Mon, 1 Dec 2008|
Automatically Generated Transcript (may not be 100% accurate)
Okay have -- bucking horse energy hey niche focused oil and gas exploration development and production company headquartered in Houston clip -- -- will be presenting today. Good afternoon. Was when I -- bucking horse on the -- name that most people aren't too familiar with he's seen -- been in the pine hill -- and from the other companies that are there. You may have seen our name but not know exactly what we owner what we do. And let me make sure that -- -- -- tell me in twenty minutes of a runner over the colonialism -- of matter. Serve any reader please can keep. My bucking horses. As adjustments is a small smaller company. Niche focused in the pine hill. Any -- that's. That's all we have essentially we have a new management team became in march of this year infected with that listed on the marked on the TSX venture or TSX exchange. March 4 and that's when we came into the company. We've been expanding our reserves. He Lee's return -- look at this but now I have to focus on this. Look at with the screen here -- -- reserves consistent with -- for the past 67 years. In fact -- -- he's been around for ten years as as formerly called -- nine and became bucking horse this year and emerged with another small company. Our partners are all trying -- and some mothers with -- of the notable names. We're primarily non operated are wrong on operated -- -- for its fourth you'll see our acreage position in a minute. All reserves and you'll see your dumb and analysts who'll protect the same guy who does -- reserves does our reserves. So there's a lot of experience in and -- oil it is changing the numbers we have some influence on what's what's posted for -- but. -- it's all sort of very well thought out and moment metrics are consistent level -- -- Begin with treating them the Toronto Stock Exchange does -- this year for trading symbols but. Our market cap like others has gone down in the past few weeks. Armored -- -- 150 million to retrieve four -- here today we have 23 million shares outstanding. And about 175 million dollar market caps have gotten down the company that tomorrow capped by 50% but we're very well capitalized so in this era. Companies that are for running -- -- money were not in that position and all over. I'm very well funded you'll see that second our productions -- ranges from six and a half to eight million cubic feet a day. Which is pretty healthy for small company like us it varies because things are going on and off line. Recently and into our areas that. Are reserved as of year end which we will have a -- -- ended August 31 two the new year and you'll see shortly. But as of December 31 700 BCF -- proved reserves and about sixty Beazer probable and under various price forecast and and those are. Reserves -- as you know are dependent on that those local ups significantly -- this fiscal year and the team they came into place really was. Bucking horse was. For the -- creative. And -- ministry of exercise. For the guys who -- -- and they'd be decided to bring in management team. To push the company forward take it to the next level. -- a petroleum and here I've been an investment banking. And I've been running a couple of companies in and that these guys the guys who were running before. And you brought me in with ornaments you guys Tony gale ex cat bit 2.5 years experience. And we have a number of people under us that senior land men senior geologist CFO and and so forth it. Significant experience for small company and and we -- that experience on this small little laugh that would technical growth dramatically in the next few years. So our plan from strategic standpoint is pretty simple we've been -- growing through the -- -- the drill bit we plan to keep that. Our partners we have some of the best person the industry's you can imagine -- lowest cost operators in the industry and one of the lowest cost field so. We're gonna focus on that play we don't plan to expand out of -- -- -- any time soon affect anything you would do. You everybody -- -- the -- every day all the time and anything in the jails would be diluted from just finding cost basis to our smaller company so. You know we've got visible. We -- visible growth involved reserve and production and a reason to stray from that right now in this sort of dollar finding cost territory which we like -- this. It is a legacy asset it's been around for a long time now -- home -- -- come along when the past five to ten years. You know -- 100% success rate essentially economic success rate. Significant rates -- return you know it you'll see even 56 dollar realized prices were were in 40% return category. And of course -- ten dollars it's you know hundred plus percent -- return. Our partners again or ultra and Anadarko we're very well funded we have aligned with we've been known fact that's 100 million -- credit facility. We have about thirty million a revolver right now. And with the tightening in the markets we feel pretty good about that -- about thirteen million drawn sort of pretty good shape on from a financial position of -- it later in the hedges