Update shared on06 Jun 2025
1. Production
- Average Q1 2025 production: 660 boe/d
- Post-reactivation potential: +249 boe/d from 27 wells
- Implied capacity: ~900 boe/d (used for forward valuation)
2. Netback at $73.36 oil (Q1 avg):
- Operating netback: $10.55/boe
- Operating cost: $59.46/boe
- Implies realized price ≈ $70.01/boe (before hedging/transport)
🔢 Step-by-Step Valuation at $80 Oil
Step 1: Revenue per boe
- Assuming similar quality differentials, realized price could rise to ≈ $76–77/boe
- With Opex at $59.46/boe, new netback ≈ $17/boe
Step 2: Annualized Cash Flow
plaintext
CopyEdit
Daily Production: 900 boe/d Annual Production: 900 * 365 = 328,500 boe Netback/boe: ~$17 Annual Cash Flow ≈ 328,500 * 17 = ~$5.58 million CAD
Step 3: Net Asset Value (NAV)
- Assume a conservative 5x cash flow multiple for small-cap heavy oil producers
plaintext
CopyEdit
NAV = $5.58M * 5 = ~$27.9 million CAD
💸 Balance Sheet Adjustment
- Working capital deficit: $17.7M
- Total liabilities: $58.8M
- Shareholder equity: negative $3.67M
Assuming the NAV above represents enterprise value:
plaintext
CopyEdit
Equity Value = NAV - Net Debt = $27.9M - ($58.8M - $8M est. current assets) = ~$27.9M - ~$50.8M = Negative equity, but implies enterprise value support
So shareholders may value the company at a speculative premium based on turnaround prospects.
🧾 Per Share Value Estimate (Speculative Turnaround Case)
- Current shares outstanding (approx.): ~400M
- If the market prices in a premium on turnaround potential, and ignores the deficit temporarily:
plaintext
CopyEdit
Speculative Equity Value = $10M – $15M (future upside belief) Per Share = $10M / 400M = $0.025–$0.0375
🎯 Final Fair Value Estimate @ $80 Oil
ScenarioFair Equity Value (CAD)PPS EstimateConservative NAV only$0 (liabilities exceed value)$0.00Turnaround discounted (1x CF)$5.6M$0.014Optimistic 5x CF scenario$27.9M$0.07
Fair range: $0.01–$0.04, with speculative upside to $0.07 as debt has been restructured and if production continues to improve.
Disclaimer
The user Canderous has a position in TSXV:PEI. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.