current valuation and I am considering getting back in, but not so sure after reading your analysis.
soostefan profile picture
With market cap of $1b and EV of $1.17b I tend to see it as being cheap if we consider FCF of $150m in 2021 and Ebitdax of $325m. Not too many companies are trading at FCF/EV yield of 12-13%. OAS, WLL, ERF and BCEI are currently on top of my list of oil & gas companies from valuation perspective and risks/leverage. Interesting that there are so many oil & gas companies that are targeting to improve the debt/ebitdax to 2-3 and are considered attractive being valued at EV/ebitdax at 6 or above while companies which are trading at
EV/Ebitdax 3-4 and FCF/EV above 12% are considered fairly valued. 🤷🏻‍♂️What is the expected 2021 average FCF/EV for S&P500 and XOP?
awayfromtheherd profile picture
@soostefan agree, look at natural gas stocks market is giving 5-10 EV/ebitdax. My oil exposure is now $bcei,$oas,$wll, which had a nice pop yesterday because Biden decided not to shut down DAPL.
soostefan profile picture
@awayfromtheherd have a look on ERF also, they did some nice acquisitions, especially Bruin.
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