GREY:LSTMF - Post by User
Comment by
JohnDDon Oct 01, 2014 11:53am
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Post# 22986839
RE:Earnings are likely to disappoint
RE:Earnings are likely to disappoint
Cadillaccoupe said: "They'll likely only produce 35-36 thousand barrels of oil and capex will come in over budget at 600 million."
No doubt the company has struggled with execution, but i think the scenario you paint is beyond a worst case scenario - at least on the capex front.
The company has stated that they will be around $500 million in capex this year give or take 5% and will have a sustainabilty ratio less than 100%. I see no scenario that they would ever hit anything close to $600 million this year. They even cut spending on the additional swan hills wells - which from a management oversight was prudent.
With respect to this quarter's production, that could surely dissappoint and that could be what is concerning the market. They cranked up their corporate decline rate from the high twenties to 30% after the latest disspoistion so that likely didn't help. Plus the asset sale is effective begining of the Q so that is a negative for the Q - if I recall correctly.
The uncertainity with Swan Hills is also not helping. Will be interesting to see what the technical review concludes, but my assumption is they likely they didn't drill and complete the wells properly - rather than an asset/reservoir quality issue? The question for me will be okay what action have you or are you taking to make sure that doesn't happend again. Rarely do we get clear answers on this front.