DB:39B

Stock Analysis Report

Birchcliff Energy

Executive Summary

Birchcliff Energy Ltd., an intermediate oil and natural gas company, explores for, develops, and produces natural gas, crude oil, and natural gas liquids in Western Canada.

Rewards

Trading at 86.5% below its fair value

Earnings are forecast to grow 83.65% per year

Risk Analysis

Interest payments are not well covered by earnings

Dividend of 6.03% is not well covered by earnings

Highly volatile share price over past 3 months

Large one-off items impacting financial results

+ 1 more risk


Snowflake Analysis

Undervalued with reasonable growth potential.

Share Price & News

How has Birchcliff Energy's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 39B's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

5.2%

39B

5.2%

DE Oil and Gas

1.7%

DE Market


1 Year Return

-48.1%

39B

80.1%

DE Oil and Gas

15.0%

DE Market

Return vs Industry: 39B underperformed the German Oil and Gas industry which returned 80.1% over the past year.

Return vs Market: 39B underperformed the German Market which returned 15% over the past year.


Shareholder returns

39BIndustryMarket
7 Day5.2%5.2%1.7%
30 Day-18.8%7.9%1.4%
90 Day-19.3%38.4%3.3%
1 Year-45.9%-48.1%85.2%80.1%18.5%15.0%
3 Year-76.4%-78.4%17.8%8.0%17.1%6.9%
5 Year-74.3%-76.5%331.1%263.6%24.3%7.3%

Price Volatility Vs. Market

How volatile is Birchcliff Energy's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Birchcliff Energy undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 39B (€1.21) is trading below our estimate of fair value (€8.98)

Significantly Below Fair Value: 39B is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 39B is poor value based on its PE Ratio (15.3x) compared to the Oil and Gas industry average (10.9x).

PE vs Market: 39B is good value based on its PE Ratio (15.3x) compared to the German market (21.1x).


Price to Earnings Growth Ratio

PEG Ratio: 39B is good value based on its PEG Ratio (0.2x)


Price to Book Ratio

PB vs Industry: 39B is good value based on its PB Ratio (0.3x) compared to the DE Oil and Gas industry average (1.3x).


Next Steps

Future Growth

How is Birchcliff Energy forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

83.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 39B's forecast earnings growth (83.7% per year) is above the savings rate (-0.4%).

Earnings vs Market: 39B's earnings (83.7% per year) are forecast to grow faster than the German market (13.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 39B's revenue (11.7% per year) is forecast to grow faster than the German market (5% per year).

High Growth Revenue: 39B's revenue (11.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if 39B's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Birchcliff Energy performed over the past 5 years?

-6.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 39B has a large one-off loss of CA$10.9M impacting its September 30 2019 financial results.

Growing Profit Margin: 39B's current net profit margins (5.2%) are lower than last year (8.8%).


Past Earnings Growth Analysis

Earnings Trend: 39B's earnings have declined by -6.5% per year over the past 5 years.

Accelerating Growth: 39B's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 39B had negative earnings growth (-41.6%) over the past year, making it difficult to compare to the Oil and Gas industry average (-5.3%).


Return on Equity

High ROE: 39B's Return on Equity (2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Birchcliff Energy's financial position?


Financial Position Analysis

Short Term Liabilities: 39B's short term assets (CA$53.4M) do not cover its short term liabilities (CA$124.1M).

Long Term Liabilities: 39B's short term assets (CA$53.4M) do not cover its long term liabilities (CA$977.6M).


Debt to Equity History and Analysis

Debt Level: 39B's debt to equity ratio (40%) is considered high.

Reducing Debt: 39B's debt to equity ratio has reduced from 44.5% to 40% over the past 5 years.

Debt Coverage: 39B's debt is well covered by operating cash flow (48.5%).

Interest Coverage: 39B's interest payments on its debt are not well covered by EBIT (2.4x coverage).


Balance Sheet

Inventory Level: 39B has a high level of physical assets or inventory.

Debt Coverage by Assets: 39B's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

What is Birchcliff Energy's current dividend yield, its reliability and sustainability?

