E&P Valuation Tracking Sheet Updated And Price Targets For Our Holdings

The link to the new E&P valuation tracking sheet will be found at the bottom of this article.

In an effort to not jinx ourselves, I have abolished $105 WTI and $125 WTI price projections for our holdings. For starters, the moment I revised the E&P tracking sheet last year in July from $75 WTI to $105 WTI, we found ourselves in a bear market. It's safe to say there is a bit of coincidence with this hubris exercise and the peak of a mania. This won't happen again going forward.

In our latest update, we are assuming $90/bbl WTI and $95/bbl Brent for 2024.

We have also included an EV/FCF chart for comparison.

Now there's an important assumption I want to point out to readers. In our latest discounted free cash flow analysis, we are using 12.5% up from 10% (last update). The discount rate, according to traditional finance theory, is usually the weighted average cost of capital (i.e. the cost for the company to borrow). But from an investor's perspective, the discount rate should be the required rate of return you desire for holding the companies.

For example, a name like Suncor versus Bonterra should receive a much lower discount rate for multiple reasons. The operation, the ability to borrow cheaply, access to markets, size, and various other factors should lower the discount rate. However, we are using a static 12.5% across the board.

Here are the price targets: