RE:Another YGR Theory
one of the issues that I am unsure of is the accounting strategy.
I have seen a number of analyst and fund managers refer to Yangarra as remarkably profitable. The company itself also refers to cost controls etc. It all seems to be consistent.
We know gas producers have lower reported op costs mostly because once you tie it in to a pipeline there is less to do. YGR has been vocal about using more trucking and internal staffing to avoid over captilazing the leases as part of their cost control. Most of it seems logical.
the part I am unsure of, is where the money was going. If it was so profitable I would have thought debt would have been dropping faster. I think most of it probably went into more drilling after the pandemic production plunge but I am not 100% sure that some is not being capitalized in different ways. Peyto would be an example of a company overcapitalizing to minimize op costs.
The gold mining industry had a huge problem with this until they changed a few practices (basically what was an op cost and what was a development cost, now they also report all in sustaining costs) almost 10 years ago. Oil and gas has been trading on flowing multiples and cash flow metrics so profitability was not used as much with in the industry.
When there was high prices and unlimited access to debt this was not an issue, but that has changed.
so has the "cost control" per barrel been offset by more equipment purchases, hidden in G and A, added to financing costs or is it real?
This is one of the reasons I was harping on the share issue so much as well as the lack of strategic hedging because the "cost control" is not evident if you have to dilute.
dont take this as a negative post because I am not sure it is an issue or not - can anyone else weigh in with some info?
I still think momentum is on everyone side here boing into Q3 though. It is dart time.