U pay C$80m & u get C$290m, LXE's & BBI's metrics Chinook (CKE) initiated a strategic review process last week. At C$0.51/share, CKE's Enterprise Value is just
C$80 million because it holds about C$25 million in cash proforma the recent Gold Creek asset disposition to RMP Energy (RMP).
This price of C$0.51 is a steal, because at C$0.51 per CKE share, you get:
i) 70% of Tournament Exploration whose Enterprise Value is estimated to be approximately C$200 million, given that Tournament produces 5,041 boepd (35% oil and liquids) and has 21.3 MMBoe of 2P reserves. Check CKE's news as of June 2016 to see Tournament's production and reserves after the deal with CKE. So CKE's 70% stake in Tournament ALONE is valued approximately C$140 million.
ii) The Montney assets in Birley/Umbach and Gold Creek with production of 2,700 boepd (19% oil and liquids) and 18.3 MMboe of 2P reserves (~21% oil and liquids). Check CKE's news as of June 2016 to confirm everything. And the value for these Montney assets is at least C$150 million, which is significantly less than today's key metrics for the production and reserves of CKE's offset operators in Birley (i.e. SRX, LXE etc.) and Gold Creek (i.e. CIOC, BBI, NVA etc.)
So at C$0.51/share, you pay C$80 million for CKE and you get a very conservative value of at least C$290 million (C$140 million + C$150 million).
And this value of C$290 million is a very conservative estimate because CKE's Montney assets were estimated at only C$150 million. But:
i) Leucrotta Exploration (LXE) is another debt-free Montney producer next to CKE in Birley/Umbach. At C$1.90/share, LXE's key metrics exceed C$70,000/boepd and C$15/boe of 2P Montney reserves (based on 3,300 boepd production capacity and 17.1 MMboe).
ii) Blackbird Energy (BBI) is another debt-free Montney firm next to CKE in Gold Creek. Although BBI is a very small junior producer with very small production, BBI's current enterprise value at C$0.32/share is approximately C$130 million because it holds C$28.5 million in cash pro-forma the deal with Stage Completions. So at C$0.32/share, BBI trades at approximately C$100,000/boepd and C$17/boe of 2P Montney reserves (based on 6.5 MMBoe of 2P Montney reserves).
iii) Riverstone Seneca fund increased its stake and won a majority stake in privately-held CIOC in December 2015. CIOC drills next to CKE in Gold Creek. Riverstone paid for this additional 12% stake more than C$70,000/boepd, see: