I will preface this thread with I understand that Borba has been...

I will preface this thread with I understand that Borba has been a disappointment for all involved and while we may see some gas production it is not the outcome anyone investing in SGC desired.

In saying, I have switched my research to the newly acquired Canadian assets and the potential these offer the company. SGC currently has a Market Cap of $13 million + options which are currently out of the money.

SGC has recently acquired a percentage of 2 assets Canada
1. Red Earth
2. Alberta Plains

Both purchased through Blue Sky in partnership with XST

Red Earth
Current production 1000 BOE/d (300 boe/d net SGC)

Red Earth properties were transacted from Highwood Oil who over the last few years has disposed of its Oil assets and shifted focus to Lithium. It still retains pipelines as a revenue source. Highwood plans to transition to an Asset Management company focusing on energy transmission and related technologies.

To gauge the Red Earth properties I think it is important to look Pre-Covid as the effects of Jan-April last year does not reflect the current situation.



The table above shows the adjusted operating and transportation expense per boe, note this includes Highwoods clear water asset which was not included in the sale.



The table above shows the Netback of Highwords assets, noting that September 2018 was affected by the pipeline release.

There is a large amount of documentation on theRed Earth asset showing the fields are highly leverage to higher oil prices and have good capital returns with a payout period of less than 12 months for new wells (approx 0.8 yrs).

Alberta Plains
Current production 607 BOE/d (114 BOE/d net SGC)

Alberta Plains properties were transacted from Zargon Oil and Gas. Zargon went Bankrupt in mid 2020 due to a high debt loading and a large reduction in oil prices. In early 2020 Zargon shutin the alberta plains assest due to the low commodity prices April 2020 approx $8 per BOE a reduction from $35/BOE in Q1 and $56/BOE in 2019.

The Alberta Plains assest were purchased with a production rate of 100 BOE/day due to being shutin from COVID commodity prices. Since purchase production has increased to 607 BOE/day



Above shows the production prior to the COVID shutin, showing that at 607BOE/day the Alberta assets still have further potential for production increases (note the Williston Basin assets were not included in the transaction).




The above outlines, the basis for the comments from SGC around the potential for good cash flows from the Canadian assets. And also highlights that these assets are leverage to high oil prices.

If oil prices continue to remain steady than SGC with its current 414 BOE/d has the potential for positive cashflow from these assets with further improvement available with little expenditure.