PWE - Penn West Petroleum

[muscleman]

Very nice update gentlemen.

 

Notable is that FFO is now up to 225M from the previous 150M. At $C 2.38 PWT was trading at 8x FFO ((8x150)/502.6 = 2.387). With FFO at 225M it should now trade for at least $C3.58. Arguably the de-risking via the 50% oil & 30% gas hedges, & the completed phase II asset sales; warrants a rise in the multiple as well.

 

Dec-31 debt is around 469M (139 notes, 330 facility). It is not unreasonable that during Q1, net of the 80M in asset sale proceeds, all the senior notes get retired; leaving the facility at 389M. Elimination of the covenants, and additional 2017 interest savings, to go along with the 2.5M saving in reduced standby fees.     

 

Nice to see the Manville exploration, & much of it risk shared with partners.

It’s a small patch, there is a need to share the wealth, and it significantly improves their ongoing access to the most efficient rigs.   

 

What’s not to like.

 

SD

 

 

I don't know why you kept talking about FFO. I am not an industry expert but I think FFO is more applicable to REIT which have very little capex need.

 

 

[SharperDingaan]

MM - they have repeatedly stated, and continue to do so, that they are going to drill within their means and fund it from operating cash flow (FFO), hence its a significant metric. Analysts don't like it because the current FFO multiple is higher than the EBITDA multiple, it cannot be disputed, and it produces a higher value than you would get using the EBITDA multiple. To keep his/her job the analyst needs to arrive at a higher value than this by either changing their valuation approach, or recognizing more production applied to a lower EBITDA multiple. The solution is to either use peer metrics, or find another job.

 

Agreed, I think they've held back some production they were planning to sell. Other than Manville its hard to know what they've held back, & it doesn't mean that production isn't available for the right price. Good on them.

 

It's not clear if the 80M sale became 'definitive' in January, or December; the timing of todays announcement suggests January.

Significant as there are gain/loss, provision reversal, and reserving impacts to this sale. We're just glad its done.

 

Not concerned with the C-Suite changes.

It's a different company today, & every top dog wants their own people.

 

SD 

 

               

[Uccmal]

Very nice update gentlemen.

 

Notable is that FFO is now up to 225M from the previous 150M. At $C 2.38 PWT was trading at 8x FFO ((8x150)/502.6 = 2.387). With FFO at 225M it should now trade for at least $C3.58. Arguably the de-risking via the 50% oil & 30% gas hedges, & the completed phase II asset sales; warrants a rise in the multiple as well.

 

Dec-31 debt is around 469M (139 notes, 330 facility). It is not unreasonable that during Q1, net of the 80M in asset sale proceeds, all the senior notes get retired; leaving the facility at 389M. Elimination of the covenants, and additional 2017 interest savings, to go along with the 2.5M saving in reduced standby fees.     

 

Nice to see the Manville exploration, & much of it risk shared with partners.

It’s a small patch, there is a need to share the wealth, and it significantly improves their ongoing access to the most efficient rigs.   

 

What’s not to like.

 

SD

 

 

I don't know why you kept talking about FFO. I am not an industry expert but I think FFO is more applicable to REIT which have very little capex need.

 

Funds Flow from operations is a very standard measure in valuing an E&P. 

 

See this:

 

http://www.investopedia.com/university/important-ratios-for-analyzing-oil-and-gas-stocks/measuring-performance.asp

[Uccmal]

Okay, a simple version: 

 

Using 3 Q numbers except financing, and Capex.  For Capex I have used their stated 2017 Capex of 150 Million.  I have used forward estimates of financing. 

 

The Capex is designed to increase production by 10% per year.  I have completely left out any benefits from DD&A, and benefits or losses from Taxes.  By accounting standards this isn't entirely correct, but it shows cash expenditures.  By virtue of using Q3 numbers I have a lower revenue than they likely make, barring a commodity reversal.  Purely a cash exercise. 

