Opex for SAE on its North San Ardo field is currently running at around $6pb, and they won't have to steam inject for about another 18 months to two years, so SAE is not a high cost producer.
The company has been running at an operational profit since late last year and has significant tax losses to write forward. ie compared to many (most?) other E&P juniors, a greater percentage of its net revenue flows to the bottom line.
The company is in good shape on its NSA project at $85 oil, and they have modelled internally at a lower WI price than that. Importantly, the company is also in a good position to internally finance its programe for the next year or so.
At the current SP the stock is under-pinned on an NAV and cash flow basis at $85 oil. You are getting the exploration and appraisal upside for free, which I think is a good deal considering what they have. If the oil price is sustained over $100, then that is another bonus.
G.
SAE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
