Ann: December 22 Quarterly Activities and Cashflow, page-4

Much like I expected, they are plowing all their operating cash flows into new growth. There really isn't all that much profit in the oil producing business at current prices and current growth plans.

Post quarter end production rate is a fair bit higher than the average achieved during the last quarter. The spread has improved a fair bit post quarter end as well, so this suggests a much better quarter is underway but it will be spent on more wells in February and Montney well testing. Kiss your buyback and future capital returns good bye.

If they weren't so set back by the hedges they would've made about $18m of FCF in total for the year, whilst growing production by about 20%. Keep in mind much of this was generated when oil prices were >$90 a barrel WTI. If this were a stand alone business you wouldn't want to place too much value on it unless oil prices start rising again.

I really don't like the oil producing business to be honest. I write it off as I am here for the Montney asset. But an optimist might look at total future cash operating profit with no new wells which could look something like $10m for the first quarter and declining by say $1m per quarter, so $55m in total. My best guess is the value is anywhere between $0 and $55m. The balance vs market cap can be attributed to the Montney investment.

If I were them I would halt all new investment and stockpile the cash for development of Montney. I don't know why they spend so much on the new wells. Which suit is in charge of these decisions? Is it the same person who decided not to hedge production at $120 WTI and WCS at $12 but instead raise capital?

Looking forward, they sound very excited on the imminent results on the re-testing of the Montney wells, and very confident of getting on production in time for the LNG Canada export facility in 2025. This asset is likely worth many multiples of the oil business and I feel like there's a sense of urgency to get this testing completed, driven by a genuinely interested and committed party (Peters & Co signal is relevant here).

If there's any weakness on this result I am probably going to tip in more for the news flow on the Montney testing results. They should be quite pleasing as neighbour results recently suggest.

Just my opinions.