According to it, they plan to spend capex in ND this year and next, and quite a bit in Canada next year. Is this real or reserves smoke and mirrors?
- Very little capex spent in ND in 2017 ~1M compared to Canada $7.8M
- ND nav is actually $34M but deduct $10M for taxes? No such deductions for cdn nav.
- only 5 of 16 locations in ND are booked. They currently have 60 or so producing locations so drilling all those 16 would take production well over 1,000 boepd I would imagine. Its why its RLI is 14 years (probably cconservative too)
- the realized price of ND oil today is much higher than in the past likely higher than booked in the reserves. And of course higher than WCS.
- with new realized prices, netback must be approaching $30.
- ND has essentially no abandoned wells. Canada has a lot.
-ND also has almost no decline.
- despite production and no drilling, proved reserves went up due to revisions and a small acquisition?
To me this confirms ND is the best and most valuable asset Zargon has. By far. .Debentureholders need not worry with an asset like this. Its also why you cant value assets on 4.5x fcf and NAV - the devil is in the detail.
By the way, from m&a pov, best strategy is just to buy ND sit on the front porch and collect the cashflow. A good asset for a fair price.