Oil Company with 10x Potential Upside from Higher Oil Prices - CEO Update
This executive update provides a detailed look at the company’s development plan and supports the upside potential I see in the stock.
10x potential at $100 oil sounds too good to be true. Oil is almost at $100. But with this idea, it could just be a matter of how high oil prices go, and how long they stay there. This is not a new idea - I shared oil price upside analysis on this idea this past week. What is new is the executive update video below, which outlines the company’s own development plans and expectations going forward, and supports my view of very high upside potential.
Since I published this idea, the stock has meaningfully outperformed the broader oil and gas market, as measured by the XOP ETF:
Despite this strong performance, I think the stock is still deeply undervalued. I don’t think the market is incorporating the upside potential from a development project that could nearly double the company’s oil production by the end of the decade, as highlighted in the CEO’s update.
In addition, the company is nearing completion of power infrastructure projects that will benefit from surging electricity demand driven by the AI data center boom. Similar projects have already doubled in value over the past year per third party analysis. Values are expected to continue rising as electricity demand continues to increase.
To evaluate this company’s upside in a sustained higher oil price environment, I looked at the company from two valuation perspectives.
First, on a cash flow multiple basis, using the company’s projected cash flow under a range of development scenarios:
Second, on a net asset value basis, incorporating the value of the base business, development project, and power generation assets:
Despite these two significant catalysts, the stock trades roughly in line with peers on the value of its base business, leaving the upside from both of these developments “free” for investors today, with huge upside in a sustained higher oil price environment. A large share buyback program could amplify this potential upside to 10x or more over time, and even more upside from the price at the time of the initial idea publication.
The full executive video update is linked below.
Disclaimer: This is for informational and educational purposes only. This is not an offer of securities, solicitation, or investment recommendation. Please consult an advisor and do your own diligence. Past performance may not be indicative.
