GREY:DPGYF - Post by User
Comment by
zagorskon Mar 24, 2007 12:03am
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Post# 12481160
RE: What the DEEvil is going on?
RE: What the DEEvil is going on?
I believe the reason for the decline in production was because they sold some non-core assets and used the proceeds to reduce debt.
DEE is an excellent speculation at these price levels. The Gigstone and Bigfoot assets are premium assets and they are partnered with a major at Bigfoot.
DEE has spent $90 million at Bigfoot mostly on infrasructure in order to be able to handle increased production when demand strengthens. In the meantime don't expect too much action from Bigfoot. Their 2007 CAPEX will be reduced and most of it will go towards drilling for OIL since the demand for gas is not their for now.
DEE is now an attractive value play and as such may take a while to pay off. The metrics with respect to Book Value, Net Asset Value and Cash Flow are compelling. DEE has also hedged about 50% of its gas production through March of 2008 with a floor of $9.00.
I look for some recovery from these prices in the near term but I don't expect a major move until demand for gas picks up again.