Lorne, I've crunched the numbers, and I'm undecided on the deal. According to my calcs, they've given up .08 cash flow (based on 961 boepd before deal, + 800 boepd after deal, with 12.9MM shares after the deal - based on $19.00 oil and $2.50 gas).
I've emailed Vic to get some feedback. If you look at it on a boepd purchase price, it's only 13,000 / bbl... which would appear cheap. Considering they have more than doubled their land position in producing areas, I'd tend to think they're on their way to building a contender. I do like the stability of a 60% gas to 40% oil mix, and the proposed move to the TSE.
Bottom line: As usual, it's an O & G play that requires a leap of faith. On this point, I feel confident they have legit/competent management (re: associate knows Vic). I'll post a follow up, when I receive Vic's response to my email queries. JT says HOLD for now.
Regards,
JT |
