Chinook Energy Inc. Common CNKEF

26.5MMboe- 5,300 boepd- $15.6m surplus- $75m EV- $128m NPV10

[George98]

Superb. This is the word about yesterday's Reserves report of December 2016. CRAFT's non-Montney assets in Alberta are not included into Chinook anymore to impact the NEW CKE's Montney production and Montney reserves. So I summarize the NEW CKE that has sold everything in Alberta and has focused to its contiguous large core Montney acreage in Birley/Umbach in British Columbia next to Storm (SRX) and other private equity backed producers (UGR, Sanguaro, Black Swan etc.).


The NEW CKE's Enterprise Value at C$0.42 per share is just C$75 million and this C$75 million Montney package has:


The NEW CKE has now its own new 25 mmcf/d A-72-F compression facility at Birley next to its large core Montney acreage that tremendously reduces its operating costs. And this will become very obvious when Q1 2017 is out and will NOT include the non-Montney Alberta assets that were sold to CRAFT and MEI (Manitok) in the second half of 2016. Few realize the upcoming tremendous improvement on operating costs now because few are forward thinkers, as always. The NEW CKE has also recently announced hedges at C$3.20/GJ that will further increase its operating netback, see latest news.
 
ZERO debt.

The new Chinook exited 2016 with no bank debt and with an approximate C$15.6 million working capital surplus. 

And this working capital surplus is significantly ABOVE estimates of C$13.5 million that were originally projected in Q4, see presentation below slide 5:


https://www.chinookenergyinc.com/wordpress/wp-content/uploads/2017/02/CKE-Feb-2017-Presentation-1.pdf


And this working capital surplus does NOT include the Cold Creek Montney asset sale of January 2017 that added another C$10.5 million cash and this new fresh cash will more than offset the costs for completion and tie-ins of the 3 new Montney wells in Q1 2017.


Exit Production December 2016:  3,030 boepd


Production March 2017 (company's estimate): 5,300 boepd (so the Montney-based production growth is here)


2P Reserves: 26.5 MMboe (15% oil and liquids) !

So the Alberta non-Montney reserves that were sold to CRAFT and MANITOK in the second half of 2016 were largely replaced with Montney reserves from Birley/Umbach from these 3 new Montney wells that were drilled in the last quarter of 2016.


NPV10:  C$128 million!


RLI: 16.6 years!


and see this excerpt  too, only 15% of its Montney acreage in Birley/Umbach in British Columbia has been booked for this reserves report:

" As at the date of the McDaniel Report, approximately 15% of Chinook's greater Birley/Umbach Montney acreage was booked. "