RE: new buyer Hi Bob,
Good to see a seasoned investor like yourself on this board, we need to get the word out there, because SKO themselves are for sure not doing it!
The wait is frustrating, I have been in this stock since April this year after having followed them for the better part of a year. I thought that with the recent 8c per share profit and improved net backs, this was going to take off after Q2 results, but the volumes simply aren't there to move the stock. Oh well, in the end we will be rewarded, I'm sure of that.
You point to the right buying arguments for SKO, I did a quick back-of-the-envelope on Delvina back in May and felt that only this field alone could motivate a share price closer to 2 CAD...for the oil fields, it is really an early days BNK look alike, installing new pumps and refurbishing old wells is low hanging fruits that can keep SKO going for years. Remember, all the 2P reserves of some 25 MMbbl are work-overs and pump changes, no secondary or tertiary recovery in those estimates.
About the hz Delvina well, I would look very negatively upon financing that with shares at current levels, that should be funded from cash flow or an increased bank line. In addition, there doesn't seem to be demand for the gas coming out of the two current wells, so I think they should hold off drilling that well at least until they have signed a gas sales agreement.
I asked Jim (the CFO) these questions back in April when i did my DD, and this is what he said:
What is the projected CAPEX for fiscal 2012? Are you considering additional financing later on in the year? What are your thoughts on that considering the depressed share price as of late? Projected capex in 2012 is approximately USD 40 million which includes the first horizontal well. Given that this well will be spudded late in the year expenditures will not reach the entire 40 million in 2012. The oil projects are self-funding and depending on how fast production ramps up there may be a need for additional funding later in the year but that has yet to be determined. Low share prices in the oil sector in general have received a lot of press as of late. The price of oil has risen dramatically and is holding above $100 / bbl without any real growth in share price. Stream’s reserves value our shares at approximately $5 / share if one looks at the NPV10 of our 2P reserves. (USD 331 million in value versus 66.6 million shares).
On the Delvina block, what is the cost for gas re-injection compressor and facilities? What is the projected well cost for the horizontal well in Q4? The gas re-injection compressor is under USD 500K. I do not know the associated facilities cost at this time. The projected well cost for the horizontal well is anticipated to be USD 15 million which includes the drilling and the associated surface facilities. Subsequent horizontal wells are projected at USD 10 million each
I'd be happy to share some more of my thinking around SKO if you're interested, I've spent a lot of time flipping this one around and around, and I can't find many flaws, apart from the lack of investor interest...
Best,
Darcy