The hedge number has me puzzled. Way smaller than I was...

The hedge number has me puzzled. Way smaller than I was expecting and hugely smaller than what you were expecting.

In the laundry basket of dirty shirts SSN is not the dirtiest but it aint the cleanest either.

Never (and I do mean never) have I looked at an O&G investment and thought gee if I put aside all their G&A costs they make money at what they do (produce hydrocarbons or explore for hydrocarbons,...)

It's also why I choose to look at the cost on a $/Boe basis. This doesn't flatter a lot of companies (for the record I also look at $interest paid on Debt and that doesn't flatter LNR for example).

Looking at G&A costs in context of BOE produced doesn't leave room to hide. I made 2 points in earlier posts
1. Production is declining. It is a natural decline. Even SSN will tell you that (see bottom of page 1 of Qtrly). SSN has had 3 straight Qtrs of decline (natural). At roughly fixed G&A costs that forces an increase in G&A $/Boe
2. SSN production (sales) is becoming more gassy. So that decline is a double whammy. Less BOE's produced and lesser oil % in production mix. Flows through to G&A costs as well which impacts the Netbacks SSN receives on BOEs produced.

So as we look forward to getting some kind of proforma from SSN on the OAS acquisition, the assumption I made was that they can double production (as in they are buying +100% of their equivalent production (and more oily production too) but not double the G&A cost. I allowed for an ~25% (only) uplift in $G&A (so from $4.6M to $5.75M and the news in this Qtrly is G&A now down to $8ooK for Qtr (from ~$1.15M prior)). That brings their G&A $/BOE down from ~$20/Boe to something in the range just about $10/BOE (And a much oilier mix).

I know I don't sugar coat things but I'm also being generous (IMO) in the allowances I'm making in any forward models I've put up for SSN's ability to deliver on scale of changes required.

Truly tough times for 99% of E&P (even Chevron produced its first Qtrly loss in a decade).

Nonetheless, TB/SSN isn't going down without a fight and I have to believe his positioning of OAS acreage is being made with every bit of financial engineering and skill they can jointly employ.

GFTA.