Yangarra Resources Ltd T.YGR

Q3

[TheRexmember]

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.

[kavern23]

Rex...why do you think PNE carries no debt? PNE has a cash balance because how can they access cash in the dips of the cycle if banks dont even give them option of a big bank faculty? If I was younger, more thristy to make money and more into risk, shorting PNE at 1.50 would be the best move to make in whole sector. Isnt many scenarios in which it doesnt fall to under 1 dollar over nexy 12 months

[TheRexmember]

Couldn't disagree with this more Kavern. The whole point is that PNE DOESN'T need high gas prices. Low cost, low decline - they can wait out anything.  Cash will be put into something accretive eventually and until then my average cost will drop a penny every month. Its good to have little debt as a gas producer.  on the other hand if you REALLY want to short a debt free

[kavern23]

Rex, as at end of 2022, PNE had 7997 active wells and 844 inactive wells so average PNE well is like 2.5 BOE per day per well of mostly gas.  Cant be low cost producer with that set up.... And PNE has a 500M dollar market cap!!!! Bonavista who also has old assets along with new went for 1.4b. PNE is a once in a lifetime short opportunity and what makes it safe short opportunity is

[TheRexmember]

Kavern you do get distracted by the red herrings too easily. There is a reason the biggest PNE  shareholders are long term investors or family offices.  9% dividend 55 million cash thousands of cbm wells good for another 30 years cheap ARO per well and 3000 barrels per day of liquids. Mostly oil.  solid company, different model, and it pays shareholders. It doesn't

[kavern23]

Rex..one of the things PNE had going for it was their cash balance was a good deterrent for the shorts as threat of a special divy if fall aeco would have been strong. Sadly, Aeco prospects look like hopefully reach 2.8 at some point before end of 2023. i dont see Aeco 2.80 to even 3 spot jusitfy a 500 million market cap. PNE divy slowly is taking money out, do you think PNE is getting more

[kavern23]

Rex..and there is this price used in last year's reserve report: Pine Cliff's Reserves McDaniel has used a three consultant average price (McDaniel, GLJ & Sproule) forecast, resulting in a price forecast of $4.23 and $4.40 per Mcf for AECO natural gas and US$80.33 and US$78.50 per Bbl for WTI oil in 2023 and 2024 respectively. Oil price is fine but unless things turn around fast

[TheRexmember]

I think we will just go around in circles on PNE so I will leave it with this. Pne has a capex budget of only 28 million this year. One quarter of which is for ARO. The capex is more than covered by the 15% or 3000 barrels of liquids. The gas pays the dividends.  The last takeover by PNE was for cash and the cost was paid out in less than a year.  Low decline rates enhance

[kavern23]

Rex...we wont be going around in circles when PNE releases results with low AECO prices. Here is the problem with the 7% decline rates. if a 2.5 BOE well or 15 mcf ng well that PNE has declines by 7%...it goes from like 15 mcf to 13-14 mcf.....not making much money at sub 3 mcf prices.... Rex...PNE hit 13 cents in early 2020 for a reason. Low producing NG only dry gas wells dont make much CF

[TheRexmember]

Pne bought certus today for 100 million. No shares issued.  10% under PDP purchase price going into the winter gas market. Total liquids over 5,000 barrels per day now. Another great deal.