were. We've covered our bases -- with some hedges is well pretty good prices. -- -- we have had -- significantly growth growth reserve growth over the past five to seven years. And so here's where we are on the yellow and -- this is him pointers and there's an important -- -- -- and it is. Well. And the yellow that you see on the map is the mesa area which is about. It's very large 141000 gross acres we have about 4000 net acres but I would tell you that little part that. Sort of sticks into the orange there that's the part we focus on that's the -- -- kind of proper room where -- -- reserve come from. And that's about 500 net acres to us to focus on that number in the mesa area which is at the bottom there were we own. A smaller interest about 24% working interest again -- our operators ultra who has about -- 90% interest there. And war bonnet where we've got some significant drilling there right now in fact as we speak we've got some welcome went on. 42% that's down there at the bottom. That's where there's not a point refute it's between -- point. We have enough we have about thousand net acres. Technical mind. And -- the point it's a -- Okay. OK so over here on this right slide there's the world -- area -- have about thousand acres and all those acres are essentially within the kind of proper so. We -- we get full credit to that. We don't have. So -- and the way I would I would think about our asses is about 15100 net acres in the -- -- and that's important because when you go back to. Reserves gas in place and then of recoverable reserves it makes it's it's it's a pretty significant number for this -- accompanying -- market cap. Okay here's the work on -- property down south here. That there. We've got a lot of things going on in the -- -- right now in the catalysts going on right now. Are the ten Acre down spacing which happened throughout the field this whole -- was on anywhere from five to forty Acre spacing in fact most of our little acreage was. On forty Acre spacing we had a little bit approved for ten acres right here. And and the way -- missile looks at this they give credit to every little every forty Acre block. So it's important to today and get this approved for -- ten Acre down base because it immediately ramp up our production or are reserve level. Without doing anything effect did this company did. Double its reserves. From a TP perspective pretty easily judgment on things -- -- So -- feel pretty good about that in fact. All this -- here is now ten acres this pale yellow was on forty acres. All that's on ten acres were not gonna give full credit this year -- everything we're not asking counsel to do that. So in a way were sort of managing the growth of the company note you'll see when it comes out probably -- point five to 30% reserve growth. And hopefully in the this year with some wells -- -- have similar type. Production growth numbers as well as consistent with -- -- historically. Figures here of what's going on this field the magnitude of this field we don't know the fine -- from the Truman -- see me do you you've heard anymore for a either big wealth we've got one while McCain and -- between four over here to the right. -- a twelve point seven million today we had an interest in that. And this is an area that ultra owns the same as we do they probably focus more on other areas that they have higher interest -- But what's great about that is -- delineate the field to -- -- you can -- -- this. To the east and also to the west but in in this case the east we've got some other well -- right we had one while just thrilled. The the five B 124 it says in progress right now but that wells down it's in progress it's completely completing this year. -- -- -- -- We've got the 7124. And eleven B 123 these two wells -- here. And we had so from a success standpoint we had this twelve point seven -- -- David very very well here. To the north acumen or fifty million today -- these -- community anywhere close to them we have a 42% interest we've got three wells going on this year. That's within our capital constraints of course. You know we could 42% even vote because he minutes and going today it would be a significant number -- plus it would more than double our production at the current time. -- pretty good about the war -- area. Again from a reserve booking standpoint all this would be. It most that would be in -- category will probably means that a little bit and one of those blue triangles and circles will go to the proof that most of the ten acres in fact more between acres well. The mesa area again the other is -- thousand acres about 500 net acres within this sort of broader 4000. Gross acres this little area right in here in this -- here we know the field. Gets. The reserves are quite -- parts of the east. Although in in more fun it's a better to be here we we sort of -- the field limits and we know what the economically and it is the field so. -- -- gives us credit for anything right -- here is that's where it starts fading from an economic standpoint. And we've got it's sort of this this cooperate here's -- me blocked. This thing going -- feel with the you're around