Of pumpers and poseurs Mushroomcat’s post of 29th September was in sync with what I have also long suspected - that Value Digger and Stockfy are one and the same - pumpers of CKE who are not known to let facts get in their way. My impression is that Stockfy may simply be using the Stockhouse board to flog subscriptions to Value Digger’s “Premium Research” on Seeking Alpha. Like, Themacguy who bought CKE at .54c back in 2016. I was also drawn to CKE by ValueDiggers “research” - fortunately at a somewhat lower price. Back then I think Value Diggers target was about $1.20 - right now it seems their target is down to about .52c (see Stockfy recent hustle - September 25, 2018).
For me the clincher came when both suggested that Velvet was effectively paying over $2,500 an acre for IBR Montney land. When it was pointed out to Stockfy that IBR own press release suggested a price of about $1,300, Stockfy claimed that IBR was “completely wrong” and didn’t “have the courage to admit their mistake”. (Stockfy posts 1 and 21 September, 2018) Well Stockfy / Value Digger - lets see if you have the courage to admit your mistake? It wont require much research. Start with your number for the acreage. IBR current Sedar information sheet shows they own a total of 69,519 net acres (SEDAR March 20, 2018) not just the 49,600 net acres you claim. So much for your “math” and “research”.
Stockfy will brook no questioning of the CKE official line even when it could in the long run favour company. Take for example the tantrum he threw when I suggested that the potential production from the Brierly / Umbach wells could be as high as 9,506 boe/d (see Stockfy post 3 September 2018) . Compare this to CKE projection for year end 2018 production of 4,100 boed /d and their “peak” production number of 4,200 boe/d shown in their August presentation. Stockfy / Value Digger should know that something must be off here. After all in the Seeking Alpha report of 25 September 2018 Value Digger tells us that the 4 latest wells in Brierly / Umbach are each on average producing 1,800 boe/d. There are 13 wells. “Do the math”, Stockfy ! The current potential daily production could in fact be well above 9,100. At the end of the day shareholders should not have to be debating this. The correct numbers should be provided by CKE management along with an explanation as to why CKE is operating at less than 50% capacity. By my estimate this is costing them over $25 million a year in potential revenue.
What worries me most about this duo is not so much what they do tell their followers - but what they dont. The single most important issue facing producers in Montney at the moment is pipeline capacity.
https://www.bloomberg.com/news/articles/2018-02-21/investors-bail-on-landlocked-canada-oil-as-pipeline-woes-deepen
Every single one of CKE neighbours has reported in detail on their arrangements to secure pipeline capacity for their future production. CKE, Stockfy and Value Digger surprisingly avoid addressing this critical issue. I suspect CKE has in fact made has no firm arrangements and is instead relying on interruptible contracts. In this case, rising Station 2 prices will be of no benefit to CKE if they cant ship. To the contrary rising prices might even lower the chances of spare capacity becoming available. On this material issue, CKE is keeping shareholders in the dark.
Then there is the their latest razzle-dazzle about the Martins / Aitkens Creek 55K 2 inch line CKE bought from Nuvista in 2014. Stockfy now grandly refers to this as a “mid stream asset” as if CKE was about to set itself up as a rival to Pembina. I first drew this board attention to the potential of this pipeline in November 2017. Back then I lamented the fact CKE was not publishing enough details about its operational status and potential use. Things have not gotten any better since. The fact that CKE is now earning some revenue from it means nothing. This is a result of a lease back arrangement made to the sellers of a small additional section purchased in 2017. As far as shareholders know, the principal 55K and associated compressor station currently remain dormant. The Black Swan / AltaGas joint venture Aitkens Creek could have positive implications for CKE but none that are obvious. The deal is mainly about processing and transporting NGL (Natural Gas Liquids). CKE has its own processing facility at Martins Creek and the 55K pipeline is designed to carry sour gas. CKE production of NGL at this time is only about 800 boe/d. No reason for high fives here that I can see. But who knows. CKE shareholders will probably be the last to know if there is.
The obvious use for the pipeline its ability to link the CKE Martin Creek Montney lands to three alternative pipelines - North Montney NGTL, Alliance and Enbridge - add to that the Aitkens storage facility. CKE already has 82 operating vertical wells in Martin Creek but CKE has not disclosed their potential production. CKE has also drilled an exploratory well there with the view to establishing the potential for horizontal wells. CKE is keeping the results confidential.
Finally it seems Wierzba, P. Grant, the only independent director to have made a meaningful investment in CKE, continues to sell. It could be for a completely innocuous reason. But who knows?
Dont get me wrong on CKE. I am still a believer. To another producer with secured shipping contracts, CKE must be worth at least 70 to 90c a share. This seems to be in line with managements informal estimate of value (see CanadianFemme post June 02, 2018). However nothing much is going to happen with CKE until its management decides to be more open with shareholders (ultimate owners of CKE) and the market about whats going on.
The CKE Board is mandated to:
Establish a communications policy or policies to ensure that a system for corporate communications to all stakeholders exists, including processes for consistent, transparent, regular and timely public disclosure, and to facilitate feedback from stakeholders.
This one of the reasons why the Board gets paid its fees. This is also why they get granted their options.
Sadly, in my opinion, the Board is falling short of their duty in this respect. If the CKE Board needs a standard to guide them, then they need not look further than to the reports issued by neighbouring operator Storm Resources for starters.
Until the Board makes it their business to ensure stakeholders get the sort disclosure they are need, then they and the market will be unable to make any form of independent judgement about their investment. Instead they be forced to rely on the likes of Stockfy and Value Digger for information. This pair will continue to suck in small investors to their eventual disenchantment. Funds and Institutions, however, are not so easily fooled. Absent their participation, the resulting low turnover will continue to expose the share price to manipulation. It is all a viscous circle. Time our Chairwomen took some action to address the situation.