 

2017 Annual:

Revenue: 544 Million

Subtract:

Operating Expenses: 220

Cap ex (stated): 150

Development Expenditure: 16

Transport: 28 M

Financing: 30 m

Royalties: 24 M

 

Net Cash: 76 M

 

I have ignored DD&A because this amount is covered in Capex.  By ignoring it, I have also ignored the benefits that the company would receive from deducting it.  Does this make sense?

 

Caveats: both ways:

We dont know how much production they start 2017, with since there have been dispositions.  We wont know how much of the disposition cash will go to debt reduction, further decreasing finance costs, or if it gets spent on further capex on their existing properties, or on buying production on an adjacent property. 

We dont know commodity prices going forward, but we do know that Nat. Gas is way up at the moment. 

 

Should oil shoot as far as 60 USD they will bring in nearly double the cash.  Revenue goes up but costs are steady (they probably rise a little).

 

If I use 29000 bpd at 45 USD per barrel and an 80% USD to CDN exchange rate:

Then the revenue is: 595 m

 

If I use 29000 bpd at 40 USD and the same 80% exchange rate then revenue is: 530 m. 

 

The reason for using the lower prices than listed WTI is because the realized prices for gas, and heavy oil are lower.  It is exceedingly diffcult to pin down a go forward number on pricing until we see what they actually will get, and what is still on the table.  They cant divulge the actual production numbers until all sales are final so we wont know for a few weeks yet. 

 

So plugging my numbers into the above formula still gets me a minimum of 60-70 m cash. 

 

MM, If I were looking at Pwt at 2.50 cdn I would likely take a pass.  There is alot of upside but it will be generated by the commodity price gains, where anything above todays price goes straight to extra cash.  It is likely very safe on the downside, judging by the new hedge book. 

 

Overall, I am into capital preservation mode now, across mynentire portfolio.  I have sold some of my pwt into the rally, after the year end (yesterday and today).  10% of my total holding sold.  The rest I will sit on, but my buy is 1.80 cnd, after taking profits all last year, on earlier cheaper buys. 

 

 

 

[StevieV]

FWIW, I like PWE now almost as much as at any time.  I am not selling any of what is a substantial position for me.  I added a small amount recently in the $1.70s USD and thought about trying to pick up some more earlier this week.  I don't plan on adding any additional stock at this point.  With the recent adds, my cost basis is somewhere in the low $1.50s USD.

 

I think PWE is well positioned for significant gains without any extraordinary gains in the price of oil and natural gas.  That is, I think it could get to $2.50 USD or perhaps $3 USD with oil at about the current price (maybe $55 WTI).  I think $3 USD is a reasonable possibility if oil is in the $55-$60 WTI range.  Of course, I expect volatility in oil pricing and not a steady state.  Just throwing out some numbers for illustrative purposes.

 

$2.50 is a 31% gain and $3 is a 59% gain.  Those are pretty big gains that I think are possible without a run to $70 WTI or anything particular upside surprise on oil prices.  I think there is more upside potential if oil and gas prices climb higher or with a longer hold.  IMO, PWE is well positioned for a potential double if you have a little bit of a longer timeframe and/or if oil prices cooperate.

 

I don't think that type of potential upside is there for many oil companies absent a decent move higher in the price of oil.

 

Please note I am using a lot of false precision here.  Just wanted to include numbers to provide some examples.

[Uccmal]

FWIW, I like PWE now almost as much as at any time.  I am not selling any of what is a substantial position for me.  I added a small amount recently in the $1.70s USD and thought about trying to pick up some more earlier this week.  I don't plan on adding any additional stock at this point.  With the recent adds, my cost basis is somewhere in the low $1.50s USD.

 

I think PWE is well positioned for significant gains without any extraordinary gains in the price of oil and natural gas.  That is, I think it could get to $2.50 USD or perhaps $3 USD with oil at about the current price (maybe $55 WTI).  I think $3 USD is a reasonable possibility if oil is in the $55-$60 WTI range.  Of course, I expect volatility in oil pricing and not a steady state.  Just throwing out some numbers for illustrative purposes.

