A RACE TO THE BOTTOM for gas companies this is what it looks like. Here is one of the best managed DRY gas companies in Canada, the first quarter which is a pretty good quarter for gas, CF of 48.9 million, 18.1 hedging gain, 10.1 million net income. Forget BOE. One billion in Enterprise value, 900 boe/day of liquids production in 2017, hoping to double that in 2018 with a major gas plant upgrade, not going so well, 2018 production guidance reduced by 5% and the story goes on. A 4% liquids target for 2018 that will likely not be met. A 15% liquids target for 2020, hoping to produce liquids on par with the likes of TOU.
Glacier Netbacks ($/mcfe)
2018 Estimates at AECO Cdn $1.75/mcf Revenue
(1) $2.62 Hedging $0.34 Royalties ($0.10)
(2) Operating Costs ($0.31)
(3) Transportation Costs(2) ($0.58)
Operating Netback $1.97, G&A ($0.09) Finance & other ($0.12) , Cash Flow Netback $/mcfe $/Boe $1.77 $10.62 , Recycle Ratio based on 3 Year Average 2P F&D @ $0.52/mcfe (3) 3.4x
CF is 1.77 *6 = 10 dollars a boe
This is typical of gas producer performance, i would say they are one of the better performers, they say they are going to invest 30 million dollars in liquids rich wells, 30 million dollars does not give you a sniff never mine a liquids rich strategy. The look like they have great operating cost, hardly, they are scraping the bottom of the barrel and barely viable, yet they have an enterprise value of half of POU with none of the future.
This is likely the best run gas company, NE BC, very dry, plant paid for, get operating costs however the netback side of the equation, is pretty dismal. This is what TOU looks like to me on a much larger scale.
Wrong commodity, wrong location cant more the resouce, and the company does not have Liquids Rich Expertise there is not much you can do about this, and the future for AAV in my mind looks terrible.
A billion dollar enterprise value for a company without a future, and has assets and existing infastructure in the wrong places, and the list goes on. AAV, PEY, TOU, BIR, PONY, CR, all in a downward spiral.
CALGARY, May 3, 2018 /CNW/ - Advantage Oil & Gas Ltd. ("Advantage" or the "Corporation") is pleased to report strong cash flow of $48.9 million ($0.26/share) and net income of $10.1 million ($0.05/share) during the first quarter of 2018. Cash flow was supported by the Corporation's proactive marketing strategy which included $18.1 million from hedging gains and enhanced netbacks from natural gas sales at Dawn, Ontario. In addition, liquids revenue increased 18% to $6.6 million and the Corporation achieved low total corporate cash costs of $1.13/mcfe ($6.78/boe) contributing to solid cash flow results