Oak Mea CulpaWas wondering why they were drilling and completing so much there for 2024 and I think the answer is they were expecting natural gas prices to firm up. Unfortunately its been a very mild winter so price actually went down. Conclusion: hindsight is 20/20.
What's interesting about what the company shared in the new presentation is that Oak's netback was $18.91. That may not seem like a lot but keep in mind station2 gas prices were often very low and in general HH averaged $2.50 in 2023 when we know that the US industry really needs $3.50 to operate profitably (how can they do that for a year+? Hedges).
So in an normal natgas price environment........ Oak netback could be $24-25. Not as high as Wembley obviously but quite strong considering the EUR is quite a bit higher.
Plus the play has further potential IMO from a) longer laterals (Oak is one big contiguous block), b) own plant (Storm Resources a company acquired by CNQ complained loudly about this plant) both for lower cost and higher NGLs and of course c) LNG Canada.
Oak is 190,000+ acres and the PV10 (Present Value discounted at 10%) of PROVED reserves - not proved and probable - is $290MM ($630M for proved and probable) based on 50 locations ie nothing (you might get that from 8,000 acres).
Kelt also provides us with a breakdown of netback by commodity in the presentation page 9 which if we apply to Oak indicates 17.5% condensate and 5.5% NGLs. My personal observation is that most Cdn natgas companies arent proftiable if they don't have decent oil/conde and NGLs. In that context, 17.5% is pretty good (better than CR, AAV, BIR, TOU).
So this definitely should not be sold atm as the potential is quite good based on 1) good netback considering low natgas prices b) scratching the surface of the play c) potential to further optimize with own plant etc...