 

$2.50 is a 31% gain and $3 is a 59% gain.  Those are pretty big gains that I think are possible without a run to $70 WTI or anything particular upside surprise on oil prices.  I think there is more upside potential if oil and gas prices climb higher or with a longer hold.  IMO, PWE is well positioned for a potential double if you have a little bit of a longer timeframe and/or if oil prices cooperate.

 

I don't think that type of potential upside is there for many oil companies absent a decent move higher in the price of oil.

 

Please note I am using a lot of false precision here.  Just wanted to include numbers to provide some examples.

 

I have no quibble with this.  Its individual.  I need to not lose money, more than I need huge gains at this point.  Its still my biggest o&g position, followed by WCP, BTE.  WCP is the safest, PWT second safest, and BTE is the most speculative. 

[StevieV]

Of course.  Just thought I'd throw out a different perpsective.

 

I am also a BTE shareholder.  It is my second largest holding in the oil and gas space after PWE, though PWE is multiple times bigger.  As you mention, BTE is more speculative than PWE at this point.  They have a larger debt load and require higher oil prices both to break even and make money.  So, BTE is certainly more susceptible to oil price declines than PWE.  However, they have a good bit of time until debt maturities; I like their management for the most part; and I am bullish on oil prices.  $60+ WTI should be very favorable for BTE.  I think BTE is going to be a great investment at some point this year. 

 

As a general matter, I would not invest in anything that I think needs $70 or higher WTI.  Could happen, but I have much less confidence.  Many companies that needed $80 WTI are already bankrupt.  Some other companies may not need $70+ oil to survive, but are going to need that for investors to make any money.  PWE and BTE shouldn't need $70 WTI this year for us to do very well.

[SharperDingaan]

We’re on the same page as Uccmal, but more growth orientated. As we also hold PD, and temporarily TDG as well, our o/g weighting is almost certainly higher than everyone else’s. To compensate we will be opportunistically selling across our holdings over 1H2017, and returning a material chunk of our capital around midyear. The wise men in the casino let their chips run, and take $ off the table as they are doing it.

 

Long term, we do best within a certain size range - and prefer to try and keep it that way.

 

SD

 

[Oreo]

We’re on the same page as Uccmal, but more growth orientated. As we also hold PD, and temporarily TDG as well, our o/g weighting is almost certainly higher than everyone else’s. To compensate we will be opportunistically selling across our holdings over 1H2017, and returning a material chunk of our capital around midyear. The wise men in the casino let their chips run, and take $ off the table as they are doing it.

 

Long term, we do best within a certain size range - and prefer to try and keep it that way.

 

SD

 

I wish you said 'we' a few more times.

[Uccmal]

Of course.  Just thought I'd throw out a different perpsective.

 

I am also a BTE shareholder.  It is my second largest holding in the oil and gas space after PWE, though PWE is multiple times bigger.  As you mention, BTE is more speculative than PWE at this point.  They have a larger debt load and require higher oil prices both to break even and make money.  So, BTE is certainly more susceptible to oil price declines than PWE.  However, they have a good bit of time until debt maturities; I like their management for the most part; and I am bullish on oil prices.  $60+ WTI should be very favorable for BTE.  I think BTE is going to be a great investment at some point this year. 

 

As a general matter, I would not invest in anything that I think needs $70 or higher WTI.  Could happen, but I have much less confidence.  Many companies that needed $80 WTI are already bankrupt.  Some other companies may not need $70+ oil to survive, but are going to need that for investors to make any money.  PWE and BTE shouldn't need $70 WTI this year for us to do very well.

 

Yes.  Stevie.  It was you who twigged me off to look at BTE in the first place.  Owe you dinner, at least right now :-). 

 

Cheers, Al

[Patmo]

We’re on the same page as Uccmal, but more growth orientated. As we also hold PD, and temporarily TDG as well, our o/g weighting is almost certainly higher than everyone else’s. To compensate we will be opportunistically selling across our holdings over 1H2017, and returning a material chunk of our capital around midyear. The wise men in the casino let their chips run, and take $ off the table as they are doing it.

