Wed, 10 Dec 2008|
Automatically Generated Transcript (may not be 100% accurate)
-- -- -- -- illegal is base corporately out of Denver and operationally Casper Wyoming. It's coming it's been public for over thirty years. Its current asset portfolio those relatively new. It's. It's. Primary asset resulted from a pilot in the -- -- -- I've done -- or did during the years 2000 to 2005. During those periods in -- back in and environmental impacts statement was prepared took six years to complete. Wants completed in the year and a mid year 2007. The development that coal bed methane project started. We have about 1083 BC FB proved reserves which is nearly 7% greater. This is mid year June. 2008. 70% greater than it was at the end of 2007. With a significant amount of three. This imbedded in those core assets. Our production at the end of 2007. Was a little over eight million today. The production for the third quarter averaged about twenty million a day with about three million Shanahan. Acreage our primary. Set of acreage is in. And Wyoming. -- it is. All the yellow as -- -- everything but this part here is. In Wyoming. When we're talking about our that's -- that methane. The other major project we'll talk about is. Fine -- and the clock. Wyoming acreage is mostly developmental and exploitation. And a -- -- -- -- wildcat of what we've drilled eighty expiration dry hole a few years ago and have no current plans for capital. Deployment. And the other represents primarily -- -- project. That does have eight to -- CF targets. We're in the process. Attempting having negotiations on farming out that. Project to larger Morse of ideologically sophisticated -- -- -- If it has a big guy risks -- also has a high reward. Our major projects as I mentioned the and -- Graham we have over 800 wells that we can participate in. Tying dale -- -- another one of the big prolific. High margin basins in the United States they're nearly 500 wells we can participate. Our enterprise value is -- a little bit over a hundred million. Substantially down -- all of us have been. From the previous amounts and while it. Our stock. Prices eroded with both the commodity and financial markets. Our fundamentals are strong and we have strong growth not only strong but significant growth potential. From our existing -- In 2007. The company was -- -- reorganized. In the current strategy that we're deploying was approved by the board -- basically is aligning all of our resource is people on capitol. Around lower risk projects where we have predictability on Africa. We've traded some core competencies over the years in certain types of projects. And those competencies are being directed to not only new opportunities. But some knowledge transfer to some of the other operators that we have interest in. With similar time crop. Our goal for 2008 was to improve extricate execution over 2007. Which was the initial year ramping up the -- that -- project. And to improve on cost metrics all of which we've done. We are also in the process of transferring the things that we learned in. Our operated property in the Atlantic rim which is called the Catalina unit. Two properties that we have ownership interest which are operated by Anadarko called sound -- -- now. We establish this strategy of trying to control control our destiny and in the Atlantic -- by controlling the infrastructure. So we -- all the pipelines -- gathering systems. -- the only company in the area that has electricity to the area of that we haven't cost advantage of about 20% over the other operators. And were the first one and actually only one authorized. Two bill -- and treat water. And discharge the water on grounds -- -- kind of forward mover and almost all the regulatory. And infrastructure issues that have been occurring in Atlantic. As I mentioned earlier here's our growth pro top profile. A little over -- million a day in the third quarter and about three million -- and it's a huge increase over where we were in -- very short period of time. Most of that increase comes from 33 wells were drilled in the second half of 2007. And put on production. In the second and third quarters of 2008. We had 23. One at the end of 2005 and one in mid year 2008. What you'll see from these cylinders. Is that our probable and possible down don't change we have -- in the core assets we have we have a constant pipeline. Of locations that aren't -- iron in the engineering reports of -- About a 400. -- 25 Catalina which we operate unit. Locations -- have not been included in the reserve report for 33. And about a hundred of other locations operated by -- -- people. So we don't have to get -- assets to continue to grow. The second part of that's important on those cylinders. Is that there's nearly a 70% increase in the proved reserves. Even after replacing production. And of those proved reserves about 50% of them are producing. And 60% of -- -- about. How do we do versus our peers. -- the production growth in the second quarter of 2008. Versus the same quarter for 22007. Put us at the top end of our peer group. The one thing it does is different from us than many of those not all of them many haven't. Is that all of our growth is organic or through the drill bit and just about a dollar and MC at finding and development costs. Much to the production growth. On some of our peer groups are either development costs that are much higher than a dollar -- acquisition costs which are much higher and higher development costs. So we have a margin in competitive advantage we think over here