Post by
energee on Jan 08, 2023 2:31pm
Suggestion
I am certain that have thought of asset sales (other than the scraps they tried to sell last year) but the Evi light oil property is geopgraphiclly remote from PPR main assets and adjacent to Surge Energy existing operations. Not sure of the PPR current production at EVI but likely ~1000 boepd. Surge has been an active asset buyer lately. Recent land sale activity in the area by a few shallow oil sands players (Cavalier Energy inc.) so maybe some op synergy for those types.
Mr. McDonald should know the property well, it was a Canadian Forest/Lone Pine asset. Lot's of operated HZ wells, generally low rate, waterflood potential, 2 HZ wells scheduled for Q1 2023 drills (from PPR info) and reasonable RLI. I suspect they would have a significant future abandonment cost liability for this property which would be good to offload.
From PPR Q3 2022 financials:
"PPR’s decommissioning liabilities at September 30, 2022 were $133.2 million" (assume disc?)
Continues later;
"The Company estimated the undiscounted and inflation-adjusted future liabilities of approximately $252.1 million spanning over the next 55 years, based on an inflation rate of 1.7%. Of the estimated undiscounted future liabilities, $18.0 million is estimated to be settled over the next five years. PPR expects that a portion of this spending will be covered by federal funding programs. While the provision for decommissioning liabilities is based on management's best estimates of future costs, discount rates, timing and the economic lives of the assets, there is uncertainty regarding the amount and timing of incurring these costs."
If US debt remains where it is they have to do something creative with Prudential at some point whose loans are likely subordinate to the regulators ARO requirements.
Opinion only.