RE:Q2 report canne wrote: the quarterly reports seem to show continued deterioration in the performance of the company. A $50 million dollar loss for the quarter and $70 million for the year are pretty grim statistics when you have $709 million in debt and your assets are decreasing by the month. The say they are going to drill 12 wells at Redwater and are planning 3 wells at Edson - trying to keep production from slipping too much I guess. Its interesting that it is a surplus of oil and gas that is causing all the problems for the industry yet everyone is trying to produce more, - if one is losing money, I would think losing less is better than losing more...
The BIG issue with Long Run is the DEBT!
They stated on the Q2 report that the “Net Debt” had been reduced by $30.4m.
That is true but misleading. The Bank Debt actually went up $14.2m to $625,934m. The “improvement” was in the “Accounts Payable/Receivable”.
Basically to date they have done very little if anything to effectively address their DEBT issue.
Their “Strategy” seems to be “Substantially Higher Commodity Prices” will save them.
The Oil and NG prices will improve “eventually” but quite possibly not soon enough to “Save” Long Run.
On the 29 July Investor Update on p. 4 they state
“P+P Reserves NPV (BT10%): $1.64 billion” on 31 Dec 2014 which looks good but is also misleading.
This was true on 31 Dec 2014 based on the “Forward Strip Prices” then. The “Current Forward Strip Prices” used to value reserves are Substantially Less!
If there is not a Substantial Improvement in the “Commodity Prices” and the “Forward Strip Prices” by 31 Dec 2015 Long Run (and many other companies) will be forced to book “Asset Write Downs”. It will be UGLY!!
I have a SMALL (fortunately) position in the Debentures (LRE.DB) that is currently a bit underwater.
In my “opinion” due to the above putting any New Money in LRE or LRE.DB is a bit like buying a Lottery Ticket.
If you like to Gamble go for it, you “Could” win big, but don’t Bet More Than You Can Afford To Lose! The Current Odds Don’t Look Good.
As Always, Do Your Own Due Diligence; It’s Your Money !!