 

Long term, we do best within a certain size range - and prefer to try and keep it that way.

 

SD

 

I wish you said 'we' a few more times.

 

We holistically assessed this fragmented industry biz, to quote Warren Buffet you can fondle gold but what else can you do with it. Munger mental models opportunity opportunity opportunity, arbitrage. We recommend

[Joe689]

Nice pullback here.  Investors worried about border tax?  Re-loading my trading position

[Joe689]

A lot of license transfer applications:

 

http://search.aer.ca/pnoa-en/search/theme/pnoa?fq%5B%5D=feed_str%3Aall&q=Penn&sort=recent

 

Looks like the final phase of dispositions are closing up.

[Joe689]

Looks like we will need to wait for YE/Q4 report before we get any action is this name.  Still lonely, looking for believers.

 

What can we expect?

1.  Update on closing of final Phase II dispositions.

2.  Reserve Report (a lot of uncertainty here with how much the company has disposed, and increase in oil prices)

3.  Recent well results. 

 

Any other feelings on lackluster movement in this name?

[SharperDingaan]

Most of the pullback has very likely been our seller continuing to unload their position.

For now, we are still crossing the desert.

 

They will also be reporting Q4 results - when conditions were materially poorer than they have been in Q1 PTD.

Let the sleeping dogs lie until showtime ;)     

 

SD

[Joe689]

 

Let the sleeping dogs lie until showtime ;)     

 

 

Will do!  Just getting antsy.  Only have a few more months before I can lock in some long term gains on this name. 

 

Anyone, care to take a crack at speculating the Reserve Report?  Feeling like it is almost impossible to predict + I am no where near an expert.  Thinking some  variables are:

1. Reverse of impairments

2. Lost acreage to dispositions (maybe most of these were already heavily impaired anyways)

3. New unbooked reserves i.e AB Viking.

4. Canada vs US guidelines

 

A lot of companies, reporting there reserve reports before ER but as per IR, Penn West will release their reserves along with q4  ER on 3/15.

 

What I see mostly is big oil reserves going down, and junior oil reserves going up.  Partially reflective of respective break even costs?

 

 

 

[Pelagic]

https://www.albertaoilmagazine.com/2017/01/cfo-year-david-dyck/

 

A nice article on some of the challenges PWE faced during the oil crisis as it sold non-core assets and resized the company.

[constala]

6 months low...There really is not much love those days for Penn West, nor most Canadian Oil producers.

 

[nafregnum]

https://www.albertaoilmagazine.com/2017/01/cfo-year-david-dyck/

 

A nice article on some of the challenges PWE faced during the oil crisis as it sold non-core assets and resized the company.

 

Interesting tidbit in that article:

 

...So at one stroke, Penn West not only focused on its balance sheet—abandoned wells show up as present value—but on its future liabilities too. It costs the company between $110,000 and $120,000 to abandon a well. By selling over 28,000 well bores with the properties, Penn West removed about $3 billion in future liabilities, Dyck says.

 

The "Getting Personal With David Dyck" section at bottom is pretty cheesy, a funny bunch of softball job interview questions like:

 

What is the most important quality that a senior executive can have?

Be measured. Don’t panic—be calm. And build a good team.

What is the least important quality that a senior executive can have?

Self- importance—not working as a team player.

What is your greatest fear?

Disappointing a family member or my staff.

And, then four questions later they repeat "What is your greatest fear?" which has the same answer.  At least he's consistent! ;)  (copy paste error I know, but it was funny)

[SharperDingaan]

https://www.albertaoilmagazine.com/2017/01/cfo-year-david-dyck/

 

A nice article on some of the challenges PWE faced during the oil crisis as it sold non-core assets and resized the company.

