GREY:LSTMF - Post by User
Comment by
jerrybeon Aug 02, 2014 11:17am
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Post# 22805169
RE:Value
RE:ValueThis one has been a "value play" for the past two years...and as it went down further and further, many of us (myself included) saw even more value and were thinking: "If only management would just adopt a more reasonable financial stance..."
Now that they have, people are saying: "If only they had adopted that stance sooner, we would not be sitting on our hands, waiting for these asset sales to go through..."
I think another problem is the lack of excitement about their land and their drilling performance. The Cardium is solid but boring (and was too gassy for some, with takeaway capacity issues). The SE Sask./Bakken base was similarly boring. Management got really excited with Swan Hills but that play does not seem to excite anyone out there but them. The whole Arcan Resources situation is still unclear, will or will they not take them over...and assume all of their debt. Or cherry pick the best assets...this ongoing saga should be put to bed, no?
We supposedly have other plays, like Slave Point...and even, or miracle, some excitement with Torquay!?!
I contacted IR about these plays. The response was the following: "We have drilled a couple of wells in those plays but management does not want to talk about them." Frustrating? Yes!
You have several "exciting plays" in the Canada. All the Montney players got a bump earlier this year, there is the Torquay now, there is the Duvernay/Kaybob...all these plays are getting all the media attention...and we are selling our East Pembina package...it's free cash flow positive, but is it exciting? No...
Even as the firm improves its image (after going from $30 to $5 and now back up a bit, at least on the financial side of things, the firm is improving), I think Lightstream suffers from being just the wrong size: Too big for growth (production has been relatively stagnant for the couple of years (we can argue whether or not we take out asset sales...)) but too small for financial stability.
The name change tells me that they want investors to think as growth as a "bonus". Instead, they want to provide a steady stream of free cash flows for many years to come. That's why they were so reluctant to perform an asset sale: They need land to drill on.
I think the fact that decline rates are now significantly lower than before will make them come true to their name. Maintenance capex is now a fraction of what it was three years ago. And just as they will finally turn things around, they will be taken out. That is why I am not selling. I know that the dividend is safer now than it has ever been and that the value of those assets is going to be realized sooner or later. Our friend John Wright was savvy enough to load up, he is going to make a mint out of that investment. Lack of excitement...but now is not the time to sell...