How much cash does Birchcliff really make, and what is a share of it worth?

The words on this page

Real cash (true cash)

What was left in the bank each year after every bill, every tax payment and every well drilled. Not profit, and not "cash flow" as companies usually quote it, which leaves the drilling out. The strictest number there is.

Required return

The yearly return you insist on for taking the risk. A dollar promised in ten years is worth less than a dollar today; this rate says how much less. 9% is a common professional figure for a large Canadian producer; the reserve engineers use 10%.

Well life (reserve life)

How long the wells keep producing. After the life you choose, nothing is counted. Deloitte evaluated 946 million boe of proved plus probable reserves at 31 December 2025 (644.7 million proved). Against the 82,500 boe/d midpoint of 2026 guidance that is a 31.4 year 2P reserve life and 21.4 years proved; the model caps the 2P life at 30 years.

What a share is worth

Every future year's cash, shrunk back to today's dollars at your required return, added up, less the debt, less the cost of cleaning up the wells, divided by the number of shares. Pay less than this and you earn more than your required return; pay more and you earn less.

Where the default growth comes from

Birchcliff's raised 2026 guidance of 83,000 to 84,000 boe a day sits about 4 per cent above 2025's record average of 80,086, so the growth dial starts at 4 per cent.

The arithmetic, step by step

1. Count the real cash each past year: cash generated by operations as reported, plus interest paid put back, minus rent on leases, minus every dollar spent on wells and plants. Buying and selling assets is shown separately.
2. Project it. The starting cash you choose (an average of the history, or the latest year) grows at your growth dial for ten years, then at the long-run rate for as long as the wells keep producing. Nothing is counted after the well life ends.
3. Bring it back to today. Each year's cash is shrunk by your required return, counted at mid-year because cash arrives through the year rather than on 31 December.
4. Turn it into a share value. Add up the shrunk cash; take off net debt of C$564M; take off the C$103M cost of cleaning up the wells if that switch is on; divide by 274.45M shares.
5. Work it backwards. "The growth today's price assumes" is the ten-year growth rate at which this start is worth exactly the share price.

Where the numbers come from

• Every history year was hand-checked line by line against Birchcliff's audited annual statements on 1 September 2026; 2019 and 2020 were each confirmed in two independent audited filings, with no restatements beyond a 2020 presentation split worth $0.01 million.
• The clean-up figure is the discounted decommissioning liability on the 2025 balance sheet ($103.1 million). Birchcliff also discloses an undiscounted, inflated settlement estimate of $306.3 million spread over roughly 50 years; deducting that whole amount today would double-count the time value the discounting already removes.
• Net debt is total debt less cash. From 2020 on it follows the aggregator and includes lease obligations (plus, in 2020 and 2021, about $38 million of capital securities, redeemed in 2022); before 2020 it is the drawn credit facilities less cash, which leaves those smaller items out. The current $564.1 million is the 30 June 2026 credit facilities carrying value of $459.2 million plus $105.0 million of lease obligations less cash; Birchcliff's own narrower total debt measure was $459.9 million at year end 2025 and $469.9 million at 30 June 2026.
• Interest is the cash interest paid on the credit facilities, which Birchcliff deducts inside operating cash flow; for 2024 and 2025 it is the cash interest from the finance expense note because the cash flow statement no longer shows a separate line.
• Lease payments jump in 2024 because Birchcliff took operatorship of a third party gas plant and the take or pay commitment became a $104 million lease obligation. The interest portion of lease payments, $8.8 million in 2025, is already inside operating cash flow, and the principal portion is what is deducted here.
• Dividends are cash paid on common shares only. Preferred share and capital security distributions of roughly $4 to $8 million a year through 2022 are excluded, and 2022 includes the special dividend paid in November 2022.
• Acquisitions net of sales are as reported in the cash flow statements: the large 2016 figure is the $614 million Gordondale purchase and 2017 is a net seller year with $131 million of dispositions.
• The 274.5 million share count is basic shares outstanding; about 25 million stock options were outstanding at year end 2025 at a $6.94 average exercise price.
• 2021 buybacks of $31.5 million are repurchases of common shares; the separate redemptions of preferred shares and capital securities in 2021 and 2022 are not counted as buybacks.
• Analyst targets: average C$8.30 across 11 analysts (stockanalysis.com analyst consensus, 14 August 2026).

For the technically minded

The method is the one used to evaluate capital projects, from Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). "Real cash" is the book's project cash flow (chapter 3) with depreciation, debt servicing and debt-like leases restructured out (chapters 4, 5 and 19); short operating leases stay in as a cost of producing, a chapter 19 judgment. The value per share follows the share-purchase evaluation of chapter 20: present value of the company's cash flows at the cost of capital (chapter 10), mid-year discounting (chapter 12), plus non-required assets, less net debt and the decommissioning liability. "What you gain or lose" is the bid-curve NPV of chapter 20; "when you get your money back" is the discounted payout of chapter 13; the bars follow the project profile of chapter 6. The reverse solve on growth is a plain reverse DCF.

Discount-rate anchors: 9% is a common cost-of-equity figure for a large Canadian producer and 10% is the reserve-report convention (PV10). The long-run rate defaults to 0% here: a depleting resource should not be assumed to grow forever, so anything above zero is a judgment you make with the dial.