Shat's take
The NR had me worried about the long term viability of the company.
However, after listening to the conference call and learning that the ICDs have not failed on 2P1 and are currently ramping up again (600+bbl/d for 2P1), I feel that a near 30% drop is unjustified.
Further to the ICDs, Lutes went out of his way to mention that the plan remains in place to install ICDs on 1P2. This is also encouraging. This means that 1P5 is continuing to slowly increase its rates and that further development on Pad 1 is deemed economic in their view.
Frankly, the only other justification I can see for the recent falloff is this mystical strategic review.
Aside from a temporary dropoff on 2P1, nothing has changed. They lost 3.3 cents per share which is about where I had them pegged. $59mil in the bank means that they are a long way from insolvency, and given that increased production is all but assured[cripes, they have the ICDs on site], I can't see how the SP reached as low as it did. Well, maybe I can a little.... I saw the L2 both yesterday and today.... and decided to make some lemonade with an in and out. Sue me. :)
The buyers or potential JV will take into consideration future production value when entering into a venture (or sale), so I'm not worried about getting gypped on my common stock.
Production and long term company viability.
They are aiming for 7,000 bbl/d from McKay. This is, admittedly below my estimates, but it will suffice. So if each well-pair on Pad 2 ultimately produces 750 bbl/d(completely feasible as it tested between 700 and 900), that leaves 2,500 needed from Pad 1. The truth of the matter is that if management did not figure to be able to get a measly 400 bbl/d average from each well-pair, they would not be spending millions of bucks in ICDs on Pad 1.
I'll have to downgrade my lofty goals for the long-term, but at 23 cents(or whatever it is as of this writing), the short to medium term looks A-O-K, especially because the market is valuating the company at current production levels of 4,000 bbl/d, and a sale or JV would take into account future production. It's the only way management would have agreed to halt all developments. Why reduce guaranteed revenue (Senlac) for weeks/months if there was nothing in it for them? So, in my mind, it's not a question of IF a deal is imminent, but when. And it'll drive the share price higher for sure.
By the way, Blackwatch has bought some shares today. We'll see if this is just a blip or something more. Usually these guys are quite savvy.
Crazy casino this penny stock world is.