RE:RE:Great week for Crew!"Momo...in your analysis of the PONY disposition, I was wondering why you presented the 2P reserve metric? From my experience, that reserve valuation is seldom if ever referenced when buying or selling assets. Just curious, but if it was meant to be inflamatory I understand."
Been investing in O&G for more than 30 years.....i can assure you that's NOT the case. There is alaways a value placed on Probable reserves in buyouts/mergers/assets sales. Whether greater or lesser are always dependent on the evironement or circumstances of when those transaction are done. Good times will get you better pricing and in contrast bad times get you awful pricing. What is always consistant is this order of things......Proven & producing ALWAYS get you the best prices, proven not producing get less and then probable get even less. But there's always some value attatched to them it's definetly NOT zero. Another factor which the acquirer will consider is the BOEPD which makes a BIG difference. So in other words, the final vlaue is a ratatouile of many metrics including land. What one cannot discount, is that ANY metric you use for the CNQ-PONY deal whether reserves, production or land.......it was WAY undervauled. This is usually a symptom of some "insider" pre-arranged "understanding" between both parties. And usualy as in most cases involving "insider" fixed deals.....the small investor gets the shaft.
Btw, just a note....i'm not currently a s/h of PPONY anymore. As i did sellout on day 1. The risk of holding is minimal and there could "possibly" be an improved offer but i wouldn't bet the farm on it.
hope that clears any confusion you had........
Good luck to all.......