Canadian Montney plays, page-15

This is not the only way to access our value, but in a highly traded asset market like Montney undeveloped acerage it is a particularly useful starting point. Our implied land value ($65 million mkt cap less $25m cash) is $555/acre, but you have to assume we will spend all the cash so that takes implied land value to $900 per acre. This is even below the poorest gas area at the very south of the formation, and nowhere near the median $4,700 for the north east where we are. Oil price has fallen 33% since Sep 18 spike highs, but is still broadly in the ranges of the last 3 years. Natural gas prices globally are pivoting higher, much higher, Canadian domestic gas prices are depressed because of reasons we are well aware of, lack of infrastructure and over supply. This is not a dreadful story on any time period other than the immediate near term.

So the next point is Montney listed plays are trading like they are distressed vehicles, the vehicles have too much debt and cash flows are under pressure due to the domestic glut. But reading PONYs market update I don't sense any distress. Although I struggled to find what their cash position is? They are saying they can grow cash flows even in the current environment without needing to use more debt, they've already used enough of that. Whether they are distressed or not, this does open up the path for significant M&A across the listed space, which could to some extent crowd us out ie: there will be cheap options , but PONY's implied acerage price is at least $3,500 even when trading distressed.

Next point is the quality of our management team, so yes there will be transaction risk, but I would spend some time with these guys if you have any doubts, Stein & Whiddon etc are not your typical WA jubbs.

Technicals are just awful, momentum indicators are catastophic, volumes traded are pathetic. 4.2/4.4 is that trendline channel, Worth nibbling here you would think. Otherwise we are heading to 3 cents.