Seacrest Petroleo Bermuda Limited's (OB:SEAPT) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Seacrest Petroleo Bermuda Limited's (OB:SEAPT) future prospects. Seacrest Petroleo Bermuda Limited, an independent oil and gas production company, engages in the redevelopment of midlife onshore producing oil and gas fields in Brazil. The kr101m market-cap company posted a loss in its most recent financial year of US$79m and a latest trailing-twelve-month loss of US$52m shrinking the gap between loss and breakeven. The most pressing concern for investors is Seacrest Petroleo Bermuda's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Seacrest Petroleo Bermuda

According to the 3 industry analysts covering Seacrest Petroleo Bermuda, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$59m in 2025. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 80% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Seacrest Petroleo Bermuda's upcoming projects, however, keep in mind that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Seacrest Petroleo Bermuda is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Seacrest Petroleo Bermuda, so if you are interested in understanding the company at a deeper level, take a look at Seacrest Petroleo Bermuda's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

1. Valuation: What is Seacrest Petroleo Bermuda worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Seacrest Petroleo Bermuda is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Seacrest Petroleo Bermuda’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.