Long Run Explor Ltd Ord WFREF

LRE Valuation

[bossu]

Just yesterday Bonterra Energy was acquiring in Pembina Cardium from a senior oil and gas producer 1800 BOE /d for $ 172 million at a cost of $ 95 500 /flowing boe.Proved reserves at $ 17,44 /boe and P+P at $ 13.19 boe. Decline rate at 7%. Earlier during the year Enerplus has sold 1900 boe /d at a price tag of $ 182 million for $ 95 700 /flowing boe. This give us a ball park figure of LRE valuation.So it means that bases on a price per flowing boe we could take just 50 % per flowing boe for LRE and using say $ 48000 per flowing boe (rock bottom price) and we could give a ball park figure of LRE valuation. Assuming projected 2014 production of 33000 boe at $ 48 000 per boe less $ 700 million debt and 193 million shares we have a share price of $ 4,58. The'' key'' to improve LRE SP would be to sell ''some' none core boe and reduced their debt accordingly. Difficult task for the management but not impossible and I think they will have to do so.We might have some ''clue''in the years 2014 financial results coming in a couple of weeks.

[bossu]

Another way to look at the actual share price and how ridiculous is the situation: The actual share price give about $ 28000 per flowing boe. Taking 2015 projected revised production at 33000 boe x $ 28000=$924 million less 700 million debt =$224 millions/193 million share=$ 1,16/share. So $ 28000 per flowing boe versus $ 95000 from recent transaction announced yesterday by Bonterra. So where is

[Sumcan2]

bossu, here is another way to look at it, I hope that it is fairly realistic. Also since Baytex got their debt covenants amended, chances are favorable that LRE may also get their's amended. The Bonterra transaction for 1800/ flowing boe consists of 86% oil and NG liquids and 14% NG. So I worked out a value for oil and one for NG. Lets say they based that deal on $109,000 / flowing barrel of

[bossu]

I like your ''guestimate'' and there are many others considerations of which we are not aware!!But taking your valuation and using the actual LRE SP ( $ 1.13 ) also give a very low price per flowing boe .In the coming months we will see many assets sale at discount and we are going to realize where LRE should stand on a flowing boe basis. But I am pretty sure Bankers are making

[JonCom]

We are all at the mercy of the market right now. Until WTI rebounds, it will be difficult for any company to clean their books up. All LRE can do in this environment is boost efficiency, try to lower operating costs, and strategize for how they will take a large chunk out of their debt when WTI rebounds. If WTI does not rebound, all these companies will be in big trouble (and so will my TFSA haha!

[sunnysidetnc]

I called the investor relations rep at LRE and asked some questions.  They feel their stock was oversold in the panic of the oil price decline, and feel that at a price of 1.12 a share , the stock is far undervalued.   Investors likely were frightened away and are coming back tentatively to names that are better known, or  are larger companies or have been in

[emmitt]

Thanks for sharing that info. Much appreciated. 

[Shlinker_]

Yes, sunny, good due diligence indeed. I knew all of that already, but still good to hear people call the company. I've been a holder for 4+ years and counting. It hasnt been a good ride. I just hope we see the likes of our true valuation before i retire. 10 years to go. Freedom 50. Cheers.

[tvstock]

They assume  115M of  Crocotta net debt last August, that is the main problem

[northwestcoast]

Sunnysidetnc, thanks for the postive post regarding your call to investor relations. Do you (or does anyone) know the date of the report due out in early March? Thank you.

[tvstock]

https://www.investcom.com/cgi-bin/nameindustry/earnings_ca.cgi?ID=121&string=More&exact=&ARC=yes&COM=&DA1= March 4 if Yahoo calendar is correct. Most canadain earnings dates can be found in this calendar. But be cautious there is no guarntee of the accuracy. Checking last year it's March 5, i.e. first Wednesday of March. And Mar 4 this year is also first Wenesday of

[tvstock]

Correction    https://www.investcom.com/ it's investcom calendar.  I got led into  this site via Yahoo and   that makes me think it's Yahoo calendar.

[sunnysidetnc]

It's this week that the report is out ( I seem to recall march 5) but will call again to confirm.  The LRE directors are indeed in a blackout for share purchases til then.