Obsidian Energy Ltd. (NYSE: OBE)

Sector: Energy Industry: Oil & Gas E&P CIK: 0001334388
Market Cap 575.41 Mn
P/B 0.57
P/E -3.35
P/S 1.20
ROIC (Qtr) -21.98
Div Yield % 0.00
Rev 1y % (Qtr) -31.84
Total Debt (Qtr) 108.41 Mn
Debt/Equity (Qtr) 0.11
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About

Investment thesis

Bull case

  • Strong operating cash flow of 226.30M provides robust 2.09x coverage of total debt 108.41M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 1.31B provides 12.05x coverage of total debt 108.41M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 226.30M provides strong 41.64x coverage of stock compensation 5.43M, indicating sustainable incentive practices.
  • Strong operating cash flow of 226.30M provides 15.16x coverage of SG&A expenses 14.93M, showing efficient operational cost management.
  • Robust free cash flow of 149.57M exceeds capital expenditure of 76.74M by 1.95x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 226.30M barely covers its investment activities of (28.91M), with a coverage ratio of -7.83, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 226.30M provides minimal -3.99x coverage of tax expenses of (56.74M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating earnings of (197.17M) show weak coverage of depreciation charges of 451.52M, with a -0.44 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 149.57M represents just -1.02x of debt issuance (146.01M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High financing cash flow of (197.32M) relative to working capital of (58.33M), which is 3.38x suggests concerning dependence on external funding for operational needs.

Peer comparison

Companies in the Oil & Gas E&P
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 COP Conocophillips 136.62 Bn 17.10 2.22 23.44 Bn
2 CNQ Canadian Natural Resources Ltd 85.21 Bn 17.67 3.04 12.51 Bn
3 EOG Eog Resources Inc 66.33 Bn -60.48 8.67 8.13 Bn
4 FANG Diamondback Energy, Inc. 49.64 Bn -2,818.83 314.47 16.24 Bn
5 OXY Occidental Petroleum Corp /De/ 37.18 Bn 15.36 2.56 22.88 Bn
6 WDS Woodside Energy Group Ltd 34.64 Bn 11.73 2.51 -
7 TPL Texas Pacific Land Corp 29.74 Bn 126.16 78.66 0.02 Bn
8 DVN Devon Energy Corp/De 18.80 Bn 3.24 1.91 8.55 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.44 1.02
EV to Cash from Ops. EV/CFO 2.53 18.21
EV to Debt EV to Debt 5.28 54.57
EV to EBIT EV/EBIT -2.91 29.98
EV to EBITDA EV/EBITDA 2.17 19.64
EV to Free Cash Flow [EV/FCF] EV/FCF 3.83 39.33
EV to Market Cap EV to Market Cap 1.00 1.57
EV to Revenue EV/Rev 1.20 11.47
Price to Book Value [P/B] P/B 0.57 2.97
Price to Earnings [P/E] P/E -3.35 -25.98
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 26.80
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 31.86
Dividend per Basic Share Div per Share (Qtr) 0.00 0.78
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.05
Interest Coverage Int. cover (Qtr) -6.26 -4.97
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 76.49 -533.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 9.50 52.06
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -5.45
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -230.16 6.14
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -19.30 105.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -231.13 75.94
EBT Growth (1y) % EBT 1y % (Qtr) -302.23 17.44
EPS Growth (1y) % EPS 1y % (Qtr) -302.39 3.07
FCF Growth (1y) % FCF 1y % (Qtr) 356.51 -43.36
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -15.38 149.32
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.27 0.33
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.01 1.32
Current Ratio Curr Ratio (Qtr) 0.53 2.37
Debt to Equity Ratio Debt/Equity (Qtr) 0.11 0.34
Interest Cover Ratio Int Coverage (Qtr) -6.26 -4.97
Times Interest Earned Times Interest Earned (Qtr) -6.26 -4.97
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 53.10 16.19
EBIT Margin % EBIT Margin % (Qtr) -56.85 -16.83
EBT Margin % EBT Margin % (Qtr) -47.78 -24.06
Gross Margin % Gross Margin % (Qtr) 61.10 58.92
Net Profit Margin % Net Margin % (Qtr) -35.90 -28.75