OTCQX:GXOCF - Post by User
Post by
perdikaoilgason Jun 25, 2016 7:10am
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Post# 24997999
Debt and 100,000 per boepd and the Zargon (ZAR) study case
Debt and 100,000 per boepd and the Zargon (ZAR) study caseAt $7.50 per share, GXO is very richly valued at $100,000 per boepd.
GXO has also a considerable amount of debt. GXO is not debt-free like Yoho Resources (YO) to deserve this irrational premium.
And there is also the Zargon case. This is a case study for those who want to invest in a secondary recovery (waterflood) or a tertiary recovery project. You can never know how the reservoir will respond to the CO2 injection.
Zargon Oil (ZAR) has faced a lot of problems with its own recovery project.
ZAR's ASP Little Bow project is in South Alberta and close to GXO's one.
ZAR's recovery project has low productivity and its productivity is well below the initial projetions and expectations. Check ZAR's news from 2014 and 2015.
And ZAR is now up for sale because of the debt it incurred to complete this recovery project, see the news.
All these reasons make me stay far from GXO. If GXO drops at $3, I might buy it after comparing its valuation to the other junior producers. Otherwise, I will stay with YO.