RE: RE: RE: RE: Interesting approach
Thanks MTP.
I agree that the Q1 results could have been better, and quite a few others will be impacted since it was not such a great winter season for drilling. OIP must have executed extremely well to achieve what they did over the past year, so it is amazing that WFE was able to snag them for such a low valuation.
There is some profit taking from the sector but with oil at current prices then hopefully the correction will be short term. These complex deals will probably take a few weeks since management will need to go explain the deal and the implications. The new update presentation on the WFE website gets into some of the details and is definitely worth a look. It will be interesting to see WFE provide new guidance and an update on their capital budget for 2011.
I would not be averse to a takeover but it would be best to defer until they get a better valuation for their recoverable resource. The extra cash flow should accelerate market confidence since they will have many more wells to help prove out their plays. WFE is so tightly held that it will need to be a friendly.
WFE may need to play with hot polymer flooding or perhaps a different innovative method to demonstrate that they can increase resource recovery to 20% since that would help get us a better NPV valuation. They might want to look at SAGD operators for some ideas on how to increase recovery on the oil in place, but not knowing the reservoir characteristics these may not be pertintent.
Looking forward to a SP turnaround in the next several weeks.
dmacd