GREY:CNKEF - Post by User
Comment by
stockfyon Aug 19, 2017 3:13am
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Post# 26599103
RE: Value Digger from SA comments on CKE's Q2 2017
RE: Value Digger from SA comments on CKE's Q2 2017Miner1967 wrote: 
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Short & Stocky,Q2 2017 was "as expected" given that they didn't drill any new wells in Q2. I was glad to see them reaffirm the original guidance with respect to exit production in December 2017 AND continued reduction on the production cost per boe by year end. I was also pleasantly surprised to notice that:
- The IP-90 production rate for the majority of CKE's Montney wells (5-6 wells out of 9 Montney wells to-date) was the same or higher than the IP-30 one. This is NOT an everyday thing given that the IP-90s for the Montney peers are usually lower than the IP-30s.
- CKE will double the compressor capacity by Dec 2017, which implies that strong production growth will continue in 2018. The cash for this production growth in 2018 will come from the operating Cash Flow and the reserves-based credit facility that will definitely be significantly increased during the next determination thanks to the 4 new wells currently being drilled.
On that front, it helps that their existing 9 Montney wells have low production decline rates to-date.
After all, at C$900 per Montney acre, CKE remains absurdly cheap. Even the indebted Montney firms like PONY, DEE, SRX, BIR etc. carry DOUBLE (or more) valuation per Montney acre.
In Q4 2017, CKE's production growth will become obvious to the most novice investor.
I'm also bullish on natural gas. Inventories will hardly reach 3,700 TCF by late October 2017, so they will be at the same levels (or under) the 5 year average.
Therefore, I expect the perfect storm to the upside to occur in Q4 2017 and Q1 2018. Rising natural gas price will be coupled with CKE's strong production growth.
thanks for this, Miner. I missed it.