Post by
George98 on Apr 11, 2017 4:09am
Delphi: Leverage, High Operating Cost, Most Expensive Wells
DEE lost $25 million in Q4 alone. Aside the surprisingly high losses in Q4 2016, DEE faces additional challenges in 2017.
DEE's key problems are associated with more than one factors such as high leverage (3 times), the highest operating cost per boe in the Montney space and the most expensive Montney wells among the Montney peer group.
DEE's leverage is 3 times, see annual report.
DEE's operating cost per boe is $16, see annual report. This figure includes transportation cost and the high interest expenses due to the debt burden. This is the highest operating cost per boe in the Montney space.
DEE's Montney wells cost $7.5 - $8 million each now, which is the highest cost per Montney well among the Montney peers, as quoted from DEE's recent press release:
" In 2016, the Company continued the trend of reducing drill and completion costs for its horizontal Montney wells at Bigstone reporting a record low gross average of $7.5 million per well compared to $8.1 million per well in 2015, and $10.4 million in 2014. "
Experienced market participants know that the high cost per well on an absolute basis for a highly leveraged junior producer with limited liquidity is a key headwind on its path to survival. The cost overruns aside (cost overruns are likely in this business), the high cost per well limits DEE's ability to materially reduce its debt burden while also growing its production. Something's got to give.
Comment by
Bjshort on Apr 13, 2017 10:37pm
dude the stock doubled since i bought it for 73 cents in less than a year .. go bash with your fuzzy math elsehere ..just another basher who missed the boat zzzzz lol
Comment by
tickerprice on Apr 24, 2017 4:58pm
Announced today the addition of 3 new Board members. Maybe some previous Board members are not standing for re-election. All new have a financial background. Is Delphi's debt situation a problem??
Comment by
profittaker1 on Apr 25, 2017 12:20am
Not really. It was a year ago for the bankers at least.
Comment by
tickerprice on Apr 30, 2017 12:25am
why 3 added directors then. compared to a peer group, 9 directors seems like a lot for a company of less than 10,000 boe/d. KEL and CR for example are run with 5 directors and RRX with 6. Waiting for the info circ to get some details on Board comp.