CKE (~10% cond), PPY (4% cond), SRX (10% condensate)Let's see some more data:
CKE's Montney wells cost $3.7 million versus $4.1 million for SRX and $4.55 million for PPY. Both these companies have achieved lower costs, but CKE has even lower, fact:
" Due to ongoing efficiencies, including faster drill times and completions, total budgeted well costs, including drilling, completions, and equipping costs, have decreased to $4.55 million per well from the previously budgeted amount of $4.8 million per well. "
More facts about their liquids volumes:
CKE's three recent Montney wells had 4%-12% liquids with high-priced Condensate being 100% of these liquids volumes.
Previous CKE's Montney wells had from 9% to 16% liquids with high-priced Condensate being 70% of these liquids volumes, see presentation.
This excerpt is from PPY's annual report, PPY has just 8% liquids with 4% condensate and 4% NGLs:
" Based on field estimates, December 2016 daily production volumes averaged over 240 MMcfe/d (40,000 boe/d) while fourth quarter 2016 daily production volumes averaged approximately 218.7 MMcfe/d (36,455 boe/d). Liquids production during the fourth quarter of 2016 averaged approximately 8% (2,990 bbls/d) of production volumes, based on field estimates. Condensate comprised approximately 50% of liquids volumes with butane making up approximately 30% and propane making up the balance at approximately 20%, all based on field estimates. "
In the first nine months of 2016, PPY produced just 5% liquids with high-priced Condensate being 0% and NGLs being 100% out of the total liquids volumes:
| | | | | | | |
| | Daily production volumes | | | | | | |
| | | Natural gas (MMcf/d) | 129.3 | 88.6 | 46% | 106.0 | 89.4 | 19% |
| | | Natural gas liquids (bbls/d) | 1,189 | 760 | 56% | 1,013 | 896 | 13% |
| | | Total (MMcfe/d) | 136.4 | 93.1 | 46% | 112.0 | 94.8 | 18% |
| | | Total (boe/d) | 22,741 | 15,523 | 46% | 18,674 | 15,794 | 18% |
| | Realized commodity prices | | | | | | |
| | | Natural gas ($/Mcf) | 1.97 | 2.07 | (5%) | 1.56 | 2.27 | (31%) |
| | | Natural gas liquids ($/bbl) | 41.67 | 46.68 | (11%) | 40.18 | 45.18 | (11%) |
| | | Total ($/Mcfe) | 2.23 | 2.36 | (6%) | 1.84 | 2.57 | (28%) |
| | Operating netbacks ($/Mcfe) (6) | 1.74 | 1.09 | 60% | 1.50 | 1.33 | 13% |
SRX produced 17% liquids with high-priced Condensate being 10% and NGLs being 7%:
| Barrels of oil equivalent per day (6:1) | 13,320 | | 10,730 | | 13,219 | | 9,956 | |
| Gas production | | | | | | | | |
| | Thousand cubic feet per day | 66,173 | | 53,147 | | 65,478 | | 48,656 | |
| | Price (Cdn$ per Mcf) | 2.86 | | 1.78 | | 2.05 | | 2.39 | |
| Condensate production | | | | | | | | |
| | Barrels per day | 1,381 | | 1,072 | | 1,303 | | 997 | |
| | Price (Cdn$ per barrel) | 57.17 | | 47.90 | | 49.34 | | 50.78 | |
| NGL production | | | | | | | | |
| | Barrels per day | 910 | | 800 | | 1,003 | | 670 | |
| | Price (Cdn$ per barrel) | 18.64 | | 14.21 | | 12.51 | | 14.30 | |
| Oil production | | | | | | | | |
| | Barrels per day | - | | - | | - | | 179 | |
| | Price (Cdn$ per barrel) | - | | - | | - | | 50.84 | |
| Wells drilled (100% working interest) | 5.0 | | 4.0 | | 12.0 | | 10.0 | |
| Wells completed (100% working interest) | 5.0 | | 6.0 | | 10.0 | | 12.0 | |
So there is not one single thing that justifies the tremendous valuation gap on all fronts and key metrics between SRX-PPY and CKE.
I'm not bashing PPY or SRX by providing these facts. I'm not telling to their shareholders to sell them.
I'm just explaining that the valuation gap between them and CKE can't be justified and sooner or later will close.