GREY:LSTMF - Post by User
Post by
JohnDDon Aug 25, 2013 7:51pm
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Post# 21696552
New webcast from Aug 14th presentation
New webcast from Aug 14th presentationhttps://www.petrobakken.com/investor-information/presentations-webcasts#webcasts
There is a new webcast up from a presentation that John Wright made at a conference in Denver on August 14th. Nothing new except for one thing.
John made a point of saying w/o being asked that their internal debt to cash flow target is 2:1 as compared to today where it in the 3:1 range. There is nothing new here except that in the past the issue was only addressed in response to questions in Quarterly CCs - this time he made it a point that this is an issue and we need to fix it. That was a positive sign for me.
John said they are going to do two things to fix the debt/CF ratio:
1) Grow production and generate cash flow. (and current high prices are helping)
2) Divest of non-core assets at premium prices.
They hope to achieve the 2:1 target over the next 18 - 36 months. I think the company knows full well they need to fix this debt problem and sooner than that timeline. That said, I do believe he will not budge if offers are below their internal threshold.
I think they should be willing to sell assets at below premium prices in order to strengthen the balance sheet. If we had a better balance sheet today, the company would be able to execute their NCIB to help support the price at these low levels. Sell assets at discount and turn around and buy back your own shares at an even larger discount. We have been here before.
What the company does or does not do with respect to Trioil will send an important message to the market about how serious they are about reducing debt. That said, I would be happy to see the company pick up at least a 1/4 of Trioil's 4,000 boe/d production from their shares and some creative solutions like a land swap and maybe throw in some cash from that $38.5 million divestiture.
John