BNN interview with Eric Nuttall

[cmm3rd]

Worthwhile listen.

https://www.bnnbloomberg.ca/video/we-ve ... ll~2472295

He is laser focused on free cash flow and companies' commitment to pay down debt and return it to shareholders via buybacks and dividends, believing such will support much higher valuations. And he's not worried if price of crude falls substantially, as FCF would still be substantial and eventually lead to the same scenario, just over a longer timeframe.

[sl6886]

You should apply his favorite metrics to Hemisphere

70% FCF next year
Could buy back the company in less than 18 months at today’s market price and Dan’s 2023 valuation
And they’re paying a 6.25% dividend and buying back stock

The only issue is don simmons will not firmly commit to the type of return to shareholder plan that Nuttel is requesting. I think don Simmons felt like he had to pay the dividend and only put in a variable dividend. Very low commit but he says it’s because they’re small.

Anyway, the company’s metrics are off the charts

[dan_s]

Don Simmons' (Hemisphere) top priority is paying off their bank loan, which should be accomplished withing three months. He is already buying back stock and the first dividend will be this week. MY TAKE from talking to Don many times, is that once the bank debt is paid off, he will increase the dividends, accelerate development of Atlee Buffalo and buy back as much stock as he can.

My valuation of $4.00US is a reasonable 1-year target. If WTI is over $100/bbl at year-end the Company's PV10 Net Asset Value based only on P1 reserves should be over $4.00US/share at year-end.

[dan_s]

Eric likes BTE and CPG, two Canadian companies that are high on my Watch List. I will be taking a hard look at them this week.