My responseI think you probably realise it will not be easy for AXL to regain the respect of the market.(I fully realised that) They are fully valued at these levels,( I disagree it is not fully valued at these value thats why I still own the stock)so will have to build value through the drill bit. ( I agree, they have to drill to increase value and that is the biggest single risk if they hit dry holes but I think this team is fully aware of their land position and the Cardium is a low risk jurisdiction)But the debt will rise quickly, as capex will exceed cash flow by about 2:1 this year. ( of course the minute they finish a well Capex will exceed cashflow right after it is drilled and completed but these wells have a 12 to 14 months payback therefore I believe Capex will exceed Cashflow only for the first 14 months after that they are cashflow positive and I mean in a big way).They cannot afford any slipups. ( I agree they cannot afford slipups but the only fly in the ointment can be poor drilling results but their records lately has been 100% success and some of their worst results in the past have been 96 % success so I pretty confident,)
And when you look at their cardium land base, their land is scattered in small parcels on the fringes of the major cardium fields. ( Owning a lot of land does not mean you own a lot of oil, to me scattered land sometimes means they knew through good geological approaches that some land had more value and more chances of producing therefore went after very specific areas and so far they have proven to be right. I have seen producers going in certain areas and buying up land just to make sure they are in the play but were very poor at finding oil. Finding oil is the key here and having a surgical approach is better than a hand grenade.) That leads to higher costs, and would probably function better in the hands of a bigger player with more contiguous land accumulations.(I am happy not to sale to bigger players, the strategies are working fine right now, we have a great team, I will vote for status quo right now.)
I hope you do well, but it will be a tough one for sure.
Read more at https://www.stockhouse.com/companies/bullboard/t.axl/anderson-energy-ltd#2IiQDxsYKiqDPHhW.99
Just my way of seeing things right now and I truly appreciate your views as well.
Regards,
Fearlessgg