SilverWillow Energy (TSX:V.SWE, Stock Forum) had it all back in 2012 when the company took over the Audet Lands, located 110 kilometres north of Fort McMurray, with the intent to develop a 12,000 barrel a day steam assisted gravity drainage (SAGD) project. Stocks were north of $1.50 per share and it looked as though the company was well-prepared to cash in on the oil sands boom.
Share prices began to fall as the company went through the preliminary motions to advance the property, but they really took a hit when the Alberta Energy Regulator (AER) decided it was time to re-examine the SAGD process as it was felt that it might be de-stabilizing cap rock in the region, leading to seepages and in some cases catastrophic collapse, as illustrated by an incident reported in the Canadian Press where a 300 metre crater was created in the forest due to a blowout.
Other companies had anticipated the regulatory body's move and built in contingencies and timeline adjustments to their projects as the AER put all SAGD project approvals on hold. SilverWillow however, in the face rumors of what was bureaucratically in store for the company, was caught sleeping at the wheel and failed to make any preparations.
After the AER's announcement at the end of January, the company still remained hopeful that a decision was in the works, but by March, it began to face reality by announcing that management was looking into strategic alternatives in order to 'enhance shareholder value' or in other words, save its financial bacon.
Measures intensified with today's announcement when the company notified shareholders it was chopping staff, not management, in order to reduce burn rate of its cash reserves so that the entity would be able to remain operational through to 2015. It also stated that it was examining other areas of cost reductions as well as continuing to look for strategic alternatives.
What alternatives, isn't entirely clear as the company doesn't seem to have anything to sell, considering the lame duck status of its project, and because of said limbo, it isn't all that attractive for an acquisition or merger. It's only option seems to be at this point, a waiting game on the AER. Will it survive until a decision is handed down?
SilverWillow was in the news recently when the company announced quarterly financial results in the middle of May.
Currently there are 56.7m outstanding shares with a market cap of $14.7 million.