RE: Back to attractive levels29 May 2026 20:09
@starsalign
A big chunk of this year's expected free cash flow is the recovery of the last of the arrears ($92.1 million of Cost Oil). That recovery might get deferred, in part, but not lost. Costs are obviously being minimised while there is no production. So there is a hit to value (of course) but not as bad as some people might think and not enough to wipe out the current discount to reasonable value.
Importantly, it's worth noting that 73% of the YE value in my model comes from production beyond this year (via very simple assumptions: PSC terms, 45k average bopd, no growth, discounted at 15%, sold at Brent of $75 less $15, plus a couple more). That exceeds the current share price. [The change from selling at a $32 discount to Brent to $15 was enormous and hopefully it holds on restart. The glut in oil many expected in 2026 was also absorbed by the war, and cushioned its impact for a while, but now expect oil to remain firmer than before - it just doesn't need to at current levels.] A further 8% was start of year cash less the dividend. Only the balance comes from "this year" and a big chunk of that is the receivable recovery which is deferred but not lost if we don't capture it this year.
"this year" ---- also we got payments this year for production occurring last year and hopefully (!) have been paid for February production and so the receivable balance will have already fallen further with payments received already
So I have been adding (although I am unlikely to go back to the same level of exposure that I have had previously quite simply because the money has been deployed elsewhere).
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