EXPM:EGRGF - Post by User
Comment by
lenumero66on Mar 22, 2018 10:11am
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Post# 27760283
RE:RE:something doesn't add up
RE:RE:something doesn't add upI have to disagree where is this huge loss?
The net loss for Q4 was 14.3M. 12.4M of that was an impairment on Salt flats, which has been sold. (Refer to page 17 of Annual Report). All other properties had already been subject to an impairment adjustment and were re-assessed at year end. No changes.
Agree that the bottom line is a net loss is a net loss, but some perspective. Current shareholder equity is listed at 99M. Total shares outstanding is 43M. Thats $2.3/share.
Remove the impairment and the operating loss is 1.9M for the quarter.
This includes:
-750bbl/day hedge at around $45/bbl. That expired at year end. (Refer to page 20 of report)
-1250bbld/day hedge at around 52.75/bbl. Also expired.
New Hedge for 2018: 1000bbl/day at $57.50.
Average WTI price for Q4 was $55/bbld (page 9). Currently at $65/bbld. After salt flat sale, we are somewhere around 2600bbld/day production, plus whatever the new wells do.
There's no doubt eagle has been poorly managed. The question is there a diamond hiding in this giant turd pile. If there really is $2/share of equity here (keeping in mind all the other properties were already subject to an impairment when oil was $40-50/bbl), and we can get to net and cash break even, I think that a doubling of the share price is easily attainable.
Very simplistic/conservative Q4 to Q1 analyis (I will ignore whatever happens at North Texas):
- Hedge 1000bbl/day. Was ~$47/bbl. Now $57/bbl. 1000bbl/day x 90 days x $10/bbl = 0.9M
-WTI Increase. Was $55/bbl. Now $60/bbl (average for Q1). 1600bbl/day x 90 days x $5/bbl = 0.7M
(I realize that royalties, operating, finance, admin etc changes aren't included). Anyway total 1.6M. So with no additional value coming from North Texas, we are pretty much break even.
Is it a good bet to buy a company with a poor management track record, but trading at 0.2x book, currently breaking even with a new drilling program that might be transformational? I've taken that wager, sure do hope I'm right.
GLTA.