Second Wave Petroleum Inc SCSZF

RE: RE: Value Now

[nlr2]

Second Wave is basically a dead company now. The wildcard is Brookfield as I highly doubt they will let there investment evaporate. They could probably lean on somebody and sell the company but at this price that seems stupid, they could wait for a turnaround but this company is so cash strapped and has no control over the pace of the development so that seems unwise. The best strategy would be for Brookfield to arrange a combination with another company then backstop a financing to give the new entity some cash. Brookfield is big into Insignia which is gas weighted but is in good financial shape. Brookfield could combine the two, raise some money to clear up the debt then put the combined cashflow towards BHL wells and Cardium wells. If natural gas comes back then the company would be very well posistioned and until then it would have some oil weighted assets to work with. The issue when dealing with the massive declines in the BHL is to get the time from spud to production down from 120 to 30. SCS doesn't have enough resources to do this but the combined company could. Insignia would have 3 million in cash flow per quarter and SCS about 2 I believe. So together per quarter they could fund (4.9 million * 40%= 1.96 million) 2.5 net wells. The best part is when the weather is lousy at Judy Creek they could transition that money to the Insignia assets to help even out the production. Insignia would also bring lower declines so that it would be much easier for the company to grow. Its not a perfect solution clearly but it would be better then the current slide into the abyss. The combined company would also have some spare credit line room to work with if conditions warranted it.