Chinook Energy Inc. Common CNKEF

RE:RE:Valuations and Montney rates: LXE versus CKE

[Miner1967]

The $/boepd difference between these two can't be justified even if we accept trolls misinformation.

We are not talking about a just 20% or 30% gap here...

As for the exit production, I will stay with the 6,400 number as an already very positive one, I agree that it could be better though.

stockfy wrote:

stockfy wrote:   See LXE's latest Montney results below and compare them with CKE's. 

LXE's cost per Montney well for the new completion design is higher than CKE's $4.2 million.

Compare now LXE's valuation with CKE's valuation. Both are debt-free with about the same cash.

LXE (3,200 boepd with 73% natural gas) currently trades at $3,000/Montney acre, above $15/boe of 2P reserves and above $100,000/boepd.

CKE (75% natural gas) currently trades at under $1,000/Montney acre, under $2/boe of 2P and under $10,000/boepd based on the exit production guidance of 6,400 boepd.

If this is not irrational and tremendous valuation gap, I don't know what it is.

See LXE's latest Montney results, LXE doesn't produce any high-priced Condensate (Pentane) that exceeded 75/bbl a few days ago but they produce only low-priced NGLs (butane, propane):

" Leucrotta recently tied in and started producing the 8-4 Lower Montney Oil well.  The 8-4 well had an IP30 of 747 boepd comprised of 317 bopd of light oil, 2.2 mmcf/d of gas, and 60 boepd of ngls.  This compares favourably to Leucrotta’s IP30 type curve of 584 boepd that is comprised of 213 bopd of light oil, 1.9 mmcf/d of gas, and 50 boepd of ngls.  Note that this well was completed with 28 fracs versus the recently released A8-22 well noted below that had 41 fracs.

 

The A8-22 well has now produced beyond 90 days and had an IP90 of 838 boepd comprised of 254 bopd of light oil, 3.0 mmcf/d of gas, and 79 boepd of ngls as compared to Leucrotta’s IP90 type curve of 521 boepd that is comprised of 172 bopd of light oil, 1.8 mmcf/d of gas, and 47 boepd of ngls.  The A8-22 has produced significantly above expectations and we will continue to monitor the well to see what effect the success of this well will have on the ultimate recoveries and go forward economics of the play."


See now CKE's Montney results, link  below. All CKE's IP-30 rates, not only its 4 latest Montney wells with the latest completion design but also many of those drilled back in 2015, have IP-30 above 750 boepd and contain significant high-priced Condensate volumes (no oil, no low-priced NGLs):

https://globenewswire.com/news-release/2017/11/10/1179060/0/en/Chinook-Energy-Inc-Announces-Third-Quarter-2017-Results-and-Increased-Credit-Facility.html
 

Based on the latest 4 Montney wells that flow at 1,800 boepd each with 300 bbls/d high-priced Condensate and 4,700 boepd  November production with 2 restricted Montney wells due to compressor capacity according to the latest Press Release, CKE's will definitely exceed guidance and will exit December 2017 with more than 6,400 boepd. 

Do the math, including the natural declines. Easy.