ALL NUMBERS ARE IN CAD! INCLUDING OIL PRICES! American ticker is SNYXF
Very important Power is a small time oil producer that just lately considerably expanded manufacturing by drilling 3 new wells final summer time that added 630bpd and reached 911 bpd common throughout This autumn 2021.
They introduced in income of $7 million for the quarter with $516k of royalties paid and $650k working prices for money movement of $5.8 million. Throughout This autumn Western Canadian Choose oil averaged $78.82. The corporate used most of those proceeds to repay its $3.8 million line of credit score and turn out to be debt free.
Q1 2022 WCS averaged a large $120.42! Royalties will enhance with larger costs however working prices stay the identical. Assuming there was no extra progress in Q1 at 911bpd income will likely be $9.9 million! Royalties will likely be $750k and $650k working prices will depart $8.4 million money movement! In a yr that’s $33.6 million money movement. Nearly equal to the present market cap of $34.54 million.
Most corporations commerce at a 15-20x PE, however your entire oil sector has been thought of undervalued for the previous yr with many blue chips like MEG, SU buying and selling at solely 4-6x free money movement. So at CURRENT manufacturing there’s 4-6x upside simply.
Within the final oil growth of 2011 VUX had a unique identify and close to $4 share worth. It struggled for a decade and misplaced $57 million. There’s at the moment nonetheless $51 million in losses that can be utilized in opposition to taxes. So all revenue this yr and a part of subsequent will likely be utterly tax free.
CATALYSTS FOR MORE UPSIDE:
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Q1 Financials finish of Could, giant chance for dividends. Administration have been bag holding for years and can need to lastly get compensated. No insider sells but even with SP up 600% in a yr.
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Present number of properties have a lot upside and may add many extra wells. Within the April twenty seventh MD&A it states they plan so as to add 4-6 extra wells in 2022. On March sixteenth three way partnership accomplice CBV MD&A mentioned they dedicated capital for 2 new wells on the at the moment producing Gull lake properties. VUX is the operator and owns 85%. This little trace let’s us know that by the point we get Q1 fins we might presumably have two extra wells producing! With the huge quantity of capital obtainable exceeding 6 wells and 1500bpd needs to be no drawback for VUX. The montney property could be very costly to construct wells on, in extra of $4 million per. As soon as they’ve a pleasant money cushion to afford the danger every nicely can produce 2000bpd. That is what is going to propel VUX to the massive league as there are 25 potential wells to be drilled on their declare.
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Publicity to the markets. VUX at the moment doesn’t do NR’s, solely a quarterly SEDAR MD&A with financials. The web site hasn’t been up to date for 3 years and is being taken care of now. Only a few buyers know this firm exists. They’ll seemingly begin paying for analysts and so on to realize publicity that can drive up share worth.
Share construction:
82.25 million shares excellent 1.2 million choices for administration 83.45 million absolutely diluted
CEO owns over 50% of VUX by means of an funding agency One director owns 1.2 million shares and one other 1.6 million
After working over 600% within the final yr there nonetheless hasn’t been a single insider promote.
This float is TIGHT! It is vitally tough to purchase giant quantities of shares with solely 37k common quantity. I waited on the bid for per week ready for it to dip to mid $0.30s and didn’t get any. After ready for market course from FOMC I went forward and slapped the ask for 53,000 shares at $0.42, with extra on the bid that didn’t fill. It received’t take lengthy for this to run excessive up. Right here’s a glimpse at how skinny Stage 2 is after I purchased. When this will get observed it’ll transfer quick.
