Food for though for the CREW hereJust a little something to think about, for the folks here, as there's seems to be a renewed interest from investors in an increased potential for a buyout of Crew after the Leucrotta deal. In this repsect i agree, but i caution folks this is NOT a reason to just buy Crew. So for my fellow investors on this board, many of whom i've not seen in quite awhile, this is for you and hope it helps you in your endeavors in the future. A little disclaimer here, i am NOT presently invested in Crew, and don't have any plans to be as of this date, but was heaviliy invested in the stock two years ago (to this day almost) when it hit just barely over a dime. I had unloaded all my position around $1 some time ago. So motives on my part to do this wite up are begnin....
So what would Crew be REALLY worth in a potential buyout? If we go according to the latest M&A event, which is the Leucrotta deal with Vermilion, we get the following. This deal is a perfect template to derive any possible asset value for two very important reasons. One the production profile of both Crew & Leucrotta, though not exactly the same is pretty damn close. Two, they operate in more or less the same area, with Crew being in a more remote region. But infrastucture is comparable though.
The Leucrotta deal with Vermilion was done for $500M. As we've already explored the deal on a production basis, we will now focus on an asset angle with regards to reserves. And what any potential value could be given to them in a possible buyout scenario. As both LXE and CR both had a small contigent of oil P&P oil reserves, i've removed the value for this portion to focus only on the NG aspect, as this was probably the reason why Vermilion made the offer for Leucrotta. So having done this and having extrapolated a value for only the NG side, i've come up with a pretty accurate value of about $7/boe for the NG. If we apply this to Crew, in a potential buyout scenario of course, we get a NAV of $2.8B or ~$14 per share net of debt. You can agrue a further 15%-20% discount for Crew being in a more remote area than LXE, but this flexible & debatable. Reserve distribution between LXE & CR are pretty similar, so numbers shouldn't be far off.
A little word of caution here, before anyone decides to jump into Crew thinking it's a bargain at this price. Remember, my assessment here is ONLY in the case of a potential buyout to monetize the assetes and DOES NOT reflect Crew's value in the day to day operations. In addition, i still believe that oil prices at over $100 WTI is unsustainable long term and a sign for folks who've been invested in this sector for a long time to take some profits. I don't rec'd anyone to invest in the heavily leveraged oil producers, as mentioned before, and should one wish to continue investing in this setor, to focus on NG ep's like Crew. As there are global macro events being played out that have changed the game for NG, and could have potential paradigm shifts incoming for this asset.
GLTA