RE:RE:RE:RE:RE:Crew UpdateSepelt there are lots of metrics used to measure a property's value. Reserves, Production, Cash Flow, Facilities, Undeveloped land.
Lloyd may have had decent reserves, facilities and undeveloped land. But 1000 boe/day of heavy oil from 600 wells (1.67 boe/day per well) is a pretty tough sell.
On a producing bbl /day metric, $50 million would be $50,000 per flowing barrel...those are Montney metrics not heavy oil. Heavy oil usually sells for $8,000 to $20,000 per boe/day. I had hoped for $30 million when the production was 1750 boe/day or $17,000 per boe/day, but I had no idea the ARO was $34.5 million.
The metric that is of most concern these days is ARO. The AER will not allow assets to be transferred to a company that is deemed unable to abandon the wells being transferred. The fact that Lloyd is heavy oil increases the risk for pollution. The oil is sticky, messy and difficult to clean up when spilled. The fact that Crew found a buyer that can assume the abandonment of their wells and facilities is fantastic news.
I hope the acquiring company can go in and work over the wells and drill more to drive production much higher because that's what the property needs. And I hope they make a ton of money with the Lloyd property.
Crew was never going to put more capital into Lloyd as they have much bigger fish to fry at Grounbirch!