RE: RE: RE: RE: Conv Debenture - @ $1.70
I do not know for a fact that they will be spending an extra $40M in Q4.
They have increased their CAPEX by $40M. Their latest presentation
says they may drill 15 more net wells over the rest of the year. I think
these 15 wells were included in the original 75M CAPEX. It would be
nice to know how many more wells will be drilled now that we have
expanded the CAPEX to $115M.
The news release said only that the money would be used to reduce
debt and for general corporate purposes. However we know they have
expanded the CAPEX by $40M.
In any event, if they plan to drill extra wells, the year is already half over
and it will take them some time to plan the wells and contract the drilling
services. I cannot see the extra wells making much of a bulge in 2011
average production.
I do note that in the recent presentation that they expect to be 50% oily
in 2012. Being 50% oily, they think they would then be valued as a junior
oil producer rather than as a junior gas producer and hence be valued at
a higher multiple. The extra $40M should at least speed up this process.