Production and debt Didn't Paul miss Q1 production targets? 20,500 was actual with guidance of 21,500, which I think is annual and not specific to Q1- but not a good omen.
They raved about production from the 4 new wells and spent Capex vigorously ( well over 25% of annual, which could be weighted due to spring thaw and lower q2 Capex but they did not adjust guidance do it must be part if they plan) but yet production declined from 2021 exit of 21500 boepd. The only reason given was the effect of the fire from late last year and cold weather, which they state reduced production by 700boepd. Now if you look back to Q4 report, the fire incident was said to be under control with an annual 125 bopd impact. So were they caught off guard by the cold weather? They set guidance with knowledge of they fire impact.
They also stated they were bringing on 6 wells drilled in q4 in q1, so my expectations were for more than 21500. Lots of drilling, bonus of exceeded type curves and yet a 1000 bopd decline, hmmm.... sounds like it must be steeper than anticipated decline issues. Does anyone have thoughts on production?
Paul talked frequently about dividends and partially came through, lower than what he stated but I'm pleased it's not too aggressive. He can grow it later after he tackles debt.
Interest rates are rising which means debt service will cost more. I'd be thrilled if they assigned every $ of FCF outside of the dividend (when it begins in a few months) against the debt. Tame it as fast as possible. Worry about share buy backs in the future. It's not like it's a huge float by standards. Once debt is gone, there will be tons of cash to further enhance shareholder value, debt reduction should be the first tool used to increase shareholder value with dividend second and share buy backs third based on circumstances and personal preference.
As far as the crown land lease, I'm ok with it but not thrilled. It's a $10m investment in the future. If oil prices stay elevated, would the cost be significantly higher down the road to buy something similar? And if it was adjacent to current properties, would they pay a premium for that reason? ( that is common reason for paying more in a lot of real estate transactions)
In summary, decent report but not stellar. I don't think there's any reason for it to harm share prices from moving forward but neither was there rocket fuel.