Long Run Explor Ltd Ord WFREF

RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:LRE - Seeking Alpha

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There is some tricks here. Liquids = oil + NGLs  .  Probably they have good oils hedged but NGLs unhedged. 

But use last Q results oil production is 13071 bbl/d and NGL 3031 bbl/d, that still dosen't add up. ---- unless they decrese crude production drastically and switch to NGL.

Natural gas side  : last Q production is 112161 Mcf/day and they have till March 54000 Gk/day hedge. That is  consistent with 50% hedged in Q1.


One point worth mentioning is that  2014 Oct  to Dec they have 8150 bbl/d of oil hedged (they say 65% liquids hedged),  at very nice prices  and 12000 boe/d hedged on the natural gas side. That should secure a nice earnings report in March. 


This may be the reason why insiders are buying despite the drop in commodity prices (???). Hopefully they can generate good cashflows and pay down the bank debt aggressively .  Having a good quarter in hand may be the reason why management opt to retain 50% dividend instead of cutting it altogether in January.

Anyway if they did have a nice quarterly release, given the dim prospects market is giving  the stock, I expect a major rally after the quarterly results are out. Short squeeze similar to COS  (up 100%) is a possibility.


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Last but not least.  this is an easy takeover target for its relatively small size.Takeover is cheaper  than drilling .......... Liquid production of 13760 boed  @ firesale price of 60000 boe/d gives 825 million.  18000 boed of NG @ basement price of 15000 boed gives 270M .     825+270 =  1.1 billion EV approx .  Minus 700 million debt  give $2 /share. That should be the absolute bottom takeover price.

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For example ,  a big guy like CPG(whose SP has recover)  can issue 10%  new shares and take this one easily.  If the bankers want to eliminate some debt in the industry, they will surely pursuade these sort of  takeovers. A winning game for all 3 parties.

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Happy family day to all.