Additional upside and an overhangOne of the next steps is for LXE to drill their oil wells differently. The company was not sure how big the oil well window was and drilled their oil wells more like gas wells. Now they will optimize wells in the oil window by adding more fracs and more tons which will show much higher deliverability and better EUR's.
For instance an offset to the 8-22 light oil well has been drilled and the company is going with 41 frac stages versus 28 frac stages used in previous wells. If results are consistent with other players in area this will result in even better production and economics.
Another big source of future upside is north of the river where the company owns considerable acreage. LXE believes the oil window extends to these lands as well and early testing is encouraging but drilling will be needed to confirm this.
Overhang?
The company should exit the year with a $35 million run rate cash flow assuming competion of a 6 well drilling program. They are also trying to buy some adjacent land from a major as well and this will not be cheap.
So I believe the company should raise money to aggressively go after the current opportunities in front of them.
Every dealer on the street is currently pitching LXE to raise money.. It will be oversubscribed when it happems but can put a damper on the stock upside for now.
As a newcomer to this board I have been catching up reading the other posts. It seems to me that George98 is a rearview mirror type investor who does not grasp the long term potential for this company. For example will the company has focused on the Lower Turbidite and the Upper Montney,but it has identified 3 other Middle and Lower Montney zones that may hold significant long term value. They are not currently planning to drill these areas in 2017 but they would be very interesting to a potential company looking to acquire LXE.