Over-promise, under-deliver From the January report;
"Due to the operational issues and drilling results achieved in the fourth quarter and the resulting exit rate, Parallel has revised its expected production levels for 2012. Parallel is now anticipating production net to Parallel to average between 4,200 and 4,500 boe/day (as compared to its original forecast of 4,600 to 4,800 boe/day) with 2012 exit production rate forecasted to be between 4,500 to 4,700 boe/day net to Parallel."
Taking an average of 4,600 boe/day for their 59% ownership of the field at that time, that would equate to an exit rate of 7800 boe/day. 6 months later, they have reduced that down to 7200 boe/day. Cutting the exit rate every 6 months could be described as over-promising and under-delivering.
One big issue that no one seems to want to talk about is the fact that they only have about 3 years worth of drilling locations left, according to their numbers. While their capex would drop substantially when they cannot drill any more new wells, the production would also begin to fall as the reserves get depleted. It will then be a case of whether investors would get their investment back before the field runs down to the point where all of the revenue is eaten up by overhead.
Yes, PLT could buy more assets, but with a weak share price and too much debt already, it would be difficult to do so without diluting the existing shareholders.
I know people like NorthSun want to stop anyone from discussing the merits of PLT as an investment, but I am trying to figure out if this might be a worthy place to put some of my spare cash. The only way to do that is to initiate some detailed discussion on the pros and cons. I thank anyone who takes the time to take the discussion seriously.