GREY:LSTMF - Post by User
Comment by
jerrybeon Sep 03, 2014 4:03pm
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Post# 22902915
RE:Lts Value
RE:Lts ValueThe sales metric you are using was for one of the best assets of the firm. Would you apply the same metric to the Swan Hills?!?
LTS has some good metrics to show on their recent deals but that is because they sold their best assets (low decline, high netback, FCF producing assets with future growth potential). We cannot apply this metric to the rest of the company, period.
The key for LTS is to reduce their decline rates. By selling their lowest decline assets, they are going exactly against their "LIGHT STREAM" approach. But the debt level is almost $1Bn lower than a year ago. It will require more capital to get the remaining assets to this steady stream of cash flows that is supposed to map to the dividend payouts.
My hope for LTS (and for many of my E&P holdings) stems from the EOR techniques. I believe that the high capex to production ratio will go down significantly once they focus on EOR expenditures (refracks, gas injections, waterflooding, etc.). That is where the "easy" money can come from (infrastructure in place, etc.). For now, as is typical of LTS, we have heard very little of this. They make a meal in the statement that they kept the Creelman assets where they are doing their gas injections trials, it seems to matter for them and I think they are right. I believe these capex dollars have IRRs well over 100%...I would love to hear more about those as there is, supposedly, the potential to use these techniques all over the Bakken and Cardium.