 

Interesting tidbit in that article:

 

...So at one stroke, Penn West not only focused on its balance sheet—abandoned wells show up as present value—but on its future liabilities too. It costs the company between $110,000 and $120,000 to abandon a well. By selling over 28,000 well bores with the properties, Penn West removed about $3 billion in future liabilities, Dyck says.

 

The "Getting Personal With David Dyck" section at bottom is pretty cheesy, a funny bunch of softball job interview questions like:

 

What is the most important quality that a senior executive can have?

Be measured. Don’t panic—be calm. And build a good team.

What is the least important quality that a senior executive can have?

Self- importance—not working as a team player.

What is your greatest fear?

Disappointing a family member or my staff.

And, then four questions later they repeat "What is your greatest fear?" which has the same answer.  At least he's consistent! ;)  (copy paste error I know, but it was funny)

 

You might want to consider what would happen to the existing provisions that had been booked to fund those abandonment costs, when PWT is no longer responsible for them. And where the PV of that previous 3B liability was being recognized ;)

 

SD

 

[SharperDingaan]

 

Note 7: Provisions

Provision = the PV of the future liability at a 7.5% discount rate over 50 years. The PV of the 3B liability removed is 80.67M - & ultimately it will flow to equity. They also received cash for the wells & intended to further reduce their debt with it. Not a bad rabbit.

 

SD 

[Cigarbutt]

I became interested in the oil and gas sector late in 2015 and in no way have the boots on the ground knowledge that some have. But I looked at PWT then. It has had an interesting unfolding so far. I am moving away though from this sector because I humbly feel that the demand/supply equilibrium is not favorable. I am not competent enough at this point to get into a deep argument about where the industry is going.

I just want to share a link about breakeven prices for shale producers.

https://www.rystadenergy.com/NewsEvents/PressReleases/shale-breakeven-prices-2017 

If I were the SA energy minister, the graph showing the declining breakeven prices would freak me out.

I would submit that the real breakeven prices for "nationalized producers" are way above.

Do you really want to awaken the giant?

 

 

 

 

 

 

 

 

 

 

Source: @nolahoubear (Via The Daily Shot)

 

[nafregnum]

Thanks SD, I've been trying to determine whether it's a good time to buy given the current weakness.  March 15 is their report date.  I'm trying to pretend I don't already hold any PWE and am facing the buy decision for the first time.  Beyond that quote about reducing future liabilities, I'm having a hard time building confidence to buy more.  Here's where I've been chasing down the rabbit hole, please anyone correct me or give the bull case to help round this out. 

 

I found David Dyck's LinkedIn profile but it doesn't list his time at PennWest at all.  My cynical mind is asking: How come Alberta Oil Magazine's CFO of the Year didn't even list the job?  It looks pretty much like I have the right David Dyck (link below)  because the picture looks like him and because he's got lots of endorsed financial wizardry skills (private equity, alternative investments, wealth management etc)

 

https://www.linkedin.com/in/david-dyck-92471220/

 

Then here on the exec bios page it lists David Hendry as CFO, looks like he became CFO in January 2017.  So the outgoing CFO was named CFO of the year by a niche local magazine.  It seems like maybe Dyck was brought in to do some of the hard work of layoffs, asset sales, and financial restructuring and now he's gone?  Anybody know if he's got loads of stock grants/options?  I personally know someone who was named CFO of the year right before being let go for incompetence, and I know a few other examples of awful leaders who become "exec of the year" in their field ... so I need to remind myself to take a skeptical approach to those kinds of awards at any rate.  And the softball "getting to know you" questions at the bottom of the article about Dyck serve to undermine credibility in the piece, since it looks a lot like something Dyck mostly handed over to the writer ...

 

David Hendry, the new CFO, has only been at PWE for a couple years.  He was at Talisman Energy before that.

 

David French, current CEO, came over from Apache.  He's been CEO since October 2016. 

 

That's a lot of Davids!

 

So glassdoor.com has a lot of negative assessments of management: priorities constantly changing, letting go of the wrong people and promoting the wrong people... old management was better, etc...  I do get suspicious of "new management" that comes in from outside, because I've seen how poorly they tend to really understand the business or care about long term culture.  And it seems there's been a lot of management turnover. 

