GREY:SCSZF - Post by User
Post by
newcoinon Mar 02, 2011 9:13pm
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Post# 18222806
Oiljack - on another Board
Oiljack - on another Board
From a friend....just out....Paradigm.
Provost Disposition Allows Greater
Focus on Pekisko
Second Wave has entered into an agreement to sell its non-core
Provost property in southeast Alberta for $16 million in total
consideration. The property is producing 400 boe/d with a 62%
liquids weighting. We feel this was a good move (in addition to
its recent Beaverhill light oil JV) to further align assets with
strategy, as the Company is now free to focus on Judy Creek
Pekisko.
1. Provost Assets Sold
SCS is to receive $16 million for 400 boe/d, 1.1 mmboe of
2P reserves and 1,550 net undeveloped acres. This represents
approximately 12% of our previous forecasted production.
2. Changes to Our Estimates
Our 2011 forecasts are lowered to 2,600 boe/d (down 800
boe/d) based on the asset sale and deferred timing of the 2011
program. Our 2012 forecast is reduced by 7% to 4,300
boe/d.
3. BHL Activity Adds Excitement
EOG Resources has licensed an exploration well targeting
the Beaverhill Lake formation in close proximity to SCS’s
lands. Success could significantly raise interest in this high
impact oil play.
4. Bank Line Increased
The Company has used the sales proceeds to pay down bank
debt which stood at $24 million as of March 1, 2011. SCS’s
lenders have also increased its revolving credit facility to $44
million from $40 million, which allows more room to run at
Judy Creek in 2011.
As shown in Exhibit 1, the high impact potential of the Beaverhill Lake formation has attracted other operators
in close proximity to SCS’s land at Judy Creek. EOG Resources has licensed a well only s few sections east.
Using Arcan Resources’ Beaverhill Lake play at Deer Mountain (three to four townships to the north) as an
analogy, horizontal well have consistently delivered IP rates in excess of 500 boe/d (40° API) and may
ultimately have an NPV10 of $12 million or more based on 500 mboe of recoverable reserves. If 10% of SCS’s
60,000 gross acres (40% WI assumed post JV earning) prove prospective, it suggests $90 million of net
potential value ($1.09 per share), whereas 50% prospectivity could mean net potential value of $450 million or
$5.44/sh. This is based on two wells per section.