SGC acquired these Canadian assets when oil was US$35 - $38 a barrel and it looked like it would take a miracle for oil to bust through $40.
Well, multiple miracles happened AFTER SGC agreed to the purchase.
a) OPEC did not increase production materially. Nobody was expecting that after the Russia/Saudi price war last year. b) US Shale producers aren't rushing back like the good ole days. Exxon wrote US$20 billion off shale assets last year and aren't rushing back.
Why? Because reserves don't mean anything anymore. It's all about cost control, production levels and protection of capital.
I'm actually not worried what oil reserves SGC has. Who cares? All O & G shareholders are worried about now is cash flow.
And these assets are cash flow positive. And with the tone of today's announcement, it looks like there may be more to come.
Above is not financial advice and my opinion only.
SGC Price at posting:
7.4¢ Sentiment: Hold Disclosure: Held
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