Chinook Energy Inc. Common CNKEF

CKE in 2018: A beautiful bride waiting for the right suitor

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PeterM, you do miss some key points. For starters, CKE does not need the credit facility in 2018. The company can drill 2-3 Montney wells from the operating cash flow in 2018 and slightly grow its production compared with 2017. Don't forget that the exit production in December 2016 is 6,400 boepd and the company recently reaffirmed it. If CKE borrows money in 2018, it will just do it to accelerate its production growth. However, it doesn't need to accelerate its production growth at the expense of the balance sheet. CKE will remain prudent and will continue to maintain a strong balance sheet by the end of 2018, so it will remain a beautiful bride waiting for the right suitor. If you attended the recent AGM, you would agree with me.

You also miss the fact that Westcoast Energy's High Pine project will be completed by year end, which is expected to improve nat gas prices in Station 2 effective Q1 2018.

You also miss that CKE can afford to wait for higher nat gas prices in order to hedge a big part of its nat gas production in 2018. Higher nat gas prices are expected in Q1 2018 based on the latest weather forecast.

You also miss that CKE exports through Alliance approximately 30% of its nat gas production and receives Chicago Citygate premium pricing in USD. 

You also miss that CKE produces significant Condensate volumes from its Condensate-rich Montney wells and Condensate approaches C$80/bbl. It's estimated to surpass C$80 in 2018.

AIM owns 37% and Bison owns 15% of CKE, so 52% of the company is owned by strong hands who know that CKE is irrationally undervalued relative to the Montney peers.

We agree though that CKE will most likely use the flow-through money to drill an exploration Montney well in its Montney acreage in Martin Creek where some industry participants say that it's a Condesate-rich area.