Production numbers and new technical guy Based on the February 15th news release, TOC is currently producing approximately 600 boe/d with 97% oil and liquids. They had exited 2012 at approximately 500 boe/d with 97% oil and liquids. Based on their last financial report, Q3 2011 showed that production was 268 boe/d and they were getting approximately $51 per boe netback with oil prices averaging $91.18 per barrel in the quarter. I expect Q4 oil price to average between $90 to $95 per barrel (look at the oil price chart for Oct to Dec) but daily production to average approximately 460 to 500 boe per day with 97% oil and liquids - At end of Q3, production was 460 boe/d (97% oil & NGLs), Dec 7th news release put production at 520 boe/d (97% oil & NGLs) and they exited the year at 505 boe/d (97% oil & NGLs). So doing the math and accounting for declines, you should get Q4 production at approximately 460 to 500 boe/d (97% oil & NGLs).
After you do all the calculations, they could have profits of approximately $2 million for Q4. Now $2 million profit in a quarter for a company currently valued under $20 million is crazy especially when you look at the inventory they have. Based on Jennings June 13th 2011 report, they stated that the Lake Alma property
alone could be worth $12.06/share unrisked. We know some unsuccessful drilling has brought into question the valuation but I strongly believe the technical team of TOC didn't get the job done, hence "As well, the Company announces that Angus H. Jenkins, Vice President, Operations and Stephen D. Irish, Vice President, Land have left the Company" from the Dec 7th news release. Now check the Feb 15th news release, "Torquay is pleased to announce that Phil Besler has recently been hired as Vice President, Operations. Mr. Besler brings to Torquay over 34 years of drilling and completions experience in Canada and the northern US, most recently as Manager, Drilling and Completions for Legacy Oil+Gas Inc. Mr. Besler's vast range of drilling and completion experience covers all play types which Torquay is currently pursuing, in both conventional and unconventional reservoirs. Mr. Besler holds a Bachelor of Applied Science in Mechanical Engineering from the University of Waterloo. He is a member of APEGGA."
Mr Besler brings significant experience in the Drilling an Completions stage to TOC, an area where the company failed at last year. This guy coming from Legacy will make the difference for TOC. Just listen to comments of how people perceive the technical team at Legacy (they are considered one of the best team out there).
Given that the company is focusing on the drilling of its low risk conventional drilling inventories, they will have enough cash flows to build up a good size oil production and take advantage of the high oil prices. This company should be worth multiples more than it is today and market will wake up once they release some new production and cash flow numbers. Lake Alma is still worth a ton of money and this new technical guy should help them to realize that value in the future.