ruling the -- yes. Ruling which is -- and about a month ago. And it's significant because it impacts how this field -- drilled. You've got to -- from certain pads which in effect how how the field is delineated in our area. So if altering -- drill on one area announcing it will won't uses. It does impact on the field developed over time and it helps us because they have to minimize those -- footprints. It's on the Syria again. Not too much to talk about from an active drilling standpoint right now. But in the future the accelerator going on ten acres as well as the accelerating your round growing certainly -- impact in mesa area. And -- with reports that we've -- -- happens over the next couple years. So just I mentioned it here's the down -- approval they came in July 15. This whole area in fact the whole field. In. The whole field he -- that whole pale yellow areas not ten -- again here very perjury here. And this red red parts were the approved five Acre spacing. So we know that the field. Can withstand five Acre spacing so you take our our acreage. And and this is all important because you and you want to boil it down through reserve numbers how big could they be for -- Right now we have just to put in perspective. We have about a hundred locations into the top -- -- we have about 47. Gross to 52. Probable locations. All and and the viewing -- for the slide it is -- we've. We don't give much credit at all right now to the ten acres which is invalid. -- -- quarter to less than 20% or both now and an Acre -- take a field down to five Acre spacing. Which is happening right now with shelves of going to be approval in the area for five -- and in and around -- -- acreage. And we. You can see the impact it would it could. Through that ramp up our reserves significantly what you wanna mention one thing on -- But I didn't and right here is the deep -- you may have heard that little truck. I'm going on right here beavers the -- be tested peer thing you see is relatively close were monitoring the result of the deep density test. -- -- all of -- -- criminal information is that deeper through nineteen is about 141000 feet. About 191020000. Feet. I think a lot of people watch and that the what the impact can be we've seen -- and that we can be. Generally understand it but you know the phone with completion -- it happens in there -- -- -- -- right now. Here's what happens in when you have ten Acre down -- you go from. A number of you on the left here you've got forty Acre spacing and that's just -- it's sort of a graphical depiction of what happens forty Acre spacing hound book. We've got 27 probable and you have seven so there's no real magic here businesses. No muscle has very methodical approach to what -- -- reserves. So you you take is facing down you obviously increase the number locations but based on the size and based on the ruling. You -- factual you'll double your but you may lose some probable to -- -- works he'll have the same number of locations. When you move those in the crew category. And you can see the impact and in our reserves and this is this is an -- -- -- -- a month or two ago. We're looking at a hundred BCF now as of well that's your last year to probably some -- the neighborhood of 130 -- yes that we found that 30% growth. Just on. Really just on the down spacing yes we will get credit for some of the results in the war -- area which -- significant. I gave -- school from comfort to give us more per well reserves. Everything that they seem to do is it just gets better every year this field keeps improving every year from a production standpoint from a booking standpoint. Per well reserves but part of the field gets -- bigger the outskirts of the field -- -- every single year. -- I mentioned earlier we've got. From a financial standpoint pretty well situated. -- we feel good about that in this market. -- -- gas hedges that we've put on -- right now we have about 60% of our current production hedged with swaps and collars. Anywhere from eight to twelve dollars you can see that the -- for 965. And we just put in places -- -- -- we had -- before we move them. We got about -- 40% or so heads to and happy doing today -- 99 dollars and 66 himself. So pretty about that and today's market -- six dollars -- There are six don't -- and it's. But you know as as our production comes on. -- on line at the end of this year from the three wells and and mention hopefully will be in line at least the first quarter. -- -- these numbers will go down we will we have an active hedging programs there were constantly looking at the best way to to cover ourselves. And you know nobody wants to handle production lower prices but. You -- -- you forgiveness in a bind either from capitals -- appointments. So I mentioned earlier that. Comments are really question. If but when five Acre spacing it's happening now. A lot of studies have been done an analyst -- a lot of work and historically there's been a lot of work comment again stands and now or you can take him down. Before you start hearing before the start hearing from before you start. Getting interference from these wells and so here's where -- back