RE:RE:RE:Op. cost is a dry gas metricof course they haven't told you why prod costs are so high. that would be transparent.
i agree there is a lot of asset value here. as of now it is "trapped".
i understand netbacks. what netbacks don't capture is capital costs. how much does it cost to complete a profitable well. capital costs are MUCH HIGHER in Alberta Montney than they are in NE BC. rose has been investing Tourmaline capital for 10 years now. he did not invest in Alberta Montney.
the capital costs will effect ability to generate free cash flow and corporate returns on capital.
for example tourmaline was free cash flow positive in q1. tou generated capital.
pou was not fcf positive. it burned capital.
further, tou only spent 2.2x the capital POU did in q1
and produced 3.6x the cash flow...
this is capital efficiency and is being demonstrated at rock bottom nat gas prices.
tou is a cash flow machine.
pou is a big ole mess that needs fixin...
pablo87 wrote: Cer, this is how I visualize my investment in POU:
#1 $600MM Debt - can be covered/paid for by non core assets - freehold lands, other lands, Fox Drilling, Birch JV, oil sands, Resthaven shares, other shares and other assets I either forgot about or don't even know exist.
#2 Karr/Wapiti aka Grande Prairie - compares favourably TODAY to NVA as far as production x field netback and I am led to believe will exceed NVA next year once Wapiti is operational. And which overall is a better asset. So that asset alone reflects the $15 share price is how I see it.
#3 Duvernay and Central Alberta - 65,000 boepd, significant land holdings. A little harder to compare with anything directly atm but should be pretty valuable in its own right.
Overall, they have an excellent asset base i think.
I'd like to bs you as to why the production costs are $11/boe when Karr is $8 but we don't know because they haven't told us. To a large extent, it doesn't matter since while it might look "bad" overall, if half the assets are $8 and the other half are $14, it just means the $14 are less profitable and thus less valuable - are they losing money on some others (presumably they would shut the wells)? We don't know so its all speculation. The only one we know is Karr.
The part you forget about cost is netback is what matters and netback is not only operating cost but its also realized price. Even 20% condensate raises the overall realized by $14 which easily compensates for a $14 operating cost. Big US companies understand this very well - its the revenue mix that matters.
The area of concern is cash flow and hedges - how much are they going to burn this year, can it be covered in #1 above, and what is the story behind the hedges anyway? Its clear as mud.
The advantage of family companies like POU is they think long-term. The disadvantage is they are usually not very good at communicating their plans because they think like a private business and don't want the competition to know their plans.