Zargon Oil & Gas Ltd ZARFF

RE:RE:RE:RE:RE:ZAR's asset sales

[pablo87]

CH's average cost must be a lot higher than 43 cents.  He also owns $800,000 face value of debentures so he must feel its pretty safe.

But there is no question that an illiquid stock like this, the employee share purchase plane exerts downward pressure on the SP - even before doing a NCIB, they should stop the EPP (just give them cash).  Btw, if they decide to go private, a low SP works rather well. Which I'm not against as long as I get a nice premium from here (85 cents?).

I thought the Q3 was pretty good.  They showed growth and costs came down.

Basically they have 3 assets.

ND is a very good one, they haven't been developing it which is very unfortunate because if they did, it could show some real growth.  The recent sale was substantially above NPV10 which means others also think this area is undervalued. (PS NPV 10 on ND is $26M).

Little Bow ASP has been a dog but it has stabilized, costs have come down a little. If they could squeeze $7-10 of costs per barrel out of it (how, don't ask me - do a JV with Blackpearl?), it would become a lot more valuable due to the substantial reserves (all in costs including chem "capex" is around $50 now?).

the Canadian conventional has good netback but it is gassy and has lower RLI than the other 2. Its problematic that if it declines 12.5% per year, WTI has to go up by that much (at least) a year to maintain valuation - If they can get a good price for that, then they could invest in the other two while paying off the debbies.  Because lets face it, those reserves are being used to pay for sg&a and debbie interest right now. Its like using your savings to pay for your monthly expenses - eventually you run out of savings.

Its why I don't understand the other poster insisting that ND and Little Bow will be the ones to be sold.  Makes more sense to sell the one with the least RLI and use proceeds to invest in the other 2 while paying debt down.

GLTA, YMMV.