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.
"They expect cash flow to exceed enterprise value by the end of 2025" - this seems very outdated.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?
This was taken from the investor presentation made 14 days ago. The share price has risen dramatically since which has made the statement not possible anymore. At the time of the presentation (and when I started writing this) the EV was about $240 million. I think that’s doable considering the tax loss benefit and that it’s 5 quarters to the end of 2025 not just 4.
Something to note though is that their current production rate is 26,400 barrels a day and they seem to think they’re going to have more growth from fields like Wassana (license G10/48).
Ah I was looking at the CAD MC/EV, that explains the big discrepancy.
Yeah current production is great but they did note in the latest earnings call that that level probably won't be sustainable throughout the whole next year. However they do expect to exceed analyst consensus of 23.3 mbbls/d.
I am long Valeura but they are valued very cheap as they had near to no reserves with decommissioning costs. They are doing a great job extending the life of the fields. As for PAGs, I have also looked into them as their growth is great. But I can't understand how what they offer is different to their competitors (some whom are bigger). Also can a tech company can introduce a system that doesn't need a merchants pay machine. Furthermore, Brazil introduced PIX, the central bank electronic payment and the concern is why do you need the middle man anymore. However they are still growing despite this but the uncertainty keeps the valuation depressed. I think PayPal and the introduction of a similar system in the US is also depressing their valuation
if you look at the FAS69, what is their replacement (F&D) cost per reserve? usually a quick way to extrapolate spend to achieve more growth and their breakeven pricing.
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!
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?
This was taken from the investor presentation made 14 days ago. The share price has risen dramatically since which has made the statement not possible anymore. At the time of the presentation (and when I started writing this) the EV was about $240 million. I think that’s doable considering the tax loss benefit and that it’s 5 quarters to the end of 2025 not just 4.
Something to note though is that their current production rate is 26,400 barrels a day and they seem to think they’re going to have more growth from fields like Wassana (license G10/48).
Ah I was looking at the CAD MC/EV, that explains the big discrepancy.
Yeah current production is great but they did note in the latest earnings call that that level probably won't be sustainable throughout the whole next year. However they do expect to exceed analyst consensus of 23.3 mbbls/d.
Any thoughts on oil prices?
I am long Valeura but they are valued very cheap as they had near to no reserves with decommissioning costs. They are doing a great job extending the life of the fields. As for PAGs, I have also looked into them as their growth is great. But I can't understand how what they offer is different to their competitors (some whom are bigger). Also can a tech company can introduce a system that doesn't need a merchants pay machine. Furthermore, Brazil introduced PIX, the central bank electronic payment and the concern is why do you need the middle man anymore. However they are still growing despite this but the uncertainty keeps the valuation depressed. I think PayPal and the introduction of a similar system in the US is also depressing their valuation
why do you think PAGS is so cheap? what is the market missing?
I think there’s a few reasons why PAGS is priced this low
1- it’s in Brazil
2- growth is going to slow quite dramatically
3- tons of competition from companies like $STNE $NU and bigger banks in Brazil are starting to try to compete with them.
if you look at the FAS69, what is their replacement (F&D) cost per reserve? usually a quick way to extrapolate spend to achieve more growth and their breakeven pricing.
for valeura