RE:Are Eight Capital's Assumptions Wrong? This is a classic example of how almost complete misunderstanding of a situation produces the anomaly we see now in TCF's price. It starts with the obsession everyone has about every natgas price
except the one that matters :
BOTAS's price.... and then it all goes downhill from there.
Completely forgetting about the $600 million in infrastructure!
( soon to be added to the Balance Sheet and therefore available as collateral ) Completely ignoring the fact they've
already reached their expected 2023 exit production rate -
7 months early! Completely ignoring the imminent 3D re-processing.
( this will make selecting new locations like shooting fish in a barrel ) It truly boggles the mind. And still.... all some people can do is whine about a few more Shares.
Gad! Karmanow wrote: Sunday Ponderings ....glta!
Taken from the March 16th "8 Capital Report" and recent news release:
It appears that Due Diligence is correct and even better than initially done++
We appear to be in a league of our own .... margins and cash flow ... matter! this huge variation is not priced in the TCF right now.
"At 1.8 MBOE/d, North American gas E&Ps generate between C$7 - C$17 million of cash flow, while TCF generates C$77 million of cash flow. Stated differently: In 2023, TCF is generating the same amount of cash as an 11 MBOE/d producer using the average cash netback of C$19.25/BOE within North American gas weighted E&Ps." so with gas at $14 BOE ... take away the 25% to make it current and we still see a major value for Trillion. (N American C$7 - C17m) versus current (European C $58m) or over 4 times the return for the same amount of product ...
We certainly know where the drill rig will be going after Drill Hole #7 ... likely drill on block for the next year + to test the zones that have showen great prospects from the newly applied seismic testing ...
"The company sees an additional 29+ Bcf of recoverable gas within these pools. Of note, and what is pivotal to the story, is that TCF has the engineering know-how to tap into these pools and the existing infrastructure to commercialize them without significant additional capital outside of DCE&T costs. Management is confident in these exploration targets as the gas accumulations share the same stratigraphy and source rock as the currently producing pools."
"the key pieces of infrastructure that cost roughly US$600 million to build out but were purchased by TCF through a receivership process for US$2.5 million. This is a large reason behind the outsized free cash flow generation that underpins TCF's growth model. We point to SDE (BUY; C$27.00 PT) as an analogy of a company that was able to create a lot of value on the heels of purchasing Bellatrix out of receivership for pennies on the dollar. These types of deals are company makers, in our view.
tcf News Release:
A very strong showing and not sure if she will run at ... but if it is 9MMcf/d ... then that is impressive indeed. Equivlaent to 2 wells at current rates. 5 out of 5 and onto number 6.
Eight intervals of gas pay with a true thickness of about 21 metres were perforated and tested in Bayhanli-2 and now are producing gas to the sales pipeline. The eight intervals within the E, D, C, A and AA gas sand reservoirs produced at a combined rate of 11.9 MMcf/d for the final flow test. The well is expected to be produced to pipeline with initial flow rates from between 8 and 9MMcf/d.