What to do
If the BOD does nothing they could see a hostile take out at a cheap price, $10 - $12. That would not be pleasant for many shareholders who have been around for a few years - including some BOD members.
From the Oct presentation, the Company says they have 2,200 drilling locations. Based on this year's planned drilling of 110 wells, it will take 20 years to drill up this entire inventory - that's right 20 YEARS.
Additionally, they have 1 million acres of land potential. How many years will it take to develop those lands? I am going to assume 10 years. So in total, it will take over 30 years, to develop the entire land inventory.
As we all know, the company has a huge amount of debt that needs to be reduced.
If we look at Bonterra Energy, they produce about a 1/4 (~12,500 boe/d - 30% gas) of what LTS produces, yet they have a Market cap of $1,750k - roughly $250k higher than LTS. This is NUTS. The big difference is that Bonterra has net debt of $167k.
To me LTS should be aggressively selling some of their lands. I would even be open to them selling some of their Cardium holdings, East Pembina and Garrington. I say that because these are likely valuable properties that others are willing to pay up, the company has never drilled there to my knowledge and it would help balance out our production by starting to focus more of our drilling to other areas like Swan Hills. At 20,600 boe/d, Cardium represents about 45% of the total production of 46,000 boe/d. Swan hills has a high oil content around 97% oil from the initial numbers that I have seen - better than the 30% gas we are seeing in the Cardium..
I think it would be huge plus if we can reduce our debt materially.
If they don't want to sell any of the Cardium properties, then unload some of the Durvenay? Ther e is lots to choose from. I know it will hurt to sell some of these properties at distressed prices, but what is the alternative, get taken over in a hostile bid - or alhough shareholders to continue to suffer at these low prices. Reduces our flexibility when the price continues to decline.
John