Free Cash Flow - Part 115 Mar 2021 02:24
Moses151,
You asked for a simple explanation of how much cash i3e makes after costs . This is basically the Free Cash Flow (FCF) which gives you the money available to cover dividends, growing the business and other discretionary spending such as share buy backs after covering day to day expenses necessary to run the business. For I3E:
FCF = Revenue-Royalties-Opex-Maintenance Capex-G&A-Abandonment-Interest Expense - tax + Third Party Revenue
Considering 9200 boepd, $65 Brent & Gas $3, also production split of 55%/18%/25% (Gas/oil/NGL's)
Realized Oil Price = $59 (Price I3E receives per bbl )
Realized NGL Price = $35.4 (approximately 60% of that of Oil)
Realized Gas Price = $15.6 (Price I3E receives per barrel of Oil equivalent - boe)
Realized Blended price = $28.36 (average per bbl of gas/oil/NGL above)
Revenue = 9200 boepd x S28.26 x 350 days = $91.3m
Royalties = $12.8m (this is a % of revenue)
Opex = 9200 boepd x $9 = $29m (operational expenses)
Maintenance Capex = $6m (capital expenditure required to maintain 9200 boepd)
G&A = $7m (General & Administrative Costs)
Abandonment = $2.5m
Third Party Revenue = $ 1.6m
Interest Expense = 0
Therefore after making the additions and subtractions from revenue per above:
FCF = $31,260,050
Potential dividend is 30% of this number though actual dividend will be likely based on the revenue / fcf from the preceeding 6 month period which would be lower due to the average POO during this period. This number is also based on Mirabaud's model which may differ from actual revenues and hence FCF / dividend. In fact my analysis of I3E's operational update indicates that there is a difference.
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