RE:Whats Up??
I am on the fence with this one, but leaning to a "No Thanks". I didn't put all that much money into PRY (about $5k) back at 0.70 and sold at around 0.60 when it looked like this was another junior in trouble. Bonjovi - at that time I believe you were just getting worried. I read one of your posts and decided not to waste any more time on PRY. Given my small position I didn't bother looking into the company at any depth.
What I have gleamed from this message board and the analysts is the following:
1) Without waterflooding, these are some of the highest decline wells in the patch.
2) With waterflooding, we have huge expenses (water wells, trucking/piping in water) and uncertain results.
3) PRY is a one shot deal. Either the play works, or it doesn't. There's no other field to draw cash flow from.
4) I think scotiabank's "No Growth, No Dividend, No Love" report summed everything up a couple months ago.
So the my questions are:
What is a high cost/high decline/so-far-unproven-field worth? There's alot of higher quality property on sale right now, just talk to any RPL investor. Everyone is unloading "non-core" assets. That's why I'm not terribly confident of a quick deal. STP put itself up for sale last month.
Second quarter production was 3,615 boe per day, Third quarter was 2,804 boe per , fourth quarter 2,580 boepd. Assuming this thing drops another 300-400 bpd for the next quarter, when does PRY start losing money? Given the declines, will they generating enough free cash flow to fund capex to at least hold things steady? If I spend $1.00, do I get $1.00 plus change of oil out?
..and a warning to those TA folks comparing this with STP, STP SAGD production was down last month due to maintenance. They have a 40 year reserve life if they ever manage to get the ramp-up straightened out before they run out of cash.
Also, I'm not terribly confident Wade & Co. know what they are doing. Why throw away valuable capital on a share buy back? Why throw away your own money buying back shares? Obviously, back then they believed there was value in the company. As of today, the SP indicates they are wrong. If they start buying tomorrow, will they finally be right?
I may buy this lotto ticket if this hits $0.15. The safer thing may be to wait for the next update and see if things have stabilized.
I will say that ZRE and CPD are not ulcer inducing microcaps - I can sleep with a couple hundred thousand parked in them. Also, when you lose your money in Vegas, at least you get a free drink and maybe a hot go-go dancer to leer at. Here we get a lousy statement and that's it.