Key metrics for recent NORTH DAKOTA & EOR deals ZAR will not continue to trade at C$0.90 for long. Currently, it trades at just C$22,800/boepd (82% oil and liquids) and C$3.90/boe of 2P Reserves (88% oil and liquids), like it's a distressed seller, although this is completely wrong and backward-looking. ZAR has zero bank debt thanks to the sale of the Southeast SK assets to TORC Oil and Gas.
And ZAR can afford to wait for higher oil prices to sell its remaining assets (North Dakota, Alberta Plains, Little Bow ASP project), because the remaining debentures of C$31 million are due June 2017.
And CapEx for the second half of 2016 is just C$2.7 million, so Zargon doesn't burn cash now. Actually, it generates a small free cash flow in the second half of 2016 with WTI at about $45-$50, see cash flow analysis in the latest presentation.
See the key metrics from recent NORTH DAKOTA and EOR deals and find how much Zargon can sell its North Dakota and Little Bow ASP project. So now it's the time to buy because the valuation gap is tremendous, not when the deal is announced:
- In June 2016, Arsenal Energy (AEI) sold its oil-weighted, NON-operated
North Dakota assets (1,100 boepd and 6.8 MMboe of 2P Reserves)
for $34 million or approximately C$44.2 million, which translates into
C$40,180/boepd and
C$6.5/boe of 2P Reserves (~94% oil and liquids).
- In August 2016, Continental Resources (CLR)
sold its Williston Basin assets (North Dakota and Montana) for $222 million or about C$289 million. The oil-weighted production was 2,800 boepd, so CLR sold them for $79,286/boepd or about
C$103,214/boepd and approximately
7.4x EBITDA, based on $30 million of projected annual EBITDA.
- In July 2016, Samson Oil & Gas (SSN)
executed a purchase and sale agreement for its NON-operated interest in the North Stockyard field in North Dakota for $15 million cash or C$19.5 million. This asset produced approximately 600 boepd (73% oil) and had 1.05 MMBoe (87% oil) of Proved Reserves, as derived from
the company's latest reserves report. So SSN sold its NON-operated interest for
C$32,500/boepd and
C$18.57/boeof Proved Reserves.
- In August 2016, SM Energy (SM) sold a
land package that consisted of an oil-weighted EOR asset in New Mexico and an oil-weighted North Dakota asset. SM sold waterflood assets in New Mexico and producing acreage in North Dakota and Montana for $172.5 million or C$224 million. Together, the assets produced about 3,300 boepd (82% oil) and had 9.5 MMboe of Proved reserves (87% oil), which translates into
C$67,955/boepd and
C$23.58/boe of Proved Reserves.
- In July 2016, financially-distressed Denbury Resources (DNR)
sold its Williston Basin assets for $58 million or approximately C$75.4 million. The assets produced roughly 1,350 boepd (96% oil) and at both locations, the company was working to install and inact its CO2 injection process for enhanced oil recovery. So financially-distressed DNR sold these EOR assets for
C$55,852/boepd.