GREY:CNKEF - Post by User
Comment by
George98on Nov 18, 2016 11:08am
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Post# 25480784
RE:CKE Q3: Production Growth, ZERO Debt & 5,400 boepd (Mar 17)!
RE:CKE Q3: Production Growth, ZERO Debt & 5,400 boepd (Mar 17)!
George98 wrote:CKE just released an excellent Q3 (consolidated report with CRAFT).
The first thing is that we will receive the CRAFT shares by year end. And CRAFT's enterprise value is at least C$60 million based on its production and its super healthy balance sheet.
So Craft alone translates into about C$0.30 per each CKE share which stands today at C$0.55 !
CRAFT produces 2,400 boepd (35% oil and liquids), has a very strong hedging program until June 2020 and a very strong balance sheet with less than C$1.5 million debt (including the tradeable debentures) pro-forma the Manitok disposition. Thanks to the Manitok disposition, CRAFT unloaded C$42 million ARO to MEI a few weeks ago and this is shown as "Liabilities held for sale" in the Q3 Consolidated report, see quote:
At September 30, 2016, these properties and associated decommissioning obligations were reclassified on our condensed consolidated statements of financial position as held for sale.
See CRAFT's presentation below:
https://craftoil.ca/wp-content/uploads/2016/10/Corporate-presentation-November-9-2016.pdf
The second thing is that production growth resumes because CKE(pro-forma the Craft distribution) is a pure Montney producer and will drill 3 gross Montney wells by year end, expects to exit Q4 2016 at 3,500 boepd and hit Q1 2017 about 5,400 boepd!
And the balance sheet will remain very strong because CKE (pro-forma the Craft distribution) says that it has ZERO Debt, C$4.8 million in working capital SURPLUS which means about C$10 million in cash.
However, I think CKE is conservative as usual, because it estimates that each Montney well (2.67 net) in Birley/Umbach will produce about 800 boepd. But all its previous Montney wells have exceeded 900 boepd thus far....
On that front it helps a lot that CKE has diversified its natural gas sales thanks to the Alliance contract.
Since May 1st, 2016, Chinook Energy has diversified away from weak Station 2 prices by securing firm transportation on Alliance to the Chicago market for most of its Birley/Umbach natural gas volumes.
Therefore, since Q3 2016, the company has been receiving for a part of its production Henry Hub pricing that currently is about $3/MMbtu or C$3.90/MMbtu, which is a huge price difference compared to just C$1.39/GJ (average realized price for AECO and Station 2) that Chinook received in the first half of this year, when it didn't have the contract with Alliance pipeline.