Dec 2, 2023·edited Dec 2, 2023Liked by Modern Investing
Good read. Especially the valuation part. Maybe a comparison with other pure oil/gas play would be meaningful. I agree that OKEA is very cheap at a FCF yield of around 60%. , which is the highest I have seen. Petrobras, the most undervalued big company in the world, has a FCF yield of around 30 %.
Thanks 🙏. The valuation difference between them and Petrobras is the result of OKEA being a small cap in Norway. Not many people look at this market and when they see a stock down 12% on Friday, they are concerned. Therefore this opportunity exists. I own OKEA and Petrobras shares.
After reading up on Norway’s tax on oil and gas, I have to ask. What’s the point of calculating free cash flow or comparing it to Petrobras’ valuation?
My 2 Billion NOK Cashflow calculation is after taxes. They will probably make 5.2 Billion NOK in operting cashflow this year. Minus 1 Billion in tax and 2 Billion in CAPEX, we arrive at 2.2 Billion NOK after tax cashflow. Let’s say 2 Billion to have clean numbers. I compared the valuation on a flowing barrel basis. Either way the stock is insanely cheap.
Thanks sir 🙏. I had a look and I get that the valuation is cheap. As of now the risk rewears look good and the growth of the company is also interesting. For me it’s just a bit hard to examine their production fields in Africa. maybe I should have a second look. Although my highly valued friend Calvin Froedge has written about them.
Many people told me to do this. At first glance I think Var is better for dividends, while ENI is more diversified. I think that ENI is a great stock. But for now I remain with VAR.
Vår is financially stable. Net Interest Bearing Debt is around 3.1 Billion $, with CFFO after taxes of around 4 Billion annually at 80$ Brent. They have credit facilities in place and there is no debt maturing pre 2026. They have a BBB rating from Moodys and Baa3 S&P rating.
Good read. Especially the valuation part. Maybe a comparison with other pure oil/gas play would be meaningful. I agree that OKEA is very cheap at a FCF yield of around 60%. , which is the highest I have seen. Petrobras, the most undervalued big company in the world, has a FCF yield of around 30 %.
Thanks 🙏. The valuation difference between them and Petrobras is the result of OKEA being a small cap in Norway. Not many people look at this market and when they see a stock down 12% on Friday, they are concerned. Therefore this opportunity exists. I own OKEA and Petrobras shares.
Excellent piece. Intriguing idea.
Thank you very much 🙏
What’s with the 80% tax rate on Okea though?
After reading up on Norway’s tax on oil and gas, I have to ask. What’s the point of calculating free cash flow or comparing it to Petrobras’ valuation?
My 2 Billion NOK Cashflow calculation is after taxes. They will probably make 5.2 Billion NOK in operting cashflow this year. Minus 1 Billion in tax and 2 Billion in CAPEX, we arrive at 2.2 Billion NOK after tax cashflow. Let’s say 2 Billion to have clean numbers. I compared the valuation on a flowing barrel basis. Either way the stock is insanely cheap.
I think OKEA provides cash flow numbers after tax is paid, so FCF is a valid metric imo.
It is. My calculation, which is much more conservative then the one of OKEA, still points out 2 Billion NOK in cash flow after taxes.
thanks for the reply and congratulations on the articles, do the analysis quality ,are you also looking at bw energy?
Thanks sir 🙏. I had a look and I get that the valuation is cheap. As of now the risk rewears look good and the growth of the company is also interesting. For me it’s just a bit hard to examine their production fields in Africa. maybe I should have a second look. Although my highly valued friend Calvin Froedge has written about them.
If you like VAR Energy, why not consider its main owner Eni, Italy's largest oil company? It trades at ridiculous valuation multiples
Many people told me to do this. At first glance I think Var is better for dividends, while ENI is more diversified. I think that ENI is a great stock. But for now I remain with VAR.
Thanks for sharing 🙏
Eni is corretly valued right now
Yeah, its a solid bet in my opinion.
what about debt situation?thanks
Vår is financially stable. Net Interest Bearing Debt is around 3.1 Billion $, with CFFO after taxes of around 4 Billion annually at 80$ Brent. They have credit facilities in place and there is no debt maturing pre 2026. They have a BBB rating from Moodys and Baa3 S&P rating.