Thomas
You can correlate both answers to the price of oil over the next year or so - if you tell me the when and how high the POO goes then the questions can be answered, But of course if you or I knew this we would be into oil futures.
As a ground floor the price of oil is ~$US20 for the last month and the share price is ~.02.
I would suggest the x POO/20 will have a similar effect on the share price.
Since the numbers are arithmetically simple.
POO $40 = .4 etc.
Clearly the relationship is not linear but there are so many moving parts I have kept it simple.
And clearly, a higher POO would allow WEL to resume drilling and the real upside is on their results.
IMO WEL has a few other advantages.
- Enough cash on hand to be patient.
- Conventional production with op costs below current and likely future POO. Making at least a profit.
- Publicly traded contrasting with private equity that may lose patience.
- and the wildcard in the pack - is there a low or future cost opportunity available in the downturn that a less patient owner would divest to WEL boosting their growth post downturn.
As always the above is technical opinion and not trading advice.
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