Goldman cuts forecast, page-38

Hi Rob,

Don't know if I am misunderstanding you or vice versa.

EVERY DAY, SSN (and most oil companies) Reserves are declining due to the simple fact that they are being produced. I think I've referenced the RRR here before:
Reserves-Replacement-Ratio

Thus I don't get your comment about the production profile supporting higher Reserves. In fact RBL usually cover this via a monthly reduction amount (in $$$ not in volume) to the Borrowing Base that is supported by the Reserves.

No drilling means 1PDP are reduced by the amount (volume) produced and thus their BB ($$) would naturally get smaller.

Of course the June 30 Reserves report increased - they converted PUD into PDNP and D&Ced the infill wells.

Unless I have missed something significant, the Dec'15 Reserves report would show a decrease in volume and the $$PV10 is based on SEC and/or Strip and/or Creditor price decks. A $19.9M impairment write-off to NS & Rainbow gives some clue to how painful this past year has been.


The picking the winner comment is more targeted towards if you are going to put money into an O&G company now, you best be sure they don't face a liquidity crunch due to maturing debt that is unlikely to be rolled over by the lender (i.e. an almost automatic loser for equity holders).

Good links. All variables need to be considered.