Spyglass Resources Corp SGLRF

Starting to look interesting?

[konzelmann]

Spyglass is starting to look pretty interesting at 52 week lows. I've been a holder of TBE because I know the value is there, I know it'll go to $2.25+. I sort of buy these things with the expectation that I get paid to wait and eventually the price does go up and I get a capital gain as the cherry on top. I'm starting to consider spyglass in the same sort of way. However, compared to TBE, there's a large gas weighting here and possibly that's the biggest issue. If they were more oil weighted, cashflow would be better, they could spend more on drilling, production would increase. But that's not what it is. So the concern I see is that to maintain a low payout ratio and the dividend, Spyglass isn't drilling enough and production seems to be in a downward sort of trend compared to last year and maybe the last couple of years? Which means it's not actually sustainable long-term. Still, at some point you'd figure this becomes a bit too cheap to pass up.. I think I did the math and came up with a flowing barrel valuation of around $34,000 per flowing barrel for Spyglass, which at this point is below TBE. Though, it should be below TBE, because TBE is probably safer, and much higher oil weighted. Still, the question that comes up in my mind and sticks is just if Spyglass can actually get production moving up year over year instead of continuing a downward death spiral that isn't sustainable.