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Second Wave Petroleum Inc SCSZF



GREY:SCSZF - Post by User

Comment by skeksison Nov 17, 2012 3:20pm
270 Views
Post# 20613967

RE: CRESCENT pays $100,000+ per boepd

RE: CRESCENT pays $100,000+ per boepd

Generally it is easiest to just put people on ignore when they start name-calling.  I like SCS at this price, but it is clearly quite risky.  It is unclear to me how they will resolve their bank line issues - currently they are in violation of a working capital covenant (which was waved as of 9/30) - and all their debt is due within a year if they don't refinance. 

I was hoping they would  pay down debt this past quarter, but they are still spending. It seems like Brookfield is completely in charge here, both because they can veto any major asset sales and because they are higher up in the capital structure via the bridge loan. 

The production looks basically as expected to me - the wells are following their expected type curves with high initial declines and then lower stabilized rates.  That well that flowed out 100,000 barrels in 2.5 months sure looks nice, but the key to me is what is the ROI on drilling for the average well at todays oil pricing.

I am still holding, but I have a higer risk tolerance than most.  I do wish they would sell the company to someone with a lower cost of capital.

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