This section covers two of the companies on our Coverage List that have reported Q4/19 results. Click any name on the list at right to jump to that update.


Bonavista Energy (BNP-T – $0.49)

BNP Q4/19 production exceeded our forecast coming in at 62,923 boe/d versus our forecast of 61,400 boe/d. Cash flow in Q4/19 was $48M or 18 cents per share compared to $78M or 30 cents in Q4/18. The stock is depressed due to its high debt level of $806M and its $208M maturity in November 2020. We see them generating free funds flow as well have their available bank line and extension of this some of this debt as likely to be resolved in Q3/20. In 2020, we expect them paying down around $80M+ of debt as they spend less than cash flow and use the free funds flow to lower their debt overhang. BNP made an accretive acquisition in December 2019 and now produces around 66,000 boe/d. The company should return to a drill program growth profile in 2021 as well as develop free funds flow for debt repayment. The stock trades materially below Q4/19 book value of $4.41 after an impairment charge. With our 2020 CFPS forecast of $0.87 per share or $210M, the stock trades at a ridiculously low valuation and should jump on news of successfully handling the 2020 maturity. BNP is on our Action Alert BUY list. We are also investors in the stock and plan to buy more over time. We bought more shares in the last 30 days as we disclose on the SER Ownership page.

SCHACHTER ENERGY REPORT: February 21, 2020 - 3. Quarterly Reports

Precision Drilling (PD-T – $1.83)

Precision had a tough fourth quarter due to lower drilling activity in both the US and Canada. Revenues fell in Q4/19 by 13% to $372M and EBITDA fell 22% to $105M. Debt repayment remains a focus of PD and $205M was paid down in 2019, much above its original target of $100-150M. PD plans on paying down $700M over the 2018-2022 period bringing debt down to $1.1B. Asset sales are helping to reach this goal and more non-core asset sales are likely. Book value at the end of Q4/19 was $5.55 per share. Insider buying and a new and active NCIB have been material. PD bought back 16M shares in 2019 at an average price of $1.63 per share and since year end has bought an additional 2M shares at $1.50 per share. The stock is very cheap, and we are becoming more interested in the company due to the rapid debt repayment and the insider and NCIB buying. We may add it to our Action Alert BUY List if we get a S&P Energy Bullish Percent BUY Index reading under 10% over the coming weeks. Our 12-month target is $3.50 per share and our Energy Bull Market target into our Bull Market Peak in 2025 is $9.00 per share. In 2014 the last time we had over US$100/b for WTI crude oil the stock traded at a high of $14.84/share.

SCHACHTER ENERGY REPORT: February 21, 2020 - 3. Quarterly Reports