Sintana Energy Inc., a crude oil and natural gas exploration company, engages in the acquisition, exploration, development, production, and sale of crude oil and natural gas resources in Colombia. Its principal assets are private participation interests of 30% unconventional and 100% conventional in the hydrocarbon resources of Valle Medio Magdalena 37 Block, which covers 43,158 gross acres located in the Middle Magdalena Basin. The company was incorporated in 1994 and is headquartered in Dallas, Texas.

Sintana Energy Inc.

Energy

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

SEI.V reported revenue of CAD 0mn in the last 12 months, down 0% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS grew 81% from FY23 to CAD -0.03. Market expects EPS to reach CAD 0.00 in FY24.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 44ppts and its growth decelerated by 15ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

Sintana Energy Inc. reported a return on equity (RoE) of -44.3% in the last 12 months, down from -30.8% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to -38.3% in the last 12 months, a decrease from -11.8% in FY22. 

In the last 12 months, the return on capital employed (RoCE) declined to -43.8%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -2.8 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

SEI.V has very poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, and poor cash flow generation. We note strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, SEI.V is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, SEI.V is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. In particular, the stock is underpriced on P/E. 

Sintana Energy Inc.

CA$ 0.48

3

Sintana Energy Inc.

CA$ 0.48

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CA$ 0.48

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