Gear Energy Ltd T.GXE

January Update is out

[jleer42]

January update is out. Net debt increased to $11M, ~$9M over December.

 

On the plus side Jan WCS was $28.21USD, so a big improvement today. If oil gets above $80 and the WCS differential stays under $20 Gear should be fine with its dividend on an annual basis.

 

On the downside, production slipped to 5704boe/day. This is quite the surprise, I was expecting a production bump with the December talk of new Killam and Tableland wells coming online. I am disappointed this wasn't addressed in the update.

 

Anyway, Gear continues to be a bet on WTI. Coming out of refinery maintenance and heading into summer driving I am comfortable with this bet. Longer term the new Mexican refinery and TMX will be good for WCS differential.

 

https://gearenergy.com/wp-content/uploads/2023/02/2023-January.pdf

[zack50]

Your concern regarding production was addressed by Gear in the Q4/22 operating results and year-end reserves summary... which was included in the latest monthly update.  Production for the Q4/22 was 5,755 boe per day, stable from the third quarter of 2022 as a result of third-party gas infrastructure challenges which resulted in suboptimal runtimes for Gear wells and extreme cold weather

[oilisswell]

How is a WCS differential of $28.21 US an improvement? It is the worst it has been for some time! Funds from operations is also pretty poor. As a shareholder these numbers are concerning.

[jleer42]

It was $28.21 in Jan, it is currently around $20. That is an improvement.

[zack50]

I think you have  misinterpreted the comment. The poster is saying that the January WCS was US$28.21 but the differential is now at ~US$16.50. That is, as he says... "a big improvement today".    

[oilisswell]

Indeed I did, my bad. However I am still concerned about the debt load rising and the free cash flow falling. The diminishing differential will help. Next report will be interesting. We should also see a bump in production. Hopefully the debt will come down.