Author Topic: GXE - Gear Energy  (Read 40688 times)

SafetyinNumbers

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Re: GXE - Gear Energy
« Reply #90 on: January 05, 2018, 12:29:44 PM »
I don't understand O&G very well, so I was wondering if someone can clarify why the company is increasing capital expenditure next year with record low prices? Why not wait and see if prices recover before drilling?

Canadian Heavy prices have more than doubled off the Jan 16 lows. Not sure what you mean by record low prices.
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mcliu

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Re: GXE - Gear Energy
« Reply #91 on: January 05, 2018, 01:24:32 PM »
I don't understand O&G very well, so I was wondering if someone can clarify why the company is increasing capital expenditure next year with record low prices? Why not wait and see if prices recover before drilling?

Canadian Heavy prices have more than doubled off the Jan 16 lows. Not sure what you mean by record low prices.

I just mean that, relative to prices over the past 10 years, the price for WCS could be significantly higher.. So why don't companies just stop drilling and wait for prices to recover before doing anything? I mean, the oil's in the ground and it's not going anywhere.. I'm a rookie at analyzing O&G, so just bear with me.

SafetyinNumbers

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Re: GXE - Gear Energy
« Reply #92 on: January 05, 2018, 01:55:46 PM »
I don't understand O&G very well, so I was wondering if someone can clarify why the company is increasing capital expenditure next year with record low prices? Why not wait and see if prices recover before drilling?

Canadian Heavy prices have more than doubled off the Jan 16 lows. Not sure what you mean by record low prices.

I just mean that, relative to prices over the past 10 years, the price for WCS could be significantly higher.. So why don't companies just stop drilling and wait for prices to recover before doing anything? I mean, the oil's in the ground and it's not going anywhere.. I'm a rookie at analyzing O&G, so just bear with me.

Just in general for oil companies, if they can get returns above their cost of capital then it's worth while drilling is the view. There are land expiries in some cases which may justify drilling and not deferring. For GXE in particular they cite returns of 40-100% at US$50 WTI so they see it worthwhile to drill. They can also drill and grow within cash flow which should increase value for shareholders.

It seems like in general, there is more talk about maximizing cash flow as opposed to growth in the industry and we'll see if that is the case over the next 12 months.
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tombgrt

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Re: GXE - Gear Energy
« Reply #93 on: January 16, 2018, 09:40:41 AM »
Don Gray upped his position again with another 400k shares at CAD$0.99 .

January presentation online as well.

tombgrt

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Re: GXE - Gear Energy
« Reply #94 on: April 05, 2018, 01:49:44 AM »
Well, I guess we are nearly trading at 2x ev/dacf unhedged. Early last year we traded briefly at $1.2, 60% above today's price with production 20% lower and WCS around 20% lower. Given production growth, quality of management, downside risk,... this should trade at at least $2 and would still be cheap. $5+ / share again would not been farfetched in a few years if oil prices recover further and production doubles.

SafetyinNumbers

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Re: GXE - Gear Energy
« Reply #95 on: April 05, 2018, 12:01:19 PM »
GMP FirstEnergy has GXE (and ATU for that matter) trading around 1.5x EV/EBITDA on 2019E based on their WCS forecast of $61.57 next year which seemed high two weeks ago but with WCS hitting almost $60 yesterday doesn't seem outlandish anymore.

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tombgrt

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Re: GXE - Gear Energy
« Reply #96 on: April 23, 2018, 02:49:30 PM »
https://www.reuters.com/article/us-canada-crude-trucks-insight/facing-shipping-constraints-canada-moving-oil-one-truckload-at-a-time-idUSKBN1HU0F4



Quote
Trucks loaded with crude are an increasingly common sight at the border. Production has risen in the world’s fifth largest producer but full pipelines and a rail car shortage have made it difficult for drillers to ship oil out of Canada.

Some oil producers are feeling the pressure from customers. Alberta-based Gear Energy Ltd pumps about 7,500 barrels of oil equivalent per day, and recently had an Asian customer walk away from an agreement to buy crude after failing to secure a way to ship oil to the West Coast.

“We’ve never had more inbound calls looking for heavy oil,” said Gear Chief Executive Officer Ingram Gillmore. “And we have never had more challenges actually getting it to them. It is very frustrating.”


This is not going away, especially with Venezuela imploding faster and faster.

investor-man

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Re: GXE - Gear Energy
« Reply #97 on: April 23, 2018, 05:00:46 PM »
it's about time this moved! Hopefully it keeps going.
Ferengi Rule of Acquisition #3 "Never spend more for an acquisition than you have to."

SafetyinNumbers

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Re: GXE - Gear Energy
« Reply #98 on: April 23, 2018, 05:27:35 PM »
Stock is definitely lagging oil prices but that makes sense for small caps not in any ETF. ATU.V, PPR.TO, IPO.TO and many others in that camp (but I mention those because I own them!).

WCS closed at C$66.20 today (being helped by the weakening CAD). The last time WCS was this high was 2014.

http://www.psac.ca/business/GMPFirstEnergy/

GMP covers both GXE and ATU and has 2019E CFPS at $0.45 and $0.21, respectively for 2019E at a WCS of $61.57 which is about have the current share price with net cash (i.e. no debt) at that price.

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tombgrt

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Re: GXE - Gear Energy
« Reply #99 on: May 17, 2018, 01:47:04 AM »