GREY:VFGGF - Post by User
Post by
benbolaon Aug 15, 2013 10:51pm
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Post# 21675105
2014/15 is looking very good
2014/15 is looking very goodThe 2013 boepd numbers are disappointing, but the big news in today's announcement is the future production context:
1. The decline rates on the new wells are falling dramatically, significantly extending the lifespan of each well.
2. The cost of the new wells has been cut by ~25%, and there are efforts to reduce the costs even further.
Translation: the medium and long-term picture is EXCELLENT. If the lifespan of a well doubles, then there will be more sites operating concurrently, even if the rate of drilling new sites remains constant (which it won't). Reduced cost-per-site, with perhaps double the volume of oil produced. With a pretty sizeable reserve base which could grow in the future.
Needless to say, the more oil produced, the greater the cash flow. The greater the cash flow, the more new sites can be drilled. And so on, upwards.
Lots of debt? Yeah, when you don't factor in the business model going forward. The risk here is not the debt -- it's the ability to execute to the model. If they execute, the debt is nowhere near as big of an issue as some are making it out to be.
JMHO.