 

Gregg Gegunde was let go at the same time as David Dyck, in January.  He had been at the company since 1998.  His profile status is "Former Sr. Vice President, Exploitation, Production & Delivery at Penn West Petroleum" ... wish he were someone we could talk to.  He's probably retiring now, having earned $1M+ per year since 2011 (only 832k in 2015)

 

https://www.linkedin.com/in/gregg-gegunde-p-eng-b3026718/

 

Is executive compensation looking fair to you guys?

 

http://insiders.morningstar.com/trading/executive-compensation.action?t=PWE

 

The other thing that's bothering me is that we don't have any other super investors on our side right now. 

 

http://www.nasdaq.com/symbol/pwe/ownership-summary

http://www.dataroma.com/m/stock.php?sym=pwe

 

I used to console myself that Prem Watsa held some and hadn't sold out.  I know most of the investors whose 13-F's I follow aren't even into oil & gas, but it sure would feel better if

 

And... this article implies that PWE has sold off a big part of its potential upside in order to stay alive:

 

http://www.investopedia.com/news/did-penn-west-sell-its-future-pwe/

 

I'm not so clear on why that article thinks oil sands were such a productive asset that shouldn't have been sold.  Maybe EVERY article you read out there is just crap some know-nothing writer put together in a hurry to meet a deadline. 

 

So is the price just languishing because the Ho Cheuk Fund is still getting out?  If that's the case, then it seems like a decent time to buy since the price would be artificially depressed by the heavier selling pressure.

 

Here are previous investing mistakes from the last couple of years, and how I've got danger neurons telling me they think this is a similar scenario:

 

* WRES (Warren Resources) in late 2014 looked cheap because it had dropped 50% or more from where a guy on SeekingAlpha had been pumping it (I know, dumb mistake)  I bought some, then doubled down a few times as it dropped more and more.  Only then did research and saw the extravagant lifestyle of their chairman and others here helped me see they weren't such a quality company.  The tip offs were: excessive executive pay packages, use of language intended to be exciting to investors (buzzwords, all sizzle and no steak), lots of executive turnover, execs that had flashy lifestyles, and headquarters in NYC instead of where their assets were located.

 

PWE seems to fit the exec turnover problem, and maybe it's been a bit too generous with exec pay, but that's lower in 2015.  I did detect a little bit of investor excitement speech in one story: 

 

https://www.pressreader.com/canada/calgary-herald/20170106/281702614393750

 

    For months last year, the company was focused on survival.

    Now, it's looking at "how we're going to grow the company at a pace that's exciting for investors," French said.

 

* OUTR (Outerwall)  I lost some real $$ on OUTR because I sold a lot of my position around $28.  I should've just held for another month or two as it dug out and eventually was bought out at around $52.  The mistakes were: it was a melting ice cube, and its executive management had some turnover and an uninspiring track record.

 

PWE seems to also have a rotating executive management.  Are there incentives to keep them there for the longer term?  I would so much rather have the Toyota kind of managers, promoted from within and with decades of experience in the company.  It just doesn't smell like Warren Buffet's kind of managers, but I haven't actually looked very deep into whether the lifestyles are extravagant.

 

http://business.financialpost.com/news/energy/rocked-by-accounting-scandal-penn-west-has-now-turned-the-corner-ceo-says

 

I hear Buffett whispers in my head about his experience with Tesco:

 

In the world of business, bad news often surfaces serially: you see a cockroach in your kitchen; as the days go by, you meet his relatives.”

 

Maybe all it means is that at one point they had the standard corporate culture that presses for meeting the numbers.

 

(from Buffett's 2016 letter)

 

CEOs who overtly look for ways to report high numbers tend to foster a culture in which subordinates strive to be “helpful” as well. Goals like that can lead, for example, to insurers underestimating their loss reserves, a practice that has destroyed many industry participants.

 

Are they clear and clean now?  It's been a while since the accounting thing, and they seem to be in a stable financial position now.

