WesCan Energy Corp V.WCE

WCE Due Diligence Report. Undiluted Inexpensive Oil Company

[Roddiggiti]

Wescan Energy Corp. Due Diligence Report. All information can be found on Sedar.

Ticker: WCE
Price: $0.03
Common Shares: 31.4 Million
Warrants/Options: Nil
Insider Holdings: 21%

Last Quarter Financials(Ending September 30^th, 2020)

ASSETS
Cash: $415,873 - $0.013 per share equivalent
Receivables: $77,296
Prepaid Expenses: $13,556
Oil and Gas Properties: $3,819,082
Office Equipment: $811
Total Assets: $4,326,618

LIABILTIES
Payables: $1,161,801
Related To Parties: $214,157
Convertible Loan: $693,821
Current Portion Of Decommissioning: $125,793
Non-Current Decommissioning Provision: $1,871,647 (Payable once all wells are done producing)
Total Liabilities: $4,067,219

2020 51-101 Reserve Report (Released September 2020)
Total Barrels Proved: 215,000
Total Barrels Probable: 148,500
Total P + P: 363,500
Net Present Value In $USD: $6,489,200

Speaking with Wescan, the company will be closing it’s $0.05 cent private placement shortly and they will be working on recompleting some shut in wells. At the same time, they worked over 6 wells last quarter, which revenue’s should show on the Q4 results. Oil prices have gone up almost 30% since the average sell price of last quarter. The company only lost $115k in total for Q3 and that was with lower oil pricing and less oil being produce from workovers being done.

MD&A Highlights

DESCRIPTION OF BUSINESS

WesCan is an evolving exploration and production company with a key objective of providing its shareholders with attractive, long term sustainability by developing and exploiting the Company’s assets at east-central, Alberta in a financially disciplined manner and by acquiring and consolidating additional oil and gas assets that are analogous to its infrastructure and focus area(s). WesCan’s assets are comprised of 100% operated, oil-weighted properties characterized by multi-zone oil reservoirs with low declines that include a number of low risk, multi-lateral horizontal development drilling locations. WesCan continues to pursue and evaluate strategic acquisitions with synergistic characteristics of long life producing assets and opportunities with low risk, upside potential.

Oil and NGL production decreased 64% from 149 BBL/D in the six months ended September 30, 2019 to 54 BBL/D in the six months ended September 30, 2020. The decrease is a result of a combination of a decrease in commodities prices, routine field maintenance and workovers of six wells during the period. Associated natural gas production decreased 67% from 263 MCF/D in 2019 to 87 MCF/D in 2020. Oil and NGL production as a percentage of total production was 79% in 2020

IFRS rules require that the cost to re-enter or workover existing wells are to be expensed and not capitalized into property plant and equipment. During the six months ended September 30, 2020, the Company expended $50,500 working over six wells (2019 - $91,500) on its core property. The decrease in revenue from the prior quarter resulted in the percentage of operating expenses to revenues to move from 67% to 79% during the current period.

OUTLOOK

Management continues to focus its attention on the future development and exploitation of our core property and is confident that the underlying reserves will capture the future growth potential of the property. With the on-going focus of identifying low cost optimization projects and the re-activation of shut-in wells, such efforts should continue to increase the Company’s cashflow while providing attractive payouts and return on capital.

In addition, Management is currently reviewing the geological and reservoir engineering evaluations for a number of new development drilling opportunities that exist on the Company’s property. While the Company continues to further examine the overall potential of the project, management remains perceptive and vigilant of the international markets and the domestic commodity pricing environment. Such influences continue to be prudently reviewed and evaluated prior to any significant capital expenditure with the objective of preserving our reserves and obtaining more favorable pricing for our resources.

[Roddiggiti]

Slowly moving up. Given the potential here, stock should be no less than 10 cents with the workovers. But there is also drilling upside that could really change things. If WCE is close to break even at $43 with half of the production down, then $60 oil with more wells producing is a game changer.