EXPM:EGRGF - Post by User
Post by
CaptainBigDaddyon Dec 12, 2014 7:25pm
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Post# 23226388
This company is a gift at this price
This company is a gift at this price
Just some basic math here -- and why I am buying more as this continues to drop:
This company had $69.5 CND cash on hand at the 3nd of the 3rd quarter; no debt; and production from established US fields of 1900 BOE per day (decline rate on Hardeman 12%, don't know about Salt Flat, but guess 20%).
Their 3rd quarter statement said they were finishing up drilling 2 wells, both at Hardeman -- with results for the wells available in November....Hardeman is vertical wells, shallow (and cheap)-- but aside from these two wells they were not drilling anything else. So I assume these drills maintain existing 1900 BOE per day production -- and no further drills are planned anywhere else at this point.
At the end of the 3rd quarter - when WTI price was $91 per barrell - they had $7.5 million in UNREAZLIED HEDGE GAINS. God know what this number is now - with WTI at $60.
They are going to pay out $3 million in dividends on December 23. This will drop their cash to $65 million.
At this point, they should just run off their 1900 BOE production from Salt Flat and Hardeman - let it decline by 20% per annum - put no further CAPEX into these fields.
They have 34 million shares outstanding.
So looking at this - $65 million cash + $10 million unrealized hedge gains ballpark - is $75 million. This is bascially cash on hand...liquid.. is $75 million.
Their share price today is $2.85. 2.85 X 34 million = $97 million.
subtract the $75 million from the $97 million = $22 million. This puts a present value on their 1900 BOE production - US fields - low decline - at $22 million or $11, 500 per flowing BOE per day.
Remember, they paid $27 million alone - or $85,000 per flowing BOE per day -- for Hardeman a little over 1 year ago - or $27 million for 300 BOE per day of production. They thought then they got a fair price....1 year ago....
Now the entire company - backing out the cash on hand and unrealized hedge gains - goes for $22 million for 1900 BOE per day of low decline production -- less than what they paid for 300 BOE per day production about 1 year ago..
The current price of oil is being manipulated with the Saudis/Kuwaitis showing everyone that they can absorb huge monetary losses on the sale of oil better than everyone else....and cause huge pain to everyone else -- i.e. IRAN and RUSSIA -- when they want to cause pain.
But the drop in oil from $100 per barrel to $60 per barrel in 4 months has been deliberately orchestrated - and calculated. Are the Saudi's going to give away money/oil forever? Just to cause Iran and Russia further harm? Economic warfare? There has to be an end game to this...and the end game will be with the price of oil going higher at some point.....All wars eventually end.
Saudis are now selling 6 million barrels a day at $60 per barrel = $360 million per day income when they could easlily be sellling 5 million barrels a day at $100 per barrel = $500 million per day income. This costs them big money - but they already have a lot of money. It t really costs IRAN and RUSSIA big money -- and they do not have so much....
Eagle should let Hardeman and Sand Flat fields simplyt run off at this point - no further CAPEX spent - and use their cash on hand and cash from the hedge book gains to buy further existing low decline production in Canada.....and put no CAPEX into that existing Canadian production either at just let that run off.
Maintain no debt -- and use the cash flow from the income to pay a reduced but sustainable dividend...and wait for the price of oil to go up in the years to come.
This company is a gift at this price. A long term investment....especially if they do it right.