PIPE vs SRL boe/dTime to compare the realized prices that PIPE and Strathcona get for the oil and gas they produce.
PIPE Q2 2023
33,143 boe/d
Natural Gas = 59%
Condensate = 28%
NGL Liquids = 12%
Crude Oil = 1%
Q2 Realized Prices per boe (CDN $)
Natural Gas = $15.66
Condensate = $93.06
NGL Liquids = $34.20
Crude Oil = $89.78
PIPE realized $2.61 / mcf for their natural gas in Q2. At the standard 6:1 conversion ratio, that is a pitiful $15.66 / boe. AECO natural gas continues to trade at this price point. Can you understand now why Riverstone and PIPE's board are interested in moving in a different direction?
Strathcona produces 110,000 barrels of heavy oil. WCS is trading today at $62.50 US which is $84.50 CDN. Half of that production is Cold Lake heavy which trades at a premium to WCS after Strathcona loads it onto one of their trains and ships it to the Gulf Coast.
Forget about comparing boe/d. Cash flow per share is what drives oil and gas companies higher. For Strathcona, WCS keeps going up. The WCS WTI differential will improve when the TMX expansion inevitably opens up.
Compare that to PIPE. Approximately 59% of PIPE's production is sellling at only $15.66 / boe. Another 12% of production is NGLs which bring in about 40% as much cash flow compared to a barrel of WCS. The assets that PIPE brings to the table in this transaction are a joke. Strathcona must be desperate for a new and reliable source of condensate. This condensate will allow SRL to continue to expand their heavy oil production. That is where the money is.
PIPE shareholders need to wake up. Hopefully Strathcona does not change their mind. This deal is the best long term solution for PIPE.