to the 15100 net acres 15100 net acres. You've got a number of locations but the rule of thumb with no Mosul as one BC. Gas and per Acre of gas in place -- -- 15100 on. And and that's that's in place if you have 15100 mandate for her particular candidate received at one point five TCF in place. If you take it down -- five acres. That'd -- recovery factor goes from ten acres 60% to five acres 80%. You can see -- ten acres 60% of one point five keys for to be number 900 -- And over TC. 80% recovery so. This this small company with 15100 net acres. Has reserve upside exposure. Albeit it's it's it is going to be a long time and and a lot of drilling before all that is -- for right now. It's all tangible when that does not include anything in the or any some of the other paid. Does not being -- right now in fact that. That alternative testing at the moment what -- -- Low quality -- so. Keep that mind 900 plus -- he. Recoverable reserves to this company in ten -- -- take it down to five and you can even bigger number -- caps a hundred million. -- -- -- -- the flavor for the economics -- six dollar realize which would be about 750 Henry -- here may be a little more. So you know within historical when it. This morning -- cents at six point two million dollar well cost which is kind of the average or we're seeing what new school books for. Per putt for us in a four point eight he's here from well we're seeing 78 BCF per well -- -- much bigger numbers. And for what basis you you've got -- -- turned 40%. And as hopefully as costs come down still come down with. The drop in prices and -- -- -- loosening up of some of the services. We'll see some they've drilled walls for last certainly -- neutral wolf for more. You know -- the rate of return verses say shale play which I'm not. Nominees shale plays which have been in finding one of the best plays around through got great returns got one year payout. And you know forty -- your reserve life can cutoff review like. From may. Compared -- standpoint. Where are we gonna finding cost basis for roughly a dollar no surprise that's -- -- that that's -- -- All of our peers average over six dollar funding costs all the -- -- plays are over five to seven dollars. Finding cost so it's a pretty good place to be in this this year. Thai capital and high cost. We have again we at two. 30% per year for the past five years our -- reserve growth -- over 30%. And that's consistent model -- it's it's greater than some of the other from of -- other peers. So you know don't harp on that too much but it has to go through some of the metrics to me -- the most important -- here's. Where -- rate relative to our peers who are -- we have one -- worked here and that's all throughout but just from a small company and upside potential. We've got tangible us we've got upside in things and -- book yet we've got. Hundreds of locations that we are getting sort of credit for the moment. And so do we have a lot of upside relative to our peers who may have more acreage and so forth. I think we do and it's all -- you can go talk to knows -- about it. But where -- we tray relative then this is just a snapshot of 1550 something small caffeine -- and if we're small cap so -- -- have. But we traded about 64% discount to those companies on an enterprise value for and -- proved reserve bases. It's pretty it's pretty significant. If you think about Peter can you lay your hands on the numbers can you figure out. Where this company -- trading and you know what the per well reserves -- 100% percent entrances success in drilling and so forth. It's always pretty strong -- more confident. And the things that are happening no way we're drilling and amber wells were were the five B once when he forced down for a valuing the deep potential consistent with what all system. And were assessing the impact this low quality -- it was -- -- time talk about that if you listen in their presentation of talk about it. They'll tell you that it's it's pretty substantial. Got thousands of feet yet untested pay that they're getting the same result war. And be your -- drilling which I mentioned this is. Is gonna need -- this company had some more wells -- drilled through the going at three wells drilled on average per year if that ramps up to six -- a line. You continue to impact. So current catalysts I've gone through some of this but. The one thing you know the delineation drilling and it keeps expanding field in our acreage has been helpful -- helpful but it's been. Pretty substantial from you saw the numbers twelve point seven million today fifteen point eight million today cubic feet big big numbers and we -- 42% of that area. The down -- five acres. And that it's the things -- wanted it -- think about. One of which amounts paid to go back to 15100 acres what is this company worth 15100 net acres. You know is it it is it is a TCF -- gas net to this company over time I think it is. And we've got a good team focused on NASA now. We were trying to move the -- forward as fast as we can and we were -- premiere basically in the united states -- -- -- -- -- -- cost basis. You can -- commitment and I'm thinking yes thinking.