RE: Production ...The market understands full well. 300 bpd is before 51% royalty and taxes on current production. And with $71.46 bbl ave in Q4, operating netbacks were a pathetic $10.25 bbl - from that the company needs to pay it's bills. Netbacks on current production are, putting it mildly, lousy. That said, Cory Moruga has 15% royalty and 55% taxes, so relatively better terms. Nevertheless, they need a lot of bbls to make producing in Trinidad worthwhile - so Firecrown and Snowcap have to come in or this play is essentially pointless as a stand alone company.
2P NPV10 after tax is $14.1MM =
.18 fd. Add in ~$3MM in cash and their 16% carried interest in the $13MM drilling obligation by Parex and NAV is around
.25. At
.35, there's a ~40% premium built into a high risk spec play - difficult to swallow from my perspective, even with the knowledge that Firecrown is cased and logged.
If the Cory Moruga wells come in, upside could be substantial. If not, the shares drop below
.20, any potential evaporates and all you are left with is low value production that barely swaps 4 quarters for a dollar. If that happens, they may as well sell off the remaining carcass and call it quits.
Is the risk-reward sufficiently favorable to offset the potential to lose half one's money if the exploration is poor? Ordinarily, I'd say no. But Firecrown has been cased and there could be oil (gas is essentially worthless unless there is a lot of condensate - but even if there is, how do they produce the gas to recover the condensate - any sales lines around?)
If I knew more about the potential results from Firecrown/Snowcrown, I might throw a few shekels this way. But I'm not and so I look from the sidelines.