Opinions Eric Nuttall
Bonavista Energy CorpBNP.TOCOMMENTJan 13, 2014
$14.67
Stock price when the opinion was issued
$0.04
As of Aug 14, 2020. Market Open.
oilgas
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SELL
What to do with the Bonavista debt deal? https://globalnews.ca/news/7088006/bonavista-energy-calgary-company/ A sad ending to a good company with fine assets and managers. Problem was that their debt was maturing in November 2020 and debt holders refused to extend that debt two-three years. BNP also couldn't get debt relief from EDC or BDC. For shareholders, it's a tough choice now. You have three options: 1) you can wait for the 5 cents after shareholders vote in July, 2) sell in the open market now at 7.5 cents, or 3) own a part of this as a private company with no liquidity or trading value until there's an exit strategy 3-4 years later. He will sell (option 2).
Josef SchachterOwned
oilgas
PAST TOP PICK
(A Top Pick Feb 28/19, Down 58%) The market is concerned about their balance sheet. He still likes the cash flow outlook as it trades below 1 times cash flow. They are 30% liquids. They have a new large shareholder who holds 15% of the outstanding shares.
Josef SchachterOwned
oilgas
PAST TOP PICK
(A Top Pick Jul 16/18, Down 70%) Good cash flow, using excess to pay down debt. It will survive. They're a beneficiary of apportionment. Will benefit from better nat gas prices.
Josef SchachterOwned
oilgas
COMMENT
BNP and BXE Both are carrying high levels of debt. BNP-T has been paying down debt and will try to keep production flat. He intends to buy more of both. BXE-T will be doing a 12:1 reverse split on the shares sometime in June.
Josef SchachterOwned
oilgas
SELL
From a trading perspective you can take a shot and buy it. But you want to flip it. It is not as cheap for the risk. Balance sheet is heavy with net debt over cash flow is 5.3 (you don't want to be over 3) They have bigger problems. Tough one. The Management has skin in the game but their balance sheet problems are very big.
oilgas
PAST TOP PICK
(A Top Pick Apr 03/18, Down 4%) Pays a dividend. Focused on paying down debt and keeping volumes down. If they pay down debt this year, then in 2020 they can start growing the company. Trading cheaply.
Josef SchachterOwned
oilgas
TOP PICK
Natural gas pick. Likes the company. Cheap here. Paying down debt in 2019. $3.50 target in next year or two is reasonable. Balance sheet's improving. Yield is 3.48%. (Analysts’ price target is $1.45)
Josef SchachterOwned
oilgas
PAST TOP PICK
(A Top Pick Mar 16/18, Down 6%) They exceed his cash flow projections. They paid down debt. They are doing the right thing in paying down debt along the way. His target is $3.50.
Josef SchachterOwned
oilgas
TOP PICK
Their focus is to keep production flat. They beat his last year's forecast for cash flow. They are paying down debt. $5.95 is their book value. NAV is $4.64. He owns the stock personally. His one year target is $3.50. This is ridiculously cheap. (Analysts’ price target is $1.39)
Josef SchachterOwned
oilgas
PAST TOP PICK
(A Top Pick Jan 10/18, Down 37%) It is even cheaper now. They did not do the loan growth he thought they would. Right now it is at about a 30% discount to book value. Right now it is a value trap. You could buy this if China and Europe have turned around.
Robert LauzonOwned
oilgas
PAST TOP PICK
(A Top Pick Jan 15/18, Down 35%) All these natural gas stocks have been beaten up. It bottomed last year. We have a big decline in the storage data last week. He thinks we will see it go up to $4. He would buy on weakness
Josef SchachterOwned
oilgas
PAST TOP PICK
(A Top Pick Dec 18/17, Down 47%) A year from now all three of these names should look really good. They have positive cash flow because they have firm hedges. Be bought stock last week.
Josef SchachterOwned
oilgas
Very good performer over the last couple of months on the expectation that it was going to be the next turnaround story. Just sold his holdings today as there could be some near-term weakness in natural gas stocks later on this year. Approximately 100% of their cash flow equals their CapX, which will translate into 5% growth. Effectively, almost 100% of the dividend is being paid using debt. That may change as their payout ratio decreases as they ramp up production. They are deleveraging slightly. Debt to cash flow is now down to about 2.2X.