Long Run Explor Ltd Ord WFREF

Long Run vs. Spartan Energy

[forkliftguy]

I used to own Renegade . When it was under a dollar a share , everyone , including Eric Nuttal of Sprott was going on BNN market call and saying what a lousy investment it was . All of a sudden it was bought by a small company , Spartan Energy . No sooner was it bought than Eric and a number of other guests on BNN were saying how great this company is . I personally don't get it . It has a market cap of 866 million dollars . There are 265 million shares outstanding and it is producing less than 10,000 BOE a day . I realize that it has a much lower debt level . Long Run has a market cap of 159 million dollars ; there are 194 million shares outstanding and they are doing 32,000 BOE a day . Even up for the long term I would take Long Run . It is trading at 30 % of book value . The big reason given for why we should buy Spartan is " The Management " . I would assume that Long Run has some smart people running it also . What it needs is for some BNN Market Call guests to start recommending it . By the way , I am still a little bitter from my Renegade experience .

[wilwal]

I think it's pretty simple and the answer is right in your post:  it's the debt. Talking heads have been yakking for 6 months now about how the high debt ratio oil companies aren't going to survive so the market has pummelled every one of them......and Long Run is no exception. This company is viewed like an individual who has maxed out all their credit cards.  Just look at

[OneStar]

Believe me mgt understands! They like to reduce the debt by 250-300 million. That would solve a lot of issues.

[wilwal]

Thanks OneStar, that's awesome news!   $250-300 million reduction is miles better than their stated $100 million.   Personally, I would like to see it go to at least $400-450 million reduction before I would consider there is no debt problem anymore. 

[OneStar]

For the right price Redwater may be sold according to Bill Andrew. That would really address the debt issue.

[wilwal]

What's your opinion on the right price for Redwater?   Seems to me it is worth about $600 million using rough industry metrics.

[OneStar]

3750 boe/day @ 100k per flowing barrel is 375m Reserves are 18500 mboe. Not sure what the total value is and what it could fetch. But it would putthe debt issues to bed.

[wilwal]

Thanks.   I was using $100k/bbl of oil too but was looking at the numbers in the Annual Report.  So it wouldn't be all of Redwater that is reported on Annual Reports?  It shows 5369 bbls/day of oil for Redwater for 2014.

[OneStar]

I used the numbers from the presentation from the agm. A copy of this presentation is posted on the website.

[wilwal]

Here is what the 2014 Annual Report says about Redwater.  I don't know why the discrepancy but it is quite significant:   "In the Redwater area, located near Edmonton, Alberta, development is focused on the Viking oil resource play. In 2014, Long Run invested $89.8 million, drilling 44.0 net wells with a 100% success rate. Production averaged 8,142 Boe/d (68% oil and NGLs

[OneStar]

We can speculate on the price . But if Lre sells Boyer and Redwater we will be in good shape. Production will be down about 6000 boe/day but the debt could be gone. All the deep basin and the girouxvile/normandville will be the key properties. Low cost and predictable properties. At 26000 boe/day with no debt lre will soar. Let's hope the properties will be sold.

[lessspike]

You bet it would soar under that scenario Onestar. LRE can easily handle $200 million debt plus the convertibles so $275 million.  What they really need when the smoke clears is a cushion that will carry them though some bad times.  That is one reason why Spartan is valued so highly.  Spartan doesn't have a lot of cash but they have a revolver with lots of room left on it yet.

[Reflect]

Yes wilwal I agree with you; there is no doubt that Redwater is a very, very valuable piece of real-estate & can easily take care of LRE's debt. Sure makes you wonder how the analysts rate stocks when Spartan Resources  has no valuable assets left & is pumping their fields dry. Accordingly to you wilwal it would take at least 600mil to produce 5,000 to 6,000 BOE/d. Lets look at

[Karmanow]

If management can sell the Redwater assets LRE shareholders will move into a much better place ... considering the current market and perception of the current $748m of debt. If we consider two recent deals we can predict where LRE will be if the Redwater sale materializes. In April 2015, Surge sold 4750boed for $430m or $90,000 per boed. In February 2015, Renegade sold 1450boed for $109m or $75

[lessspike]

The market will go crazy over a deal like that. Just to refine your valuations, you need to value oil and NGL's as $100k/boe and NG at $18k/boe. Either way, it is looking like Redwater will do the trick easily.  Boyer is worth about $50 million so it's not a big deal in the big picture. I like your optimism about $11/share but that's not a likely event.  Oil companies are

[Reflect]

Yes Karmanow; LRE is worth a lot of money so lets not lie anymore or your nose will keep growing bigger.

[Reflect]

Wilwal either you are a fool or a complete idiot. What the difference is I don't know. LRE mgt. has a unanamous vote of confidence & so things are what they are. You nor anybody else cannot change it. We've been down this road over & over again & so your intentions are to create havoc & nothing else to be gained. LRE mgt. has set a plan in motion & like it or not they

[mckenzie00]

Hi forkliftguy By the way , I am still a little bitter from my Renegade experience And you have to include THE BUDD as well. Ah memories can be sweet or very bitter. But, that's the way Canadian stock markets work. But, this is LRE. a different company, with different management. Gregory