RE: Quarterly Results Out I think all is well, and just that a couple things are causing some confusion...
First, they sold ~200 boe/day (20% of total! so 'flat' means that was replaced) of production as of Dec 1, 2012 and second, they mix the use of 'average production' for a period and target 'exit rate' of production...
So, for the Sept'12 qtr, production averaged 980 boe/d, then when they announced selling ~200 boe/day in December, they said target was exit Dec at 900-1000. Which means at the high end, they replaced the sold production. Keep in mind, we can assume the production they sold was from mature wells, as in LVL's older wells that have already declined significantly given the high $/flowing barrell ($125k/flowing boe) they received in the asset sale. This implies that the remaining 800 boe of existing production was from newer wells, and hence would still be in the steeper part of their normal decline curve (ie, a headwind to replace as new wells come online). You can see in the April presentation on their website, it stated they were at 800 boe/day of production but still kept the aggressive 1200 target by end of June - likely since they have so many wells drilling and coming online in that period. But you can imagine any slight delay in wells cleaning up or drilling schedule and #s can be off by a couple months. Also, much of this is out of their control since they are not the operators. This is really more of a delay than a real reduction in guidance; the 1200 is still on the table, just resetting expections that they can't be sure 6/30 is the date.
What's important here is the value of these wells and not a shift of 30-60days in production tgts....The Breitburn sale is a significant data point as although it is only 7 net wells to LVL, it covered 16 gross wells, and many more counting other non-Lynden, but CrownRock wells. Since this is a resource play, we can judge from this data set what the wells are worth on average....7 wells for $25M comes to $3.5M/well sale price....and as I noted above, these must be mature wells given the price paid for production, so that means Lynden has already received a significant portion of its costs or possibly been paid back completely from production on these wells. Assuming a range of $0 revenues to full payback ($2.1M costs), gives a range of $1.4-$3.5M net profit after costs per well...so lets use the midpoint of $2.5M as a NPV of each well.
For WestMartin there is a potential of 66 net locations and WindFarms 26 net locations = 92 total, then as of 12/31/12 the had 17.6 complete and sold 7 so that leaves 67 net future locations.....
67 future locations @ $2.5M = $167M NPV
+ production of 1000 boe/day @ $75k/flowing bbl (assume still declining so < Breitburn sale at $125k/) = $75M
= ($167M + $75M - $24M debt) / 145M shares
== $1.50/share -- just for WindFarms and West Martin!
The core above is solid.....
Then you have 60 potential net locations at Tubb I haven't even included....call it somewhere between $1.25M-$2.5M/location NPV
And, the big kicker/option we all know and hope to love some day, 30k+ acres at Mitchell Ranch that could be worth multiple $s/share as it gets developed....