RE:Heavy Oil ProductionDoes nobody here read the financial statements?
Page 19 of the last MD&A
Table of last 8 quarters indicates heavy oil production stable to slightly UP - not down.
Financial performance fairly stable (depending on commodity cost)
Nothing statnds out in terms of higher costs
Light Oil is down almost 20% in last Qtr but fairly stable before that
They do have a $60M well retirement liability but that is to be settled over 25 years
via continuing cash flow from those wells. GXE is already trading below 60% book
value so IMO there is no reason to bring this up. Mgmt knows that the wells still
have a lot of value even if very little is spent on maintaining thier current production
My understanding (correct me if I am wrong) is that these heavy oil wells do not
decline as ast as the typical long lateral fracked wells that are common today.
Those can deplete at rates of 20-40% a year. That is not the case here. So these
wells can still produce economically for years and then be slowly retired properly
over a long period of time.
Also do not forget that the vast majority of oil in these wells is still there. If someone
can gather enogh sections of land together and spend some money and maybe a year
or two odevloping a polymer & water injection scheme then these wells become very
valuable again. Seems like GXE they had something like this in mind at some point in the
recent past but are giving un it Maybe its cost, lack of skill, dedication, risk or a
combination of these. I do know the technology is readily available to smaller
producers now but its different than typical drill and produce. You have to get permission
to inject on dedicated wells ads monitor those injections and result over a year or so.
The results hoever can be great with wells increasing production over the years instead
of decreasing. This may work on Gear's land or it might not because of geology -
but I think we deserve to have it properly explained to us ny managment.
Please feel free to xomment/correct
Also, GXE do produce some natural gas (about 1.5 bcf/year - every $1 increasein AECO
adds $1.5M to EBITDA which in turn will go almost directly to bottom line
because of their tax free and debt free status.