GREY:NOVUF - Post by User
Comment by
Adonis1411on Nov 25, 2010 4:35pm
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Post# 17758865
RE: Q3 Results Out
RE: Q3 Results OutI think results were consistent with expectations. Their production is tracking nicely to their guidance. My only concern is the rising costs of well completion and tie-in. These aren't 300 bpd wells like in Shaunavon and the lower Bakken, so escalating drilling and completion costs materially affect the economics of the wells. They say that they believe that they can get the costs back down into the $800's, but I suppose that will remain to be seen in Q4. All indication is that rig rates certainly aren't going down, so hopefully they have a strong plan on how to implement these efficiencies.
To Williard's previous comments regarding the use of debt, I completely disagree. Prudent (being the key word) use of debt maximizes shareholder value and eliminates dilution. To fund the capex program with 100% equity (beyond funds from operations) would be extremely punitive and repress the share price materially. I'd like to see them get more aggressive in their use of debt. Agreed that I'd rather see it put towards production enhancement than a miniscule share buyback though.
Good luck all.