 

* ZINC (Horsehead) failed because of high debt, poor management of an unproven technology, and a crash in Zinc metal prices.  I made 10% on a small position in ZINC by dumb luck: bought before the last good earnings report surprise, the shorts covered, and while it was spiking that day I sold out.  That was too much of a roller coaster ride though, and I don't want my long term performance to depend on lucky bets like that one. 

 

The PWE similarity here is the question: Is PWE just a bet on recovering oil prices?  What if shale oil in the US skyrockets next year and depresses oil prices back under $45, does PWE languish even then?  If it's a bet on oil prices, perhaps I should wait until oil is down again -- maybe US shale production didn't kill enough of itself yet and still has a few roller coaster loops left to go.

 

What's the longer term picture?  In five years is PWE sitting at $3 or $6 per share?  Does the business itself have enough strength that any idiot could run it?  Why is Ho Cheuk selling out?  Why aren't there any big names in here (I just wish for an Appaloosa or Howard Marks or Klarman to be riding alongside me...)

 

This article has a graph where they've calculated the break even price of a barrel of oil when you consider the public budgets/spending of various countries.  The OPEC average was $95. 

 

https://www.bloomberg.com/gadfly/articles/2017-03-09/oil-price-prize-fight-opec-vs-the-swarm

 

Am I too micro-focusing on the individuals and guessing what it's like at the corporate HQ? 

 

At $1.45 I'm getting tempted today to just buy some, but while I can see it's not the same thing as ZINC / OUTR / WRES, I just wish it didn't feel like them at all.

 

Sorry this was so long.  If you know how to calm these worries, please help me, and thanks!

 

GLTA.

 

[SharperDingaan]

A few comments following which we will remain silent, as we do not wish to steal managements thunder.

 

Drilling costs.

(1) Drilling costs fell because 'nobody' had the cash to drill anymore. With the industry restructurings and workouts that has now changed - & there are no longer enough specialist rigs available. Costs are rising again, & those specialist rigs are going to friends only.

(2) 'Nobody' used to be everyone & their dog; today it is very much the disciplined $ only, Exxon being an example. Today, to keep a specialist rig out of a competitors hands - requires a long term take-or-pay commitment, & using much of the drilling to build the fraclog (& keep new flow out of production); a big boys game. 

 

Turnover.

Nothing unexpected here; it just reflects that different skill sets are required at different times. Just keep in mind that the old PWT books were being cooked (why a restatement was required), & any/all involved at that time have significant incentive to 're-write' history. There are many avenues by which that can be done.

 

Feb-2017 Presentation, p 13.

(1) November 2016, FY2017 was 25,000 boe/d - now its 28,000. Up 12% in 4 months ... not 12 months

(2) 13,500 boe/d is held/available for sale. Mannville was a new addition in the Jan-2017 presentation - implying that some of this ultimately isn't going to be sold. If just 1/3 was retained - its an immediate 4,500 boe/d boost in production.

 

Misc.

(1) Last report they planned to spend 80% of FFO on drilling (180M); the remaining 20% totaled 45M. They have also had a series of best in class wells in Alberta Viking that were very good, & very likely have had similar successes with their farm-outs; with everything close to existing collection facilities. That remaining 45M of FFO may well be a tad understated.

(2) The Phase-II sales was primarily about strengthening the BS by reversing provisions & removing depreciation (write-offs). We know there were a series of title changes in Feb, & most would expect they weren't just for already announced sales. The sales were also announced in January, versus December, implying that any write-offs (if material) will be in 2017 - & not 2016.   

(3) While most recognize that PWT should be trading much higher, the main impediment has been the inability to get to price levels where institutions can enter. The obvious solution is a share consolidation, and a resumption of dividend payments on the smaller share count. The obvious timing is at the beginning of a new fiscal year. 

 

All good.

 

SD

 

 

 

 

 

[nafregnum]

Thanks for the extra info, SD!  I held my nose and bought a little more.