Kerm / Crestar
I believe you still follow this company, so I was wondering if you've
looked at the Q2 results, and if you have any impressions. The
following things jumped out at me:
- Production in Q2 was 76,600 boe/d, vs. 84,500 boe/d in Q1'99, and
vs. 90,000 boe/d in Q2'98;
- Production was down 15%, and was lower in 1999Q2 than it was for
the 1997 average;
- The production decline was in part (3,400 boe/d) due to asset
dispositions (to reduce debt); most of the assets sold were gas;
- at the same time, the capex focus in 1999 is gas targets.
From the results, it is possible to form the impression that CRS
started the year scared by their debt levels, and focussed on that at
the expense of all else. I applaud their prudence in trying to
improve the balance sheet by constraining capex to less than cash
flow in light of $500 million plus debt. OTOH, I'm a bit taken aback
at the size of the decline, and wonder if the $200 million capex
program will be enough to get them growing again.
I've followed the company for the last couple of years, and have
wondered if management was really doing a good job with the assets
(250 mm boes of reserves and 2.8 million acres of land). I'd
appreciate comments from anyone else who follows the co.
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