RE:RE:PSH's North Dakota deal at US$100K/boepd and ZAR's ND assetsstockfy wrote: A couple of new posters showed up to this board suddenly.....Zero presence before. They ignore two facts that have brought ZAR at 4 cents alleging that ZAR will stay at 4-5 cents until December 2019:
WCS crash in October and November
Tax loss selling.
None of these reasons will exist in January. Actually, WCS has significantly recovered lately.
And the North Dakota deal could push ZAR significantly higher than 10 cents.
stockfy wrote: WCS has recovered lately and exceeded C$50 last Friday. With the OPEC and Notley's cuts, it will at least stabilize here or it will keep rising from here in early 2019. See the prices at psac.ca
Back in the first nine months of 2017, WCS was ranging at C$45 - C$49, so WCS has returned where it was in 2017 when ZAR was generating significant operating cash flow. Read ZAR's reports of 2017 filed on Sedar.
North Dakota does not face any bottlenecks issues, so ZAR sells its oil from its ND assets without problems at USD prices.
Thanks to these two facts about WCS and North Dakota oil prices,
ZAR can sell a couple of assets in 2019 (its North Dakota asset is one of them) and push its price significantly higher than 10 cents by December 2019 when the debentures will be converted into shares, according to the terms.
In this case, the debenture holders will receive much less shares than they will receive if they convert now at 10 cents. To get an idea about how much money ZAR can receive from its ND assets, see the recent ND deal from PSH.
Petroshale (PSH) acquired a few weeks ago light-oil weighted properties (1,900 net acres) in North Dakota with 550 boepd (light oil and liquids) for US$55 million, so it paid US$100,000 per boepd and US$6 per boe of Proved reserves.
The decline rate for PSH's acquired assets is 30% (!!!) in the first year and 20% (!!) in the second year.
See all these facts below:
https://globenewswire.com/news-release/2018/07/12/1536514/0/en/PetroShale-Announces-Strategic-Acquisition-40-Million-Bought-Deal-Financing-Concurrent-Private-Placement-and-Operations-Update.html
So ZAR can receive at least US$50,000 per boepd for its low-decline oily assets in North Dakota in 2019.
This means CAD$65,000 per boepd or CAD$26 million.
This sale alone in 2019 will push ZAR's stock significantly higher than 10 cents.
Lets clear up a couple of things. WCS is a heavy grade of crude, priced at Hardisty Alberta. Zargon is not a heavy oil producer, so WCS has exactly nothing to do with the price Zargon receives for its production.
WTI is a light, sweet grade of crude. priced at Cushing Oklahoma. WTI price, less transportation cost from Alberta to Cushing, is more representative of the price Zargon can expect going forward.
Admittedly differentials reflect market as well as technical factors. In that respect the current WCS/WTI price differential (just for clarification) is too low. By that I mean that the quality differential (WCS is a heavy, sour blend; WTI is a light sweet blend) plus the transportation cost (WCS is priced at Hardisty; WTI is priced at Cushing) you get something more like $15-$20 not the current $10.
As I have said elsewhere, I don't care how many shares I receive. Ideally, I don't want any shares, but if I must take them I want them at a price that gives me a snowball's change of recovering as much of my debenture face value plus interest .. period. If I wanted to have a capital gain play, I would have bought common shares, not debentures. If the common share holders manage to grow their investment, I'm fine with that. My interests are different than the interests of the common shareholder's.