architect, GTRE, BZP -- My enthusiasm about GTRE waned after they issued 2Q numbers. Disappointing production and cost figuers. Now its unclear how much they might be able to get their borrowing base increased, even though they now have a lot more reserves booked, upon which they might have been able to borrow against with better cash flow numbers.
On BZP, I believe they are making a mistake to put up "BOE" figures on their slides. This just gives the more informed reader another excuse to doubt their credibility. The reason for this is that, to convert Peruvian gas to oil at the BTU-equivalent price is absurd. In northwestern Peru, the relative economic value of a barrel of oil in the ground vs. an mcf of gas in the ground is probably something like 40:1 (i.e. $20 vs. $0.50), vs. the BTU-equivalent ratio of 6:1.
So when an informed reader sees BZP using "BOE" figures, calculated at a 6:1 ratio of oil to gas, he sees how silly that is and he then wonders to himself, if this company is using this misleading figure here, where else might they be using equally misleading figures? Hopefully BZP could change this slide for the Enercom show.
I was encouraged by the last several days of trading last week. The stage is now set, all we can do now is take a seat in the bleachers and watch the show, to see if the big boys buy the story at Enercom. |
