Cordon Energy offers disciplined Bakken reserve value
The bull case for Cordon Energy rests on its disciplined capital allocation and deep discount to the replacement cost of its reserves.
The argument
The guest argued that the company is valued at roughly $139 per share while holding reserves in the ground worth about $15 a barrel. Unlike historical industry behavior of drilling regardless of returns, the company has maintained cash flow discipline and offers a dividend yield over 5%.
The thesis, stress-tested
✓ What validates it
- ✓Maintenance of the 5%+ dividend yield
- ✓Continued low-cost reserve replacement in the Bakken
▸ Risks discussed
- ▸Volatility in underlying oil prices
- ▸Capital allocation discipline failing if oil prices spike
Hear it yourself
"And so, you know, we valued at about $139 We're trying to value the cost of the reserves in the ground, which we believe is about $15 a barrel, has over 5% dividend, you know, that one of the things I like about energy is how they've been so disciplined with cash flow."
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