Selling the North Dakota & Little Bow ASP Project Based on the key metrics of the Enhanced Oil Recovery deals that I posted in a previous thread, ZAR can eliminate the remaining debt of C$31 million by selling its Little Bow ASP project.
The Little Bow ASP project produces about 570 bopd and ZAR can receive about C$30 million from this sale.
Once this happens, ZAR will be debt-free with 2,000 boepd (oil-weighted) and market cap of just C$26 million at C$0.85 per share.
For an oil-weighted, debt-free producer with low decline wells, this C$13,000/boepd is ridiculously low.
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Alternatively, ZAR can sell its North Dakota assets and receive about C$20 million significantly reducing its net debt to about C$10 million.
With net debt at C$10 million, Net Debt to annualized Cash Flow ratio will be well below 2 times at current strip pricing, which is just fine.
Pro-forma the sale of the North Dakota assets, the remaining production will be about 2,200 boepd (oil-weighted) and ZAR's Enterprise Value will be just C$36 million (C$26m market cap + C$10m net debt) at C$0.85 per share.
For an oil-weighted producer with low decline wells and without any debt problem, this C$16,400/boepd is again ridiculously low.