Hopefully you guys can get a good price to clear the debt and clean the balance sheet up. Overall I think it's been a not so good outcome and a difficult position despite some indicators that the FB prospect could be a good asset.
Some thoughts:
- If the significant asset is the entire FB asset as purchased from Oasis then the remaining asset would be the Glady's well which is producing at roughly 16bopd net to SSN. This would not be enough and a new prospect needed if the coy continues.
- Maybe the significant asset is not all the original purchase but enough of the asset to cover the debt and other liabilities to give an opportunity to develop and use the knowledge gained over the past few years. Keep in mind there are many fields in the package and Foreman Butte field was only one of these. Below is my calc's on the contribution of each splitting between North Dakota & Montana.
- I think some of the challenge with the project was there are so many wells spread across a large area which concentrated effort in a few pockets. A smaller area could give better chance to develop and reduce some of the overheads. Marketing would need to improve because overall imo the development of this has been hard to follow and understand.
- A takeaway from watching here for me has been that a company that takes on debt has to have an active hedging strategy which is regularly reviewed and explained. Imo the position was created by the lack of hedging way back in Stockyard Creek days and added to by the ongoing high G&A costs. Adding hedging once the oil price dropped whilst protecting the downside has restricted cash as OP recovered and there are still some months of this to come which will also need to be covered.
Here are some updated charts I do based of the monthly NDGov and Montana public reports, the prodn are my estimate of NRI but it doesn't quite tie up with coy as I don't have enough info. The water is Gross and primarily used to get the ratio so doesn't matter so much to me.
GLTA, you never know and I hope some positives can be salvaged when/if the suspension is lifted.
