Post by
InsideEnergy on Nov 06, 2021 11:37am
seekin alpha
always brings a smile to my face. I mean the author means well, the dd is always poor and what we need to know, like what can be made in $s is seldom there.
So many areas in the article miss the point or offer simplistic thoughts
The move into liquids rich is a new thing for them and is risky that aurthor writes, nope. It has been proven by a dozen and more wells producing for years so it is kinda not a risk to add more wells, they do have area cpacity at Wembley. At Valhalla they have a decent little processing plant besides being piped into the big Glacier Plant. That plant has been at capacity since built a few years back, it will remain so with the recent two wells drilled. Those wells were drilled ahead of demand to maintain capacity at Valhalla and those two wells reported being the top 1 and 7 wells drilled in AAV history. So those wells have the capability to maintain max thru put at Valhalla for over a year. That makes Valhalla at 30 Mmcfd with 25% liquids. That area is a cash cow right now. No, they already proved they can make money at liquids rich. come on fella, it is not a new risk it is a new proven cash flow cow that will be so for years with room to grow, and they will grow it by simply expanding the plant and drillin a well a year to maintain and increase cash flow.
first up is the build a new area plant at Progess. There they found an oil pool in thr D3 layer of the Montney. Not surprising since this land is on trend with Valhalla ans Pipestone and Wembley where condensate is king but oil is there. They have several wells into the pool to deliiniate it across the Progress land block. Seems that the few new wells drilled did flow over a thousand boe with over 700 being oil. so they will build this plant to handle the oil and gas, that cash flow on 700 bopd will payout there in 6 months. and will still be flowin 400 bopd when paid off. A huge cash cow at $70 oil. not new to AAV either to drill and produce oil, Progress might be in favor over Valhalla since oil has such a great netback. yes despite the money they make thru Glacier and dry gas, and the money made at Valhalla as it runs at capacity. oil would make even more money for them. Again the aurthor did not point this out, rather only said it was a new risk to produce, where they already produce at a big profit, not good dd fella. just writing out the news release is not adding anything to any discussion. you got to add something you come up with. somehting new, come on fella
the auther also adds risk for Entropy and thinks maybe it will be a new business. my gawd man Entropy is now in discussions with banks about Entropy going public. a given not an idea. It is happening at this moment and this author should know it if he spent time doing dd beyond reading the last presentation posted on the website. There is a new Entropy presentation at AAV website. Entropy and carbon capture is a viable business and Entropy would like to come in to a gas plant or electricity gen plant and do a deal where Entropy foots the bill to install and maintain Carbon Capture in exchange Entropy gets all the credits and tax benefits. a viable business today and going forward it looks like gov.t are raising costs for carbon. Carbon is flavor of the day, might be best fighting methane but whatever they think. the money is there, AAV has done it for years at Glacier and has built Entropy to be a maket leader and a first mover. Today, all these emitters want to capture, use or sequestor, carbon for the money in it as well as for meeting polution limits and such movin ahead.
These writers are just some guy who read the last presentation, saw the financials from Q3 might have read more, he adds nothing tho. In fact he misses too much from not actually knowing AAV. That takes following it for years. knowing where it sits among the peers and what their advantage is and opportuniies are. Yes the author is correct in seeing the balance sheet is strong. They could add debt if they found the right deal to grow oil faster then they can. At Progress they can add 4000 barrels of oil. That they can do, drill a few wells and then spend the $10 mill a year to maintain 5000 barrels of oil there. a small spend and little risk. That is following the plant they have said they will build. In fact, they already bought much of the plant in prior years. It is not put together and finished obvioulsy but will be this year, I think is clear. That is adding a decent and steady 5000 barrels of oil. presently they do have about a 1000 barrels net to AAV at Progress that is processed at other plants.
AAV has a lot of cash flow and has little planned for all that cash flow. That is a good position to be in and if you think they can find a profitable spend of maybe $100 mill then own it. it is not cheap tho, the price of nat gas can fall if it is over produced. There is no sign of over production now so this is great time to won this quality name.