Debt, if Kicking Horse has $55,000,000 in debt they are going to have to answer how they are going to meet their capital budgets.
Booking of reserves: are the reserves over booked. 65%
New question: what is the cost base of the shares of the Donnycreek shareholders that merged into Contact ( becoming Kicking Horse).
On the question of presentations. I am looking for presentations that are nonpublic made to institutions. Are there any representations regarding drilling the other Montney Lands such as Chicken. In this current environment, it will be challenging to have capital to drill the noncore lands to hold them. More specifically are there any near term expiries. Are the lands in first term or are they in second term. What are the expiries, and if they are in second term, they have converted to leases. If in second term, what is the plan to drill them to hold the lands. On Monday, I will look at the lands on Geoscoot to find out.
Regarding my motivation for evaluating this company. Lets see how this unravels.
I am going through Questere's MD&A to see if there is disclosure on going into penalty on Kakwa. The street is telling me, the company wants to sell their position in Kakwa but there have been no buyers. As correlation, when Kicking Horse went out to raise funds through Cannacord they were looking to raise $120,000,000. They raised $20,000,000. The extra $100,000,000 was to buy out Questerre. My understanding was they were not able to get interest for the larger financing and to purchase the 25%. I am hearing Mike CEO of Questerre wants to sell their position but there have been no buyers. WHY is this important. If there is no buyer for 25% there is likely no buyer for the other 75%.
Who is the buyer for the Kakwa play at this time. Seventh Generation: not likely as they have over 2000 drilling locations.
Paramount: not likely as they have a great deal of inventory. We also know Clayton's holding company liquidated his position in Donnycreek/Kicking Horse. Correct me if you know different. Bloomberg does not show any holdings.
Shell: not likely as the reserves are likely over booked. But we will see.
Could be that there is another buyer out there. Maybe a Tourmaline or some other company. But with this low commodity price, most companies will wait until the debt becomes a problem.
More comments to come on this company. There should never be an issue of asking questions of a company. Let the truth be told. A quality company should be more than willing to outline there plans and also discuss their challenges. I am asking questions like any value investor would do during due diligencce. Not once have I attacked the company or its management. Low commodity prices have negatively impacted this company, the question is does the stock price reflect the accurate value of this company. Just asking questions.