Second Wave Petroleum Inc SCSZF

2P Reserves Report

[puntabeach]

I believe the upcoming 2P Reserves report will be a game changer. All their wells in  H1  2012 exceeded expectations and they were very oily. According to the company in Q3 2012 report, the average IP-30 for their wells in beaverhill  lake is 500 bbl/d  excluding the natural gas. I estimate the total average IP-30 for their wells is around 600 boepd. 

SCS drilled around 10 net wells in H1 2012. Assuming a decent  400 Mboe/well, it gives around 4 MMboe from these wells. Add this on the existing 11 MMBoe, and you get something around  14-15 MMboe (80%  oil  and  liquids).

 

Let's say  14,5  MMboe.

14,5 X  $20/boe = $290M

290 -  90 (bank  debt) = $200 M (estimated   market  cap)

 

The  current market  cap  is  only $40M. The  valuation gap  is  huge  and  the  risk/reward is huge  too.

The  numbers  speak  volumes.

However , the average valuation for so oily 2p Reserves is around  $25/boe. Do your dd to confirm.

[puntabeach]

Front Street Capital created  a negative momentum in late Nov 2012. This is the reason for the recent drop. That fund sold more than 1 million shares (1,265,000   shares)  once Q3 2012 report was released in late  Nov 2012. The Tax loss  selling  is the most likely reason.  However the manager of that fund should know  that  SCS had already let the

[raggetyjack]

Yes I've run the numbers and my friend Mr. Math told me the is a good investment with a lot of upside. They dropped the ball and the company needs to be sold to a better operator. 

[Iamwcw]

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[Oceans19]

I agree that 400K per well is excessive and there are steep declines, high well costs and the debt to worry about.  That being said, they are sitting on a very nice land package with lots of oil.  If they can partner up with someone with expertise in the region(their neighbours)to get the cost per well down or pay it for them in a farmout and get a better flow per well

[LexiOil]

You seem to have plenty of knowledge about the company, buybacks etc.  One point missed is not the POTENTAIL production, but the liquidity of the company.  Right now they need cash to further expand, and money is tight.  Wondering if they are using up the LOC, how many options they are issuing and how much stock they are issuing.