Conference call The UK phone link was late (dead at 11:58), so I missed the opening remarks, and the webcast link was added to site some 20 minutes late.
My key takeouts from the call:
Stella production based on 2 ‘heavily chocked wells’ looks very encouraging. If I interpret the numbers correctly, 1,700 barrels oil per day average and 10 MMscf/d gas then the oil to gas ratio is considerably higher than the nominal 50:50 ratio used to date. These numbers represent a 90:10 ratio. I do not expect that to be the plateau ratio but I’ve argued before that if the First Energy estimate uses 50:50 it is a significant undervaluation of near term cash flows from Stella.
In Q&A, BMO asked a couple of good questions
First, on possible additions to the field portfolio around the Stella hub. Les dodged this with a long winded reference to the development of ‘internal’ assets before finally coming round to what he knew was the point of the question. He used the priority of paying down debt to suggest near hub acquisitions are not on the agenda. Nonsense! If Stella production rates and oil ratios are above nominal forecasts then the cash would be available for acquisitions. This will definitely be on Delek’s agenda.
Second, on analysts’ expectations of 2P upgrades to Stella. Les ignored this completely, unless he was attempting to address it in his long winded answer to the first question, but I heard nothing on 2P Stella reserves.
I was peeved by the closing remarks on no questions from the phones. It wasn't an option to me. Good job they are in the oil business and not IT.
All in all, the update was encouraging and the prospects look good. It’s obvious why Delek want Ithaca.
Londoner7