In my recent posts Ive??mentioned more than once how easy it had become to build financial models for companies I research. It was all thanks to the Oil & Gas Analysis software I have been working on in the past few months. The days of number crunching on Excel are finally over!
What does this web-based software do?
First, let’s start with the Oil & Gas Analysis Stock Screener; it allows you to configure your own view of the entire Canadian oil sector in a click of a mouse. The companies are divided in 5 groups:
- Junior: E&Ps with production from 0 to 10,000 boepd
- Intermediate: E&Ps with production from 10,001 to 100,000 boepd
- Senior: E&Ps with 100,000+ boepd of production
- Oilfield Services: including fraccers, drillers, rentals etc.
- Pipelines
It takes me a second to see how money is moving in or out of stocks by looking at the top market movers of the day. How the whole sector or a??sub-sector??is doing depending on my category of choice. I can also decide to focus on a certain price range that interests me by filtering by price. For example, I want to see the top Intermediate??movers for the day that have a price above $1.
market snapshot of intermediate E&P movers (click to enlarge)
This helps me get a feel of what’s going on in the market. Todays snapshot clearly shows how 4 out of the 5 top movers so far today are ??Montney players. A normal reaction to the approval of the PRQ takeover by Petronas. Notice MEG Energy (Oil Sands) is the top loser of its category also in response to the latest limits on oil sands investment by state owned companies.
The second feature that I want to introduce is Stock Analysis. There are a number of stocks in the OGA coverage universe that are tracked for you. You can select a stock of your choice, load its financial model and tweak the numbers to reflect your scenario and your commodity price projections.
For example, a company X is guiding for exit production of 3,000 boed. You believe they will exit at 3,500 boed, as such you can project a target price based on your own production or commodity price estimates. This allows you to produce one or more target prices per investment scenario.
Better yet, if the company pays a dividend, you get to SEE if the dividend is sustainable or not. You get to decide if you’re comfortable with this company or not. You get to run multiple scenarios on dividend sustainability answering many questions you might have like:
What happens if they miss guidance by X hundred barrels?
What happens if the price of oil or natural gas drops or rises?
What is the dividend cut required to fix the balance sheet?
And more’.
Eagle Energy Trust dividend sustainability as per company 2013 guidance
Essentially, the Stock Analysis feature VISUALLY answers all your valuation related questions. It allows you to build your own projection scenarios and identify your own risk level for a given company. Curious about how much ARC Resources would be worth using PRQ’s acquisition metrics? It takes 1 mouse click to come out with a range of target prices based on production and 2P reserves.
Oil & Gas Analysis offers another powerful feature called Peer Comparison. Your analysis is stronger when you can compare a company to a peer. Not just any peer, only peers whose production weighting fall within a range defined by YOU.
For example, you don’t want to compare a 90% natural gas weighted company to a 70% oil weighted company. But you can compare a 90% NG weighted company to other companies whose weighting falls within 70% and 100%.
Does the company pay a dividend? It’s obvious you cannot compare a dividend paying company to a non-dividend paying one, they are 2 different models. Dividend payers are compared to dividend payers and likewise for non-dividend payers.
When you’re investigating a stock, the biggest mistake you can commit is to focus only on 1 metric. You have to look at the big picture for that company and not just 1 metric. As such, Peer Comparison allows you to see your stock stack up to the average and to peers on multiple metrics like EV/BOED, Netback, EV/2P, CFPS,??P/CFPS??and??D/CF.
Do these metrics sound like Chinese to you? Head over to the help section where they are all explained in detail. Knowledge is power and to become better at investing in the high risk high reward energy sector, the more you know the better. Buying a stock based on 1 metric is like buying a car based on a picture of the cars front. You have no idea what shape the back end is in, how many kms it has clocked or if its in good mechanical shape.
Frankly, I wish I built this software 2 years ago; it would have made my investing so much easier. For example, my last trade on Terra Energy TT.TO was all based on??modelling??my own scenario. The software did not tell me to buy or sell but it allowed me to make a quick investment decision based on the data that was in front of me.
There is a lot to say about OGA but I would like you to take it for a ride to see for yourself what it’s all about. I posted a use case scenario for Eagle Energy Trust based on its 2013 outlook. You will be able to follow it and manipulate the numbers as you see fit. You will be able to SEE what to expect should you decide to invest in this company.
While the features are mostly complete, the software is still in beta as I am working on a few enhancements behind the scenes. There is a lot of exciting stuff on the way but for now I’d like you to look at it and provide me with your feedback & testimonials.
Registration is open for FREE as testing will be ongoing for several weeks. To register, please use the following link.
Be sure to read the Eagle Energy Trust Stock Analysis case study.
Oil & Gas Analysis is all about EMPOWERING YOU to make better investment decisions.
I would like to EMPHASIZE that your feedback is crucial as you will get to shape its future and benefit from it.
Looking forward to hearing back from you!
