Q3 So the consensus here since I last logged in seems to be Q3 will be a big disappointment based on total production, oil rates, gas prices and timing of tie ins?
Q3 has been a challenge for years since the differential blow outs 4 years ago. Whether intentional or not I have been saying they were moving to show a higher exit number instead of average yearly number this year. Referring to production exit rates versus every quarter is easier. It will also capture more seasonality in gas prices. The current debt levels and new bank syndicate is going to make them hedge more aggressively though.
Q4 should be pretty good with all the wells coming on but it won't be in time to prevent tax loss selling.
Kav where you miss the opportunity in PNE is the decline rate. They don't have to drill. 7% decline at PNE versus 30% ish at YGR. And zero debt.
In the last 3 years YGR has drilled about 100 wells. PNE has drilled 10. YGR production has moved from 8000 to 12.5 ish. PNE is 20-21,000 flat.
At 2.50 gas PNE can pay a 9% yield for about 5 years, cover capex to keep the business running and maintain the ARO. In practice they don't have to because they have seasonal hedges for summer months.
They don't have to hedge because they have zero debt. They hedge to Earn More, not to protect their banker. PNE is a bit boring but eventually the investment banker running it will buy something. I own a small amount but it does have quality management who accomplish what they say they will.