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The Royalty King's avatar

Thanks for the recognition. Much appreciated.

With regards to LATAM stocks, just remember multiples can remain depressed for as long as anti-capitalist governments remain in place. Good old fashioned value investing based on yield + a lot of patience is required.

¡Mucha suerte a todos!

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Pitching Value's avatar

Looking into VLE:

"They expect cash flow to exceed enterprise value by the end of 2025" - this seems very outdated. How much cash flow do you see them doing in 2025? Surely not much more than $200m, let alone $600m right?

Any napkin math on FCF based on their current assets for the next few years?

I was looking at @almostmongolian's write-up and also doing my own calculations. Conservatively I see them doing anywhere between $50m and $220m.

$50m FCF = based on 20mbbls/d * $70 oil price

$220m FCF = based on 25mbbls/d * $80 oil price.

Using 12,5% royalties, $220m OpEx and $130m CapEx.

And that is with the tax credits, which will probably last 2 to maybe 4 years after which the economics change a bit.

I think as long as oil price doesn't drop below $70 and they can keep production near 25mbbls/d the cash flow is really great. Otherwise it's really gotta come from their M&A. What are your expectations around production and oil price?

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