GREY:LSTMF - Post by User
Comment by
JohnDDon Jun 22, 2016 9:18pm
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Post# 24989497
RE:Some Posters Preface Survival Based On Financing_From Who?
RE:Some Posters Preface Survival Based On Financing_From Who? when2buy said: 6) Asset Valuation - "They have more than enough assets to cover debt" - Wrong... At the peak of recent valuation (June 2014 - $107 WTI), LTS traded at $89.5K PPFB. Assuming they could even achieve PWT metrics on the Bakken (90+% liquids as per PWT lands sold), the metrics would be...
Bakken - 9.5K boepd * 71.4K = $678.3M
Cardium - 14.7K boepd * 55K (52% liquids) = $808.5M
Swan Hills/BC - 2.2K * $60K (60% liquids) = $132M
Total Mark-to-Market Valuation on complete liquidation = $1.62B"
Reasoanable analysis when2 buy. One other metric to consider in the Pennwest sale is the $18.40/boe. If we apply this number to the LTS reserves at year end and apply a 25% discount factor recognizing that LTS is now around 66% gas we get the following valuation:
142 million boe (2P reserves at Dec 31, 15)* $18.40*.75 (discount factor) = $1.96 billion - round up to $2 billion. That results in a $2/share valuation.
I would add that LTS has a lot of undeveloped land not included in the reserves numbers that has some value to a buyer with a long term horizon.
This is simpy another reference point, whether LTS could actually get a firms or firms to pay anything close to this price when they are in such a weak negotiating position is another story.
Even if this valuation is high and you applied an additional 50% discount, you would think it would still provide sufficient security for $450 - 500 million of 1st lien debt to ride out this storm and allow them to sell when prices are stronger in say 6 months +. That said, no mention of alternative 1st lien debt in the last release.
Not sure how this will play out. Not matter,being a shareholder in this company has been a very unpleasant and painful experience.