Land PositionIs anyone else concerned that they may run out of drilling locations in a few years? They have net 65 locations at Willisden Green and West Pembina. If they use 12-15 per year thats only 4 years of inventory. As their production ramps up they will need to drill more hence shortening the inventory life. One option that I saw was Tournament Exploration. They are a private co that is drilling at Wilisden Green and seems open to a transaction or farm in. Hopefully they do a deal with someone like this or find a larger player like Taqa and get a farm out done like Yangarra.
My other question is whether the 46 million dollar plan for 2014 includes the spending that they have already done on the winter drilling program? If not this may strain the budget.
With gas prices being strong I wonder if their existing Edmonton Sands production is economic? This would give them a minature Pine Cliff Energy within the framework of a Cardium growth company. Which is exciting.
I was looking at the debenture prospectuses and at the companies option they can be converted for shares when they mature. So if they can get the share price up within the next two years they could convert the first debenture with lower dilution. Either way neither bond will break the company.
Anderson is a strong stealth way to play a recovery in gas prices. You are buying gas production for way lower metrics then you would be able to in more popular, resource based companies.
Another advantage of Anderson, and one that makes them a possible takeover target is that they own all their own infrastructure. Bellatrix just announced that 3rd party constraints would limit their production. A buyer of Anderson would be able to route their production through Andersons existing facilites to capture efficincies within the WG field.
I think if you can give any creditability to the targets put out by the company, and I think it is fair to do so, then it is excellent value. 3700 BOE/D valued at 50,000, which is below market value, gives you 185,000,000. Even after backing out the debentures this still leaves a value of 55 cents per share.
Now that I'm a shareholder the things I'll be looking at going forward will be...
1) Well results, are the long reach wells hitting performance targets
2 )Production mix, are we getting more liquid
3) Debt, is it under control (this will just be bank debt, not bank debt+ debentures)
4) Operational Costs, are they trending down
5) Land acquistion, are they able to replace the inventory that they are drilling
6) Operation performance, are they hitting targets
7) Netbacks, are they increasing as they unload the shallow gas and focus on the Cardium
If they are able to do all these things I'll stay involved and look to add because these show that their is major upside either as an independent company or as part of an acquisiton.