Why the sell off??Why the sell off? Wow ... Perhaps you've never heard the line "Fool
me once, shame on me; Fool me twice, shame on you!"
What message would you receive if the Vice President of Exploration
never invested a dime in his own work? Me: that there is nothing
there of value. He was privy to all the information, including
everything now released in their Scotia Watrous data room. Yes, privy
to it all and thru his entire tenure at the company never bought one
single share. Never bet on his own work; never bet a buck on the
performance of the waterflood. Yes, I'm sure they "wish him well in
his future endeavors". Did he leave or was he asked? And is this
just his way to save face?
As for the biggest reveal ... Not one, but two sales line outages ...
What does this mean? Obviously as you appear to be a novice to the
oil and gas industry, some basic facts. This likely means that they
did not meet their Q4 exit rate. It also means that once again,
though they promised to lower their E & D costs, that their G & A, and
cost per BOE will be among the most staggering in the industry, as
they will have incurred massive trucking costs to try to get any of
their product to market downstream of the third party outages. Read
their past press releases for the plethora of excuses, usually
including all know plagues (fire, flood ...) as well as the standard
"third party" outage claims Hence (in their mind) deflecting any
blame on their own poor decisions. And lastly, a bit of common
knowledge; any wells with a high GOR that were tied in, in theory,
should have been shut in during this time, again reducing production.
Why? As a producer the AER sets limits on the amount of gas that can
be flared, and wells that are trucked are produced to tank. Hence,
flaring and a lot of it. If they are to stay legally within their
allowable flared volume, they would have to shut in production on
these wells. One other little ditty ... horizontal wells once shut
in, never come back on with the same production rate as before they were
shut in. Ever.
Oh yeah ... one more thing (okay ... for now one more thing ...)
Those "hedged" contracts for production ... remember, if Arcan can't
fulfill those volumes, there's a penalty ... a nice healthy penalty
for not fulfilling their commitment. That too gets buried somewhere
in their G & A Cost ... just try to find it.
Now, we wait for the disastrous results of Q4 to be released. But
they've given everyone a nice little "tip off" as to not expect much,
in doing so hoping that the plunge to 20 Cents won't hurt us quite as
badly as if we'd been blindsided.
And now I'm certain the bandwagon of defenders of the mighty Arcan
will swiftly respond to this post, again saying it had nothing to do
with mismanagement or improprieties and it was only "bad luck and poor
timing." I anxiously await hearing how many options they've
allocated to themselves and the size of bonus that they feel
reasonably "rewards" such stellar performance.