6.03%

Current Dividend Yield


Dividend Yield vs Market

company6.0%marketbottom25%1.3%markettop25%3.6%industryaverage6.3%forecastin3Years6.2%

Current dividend yield vs market & industry

Notable Dividend: 39B's dividend (6.03%) is higher than the bottom 25% of dividend payers in the German market (1.32%).

High Dividend: 39B's dividend (6.03%) is in the top 25% of dividend payers in the German market (3.59%)


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, 39B has been paying a dividend for less than 10 years.

Growing Dividend: 39B's dividend payments have increased, but the company has only paid a dividend for 3 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (91%), 39B's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 39B's dividends in 3 years are forecast to be well covered by earnings (24.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

15.6yrs

Average management tenure


CEO

Jeff Tonken (62yo)

15.6yrs

Tenure

CA$4,892,322

Compensation

Mr. A. Jeffery Tonken, also known as Jeff, is the Founder of Birchcliff Energy Ltd. and has been its President and Chief Executive Officer since July 6, 2004. Mr. Tonken has over 37 years of experience in  ...


CEO Compensation Analysis

Compensation vs Market: Jeff's total compensation ($USD3.69M) is above average for companies of similar size in the German market ($USD803.97K).

Compensation vs Earnings: Jeff's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
A. Tonken
Chairman15.6yrsCA$4.89m0.51% CA$1.7m
Bruno Geremia
VP & CFO15.6yrsCA$2.62m0.10% CA$322.7k
Myles Bosman
VP of Exploration & COO15.6yrsCA$2.80m0.048% CA$153.2k
Gates Aurigemma
Manager of General Accounting14.8yrsno datano data
Jesse Doenz
Controller & Manager of Investor Relations15.3yrsno datano data
Robyn Bourgeois
General Counsel & Corporate Secretary0yrsno datano data
Michelle Rodgerson
Manager of Human Resources & Corporate Services0yrsno datano data
Bruce Palmer
Manager of Geology0yrsno datano data

15.6yrs

Average Tenure

Experienced Management: 39B's management team is seasoned and experienced (15.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
A. Tonken
Chairman15.6yrsCA$4.89m0.51% CA$1.7m
Dennis Dawson
Lead Independent Director2.8yrsCA$182.53k0.022% CA$70.5k
James Surbey
Non-Independent Director2.8yrsCA$177.99k0.38% CA$1.2m
Stacey McDonald
Independent Director1.2yrsCA$5.92k0.0056% CA$18.2k
Debra Gerlach
Independent Director2.3yrsCA$190.45k0.019% CA$60.5k

2.8yrs

Average Tenure

62yo

Average Age

Experienced Board: 39B's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: 39B insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Birchcliff Energy Ltd.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Birchcliff Energy Ltd.
  • Ticker: 39B
  • Exchange: DB
  • Founded: 2004
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Market Cap: CA$462.727m
  • Listing Market Cap: CA$322.042m
  • Shares outstanding: 265.94m
  • Website: https://www.birchcliffenergy.com

Number of Employees


Location

  • Birchcliff Energy Ltd.
  • 600 - 3rd Avenue SW
  • Suite 1000
  • Calgary
  • Alberta
  • T2P 0G5
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
BIRTSX (The Toronto Stock Exchange)YesCommon SharesCACADJan 2005
39BDB (Deutsche Boerse AG)YesCommon SharesDEEURJan 2005
BIRE.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDJan 2005
BCHF.POTCPK (Pink Sheets LLC)REDEEMABLE PFD AUSCADAug 2012
BIR.PRCTSX (The Toronto Stock Exchange)PFD SER CCACADJun 2013

Biography

Birchcliff Energy Ltd., an intermediate oil and natural gas company, explores for, develops, and produces natural gas, crude oil, and natural gas liquids in Western Canada. The company holds interests in the Montney/Doig resource play, as well as other assets located in the Peace River Arch area of Alberta. As of December 31, 2018, it had interests in various gas plants, oil batteries, compressors, facilities, and infrastructure; and 178,296.7 net acres of undeveloped land, as well as gross total proved plus probable reserves of 1,002,070 Mboe. Birchcliff Energy Ltd. was founded in 2004 and is headquartered in Calgary, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/15 21:10
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.