for. Again peer group analysis. This is these -- prices based on October -- The enterprise value for it proved reserve -- double eagle is less than an hour and -- The enterprise value for their daily production. Is under 5000. Dollars per -- -- 5000 dollars friends the F daily production. Those are on the law low end of valuations which. I hope you you you pick up and are flying that means it were value by with very little risk -- the -- Just take our existing reserves without any of our locations have not been factored in. If you look at the proved reserve category of 83 BC FB. That implies -- two dollars and fifty cents in the ground. So it's it's 22 -- and -- -- and implied value just on the proved reserves. I'm curious like a letter later that tries to factor in. Benchmarks on valuations for -- assets. We're not gonna talk about all of our projects just the main project. Which is at land program which in new coal bed methane field. But what's interesting. About our projects -- that we either control our own destiny is written by being the operator ourselves. Or were aligned with companies who have a great deal of experience. Catalina while we're the operator. Are some of our owners are I Anadarko Warren Resources Saint Mary's. And Anadarko. In the inverse -- -- operators -- ability mountain. The same group of people are also equity owners in the strike. -- -- -- And we're blessed to be in the sweetie -- on the sweeter spots that quest. And I believe as they announced that -- capex is being reduced -- The rocky mountain region the tying dale piece was excluded because it is a very. -- manageable risk high reward part of their portfolio. The others are are interesting projects the man -- -- deep. We have a very small interest it's operated by ConocoPhillips that -- like an annuity. What we get about half and 500 to seven and fifty cubic feet today. With a very small interest I think that project and I might have to correct myself players I think it produces about 300 million today. In and natural gas production not to mention this offer -- again. Waldman is we're completing 2000. The typical well in the area that has been successfully completed -- in about three million today. I was completing two wells hopefully by the end of the year and have four more locations to drill. And I mention Christmas meadows which is. There -- very high target of two plus -- And that we are looking for the right partner to take it to an excellent. This kind of quantitative Italy puts all of our projects down on a single sheet of paper. At the top -- the gross wells and each year's a cumulative number it's not an -- number. So you see that at the end of the project. There's about 12180. Wells that we can participate just in our existing portfolio of assets. The next part of the table breaks it down into our net ownership for -- equity ownership in those wells. And then we put the proved as well as the probable reserves. Along -- -- you can get a sense of really how much has been developed and how much as yet ago. While those numbers are June 30 numbers and averaged about ten dollars an -- at. -- focused on the quantity you'll see we have about three times. The reserve quantities to complete developing as -- to the as compared to -- we've already do that. This line is mostly for the -- -- spent a lot of time on but it what it does is. Summarize on compared will come parable bases all of our major projects as to production. Reserves who operates and how much acreage we have. Talk just briefly about the Atlantic program. Again the coal bed methane project. The red. The red dots -- wells that we have drilled the blue dots are wells and Anadarko -- -- growth. And a great green dots are well yet to be. We've drilled a 24 wells this year. It the last half of 07. Those will come online and be be completed in come on production in sometime in tooth I'm sorry 2008. -- come on line and -- on production in 2009. Anadarko is activity in the send -- unit there's 36 wells you know -- And 32 wells respect you know eight respectively those will come on and be producing you know nine so. What we do in the latter half of each year because of wildlife stipulations. -- never hit our revenue streams and so the next year. I Catalina is unit which we operate -- a unique coal bed -- unit it's not like most others. In this two -- -- production from the wells are very prolific compared to you typically see. And what we have is the first column -- the fourteen wells that were drilled between 2002 and 2005. You can see we still have significant production from those wells some one of them even over almost a million a day. The new wells we drilled are much more prolific. We think it's in a better and we think we did our completions a little bit better. But -- the point is is this which gives us the competitive advantage. In picture it expanding our capital is our margins are so high and we have a lot of if -- buffer. To be able to absorb the commissions on price declines to the extent -- -- the economics are about a dollar and AM see. Element recovery on average we believe will be. BCF -- well. It costs us about a million dollars Israel. -- -- -- -- it's gotten a lot of press that. With with -- and and show them quest. The -- units or units we participate in with qwest -- It is it areas that -- are very active in and and intend to be continually active even as capital shrinks. They drilled eighteen wells and 2007. They were completed in -- -- in the end of 2008. And sixteen new wells are planned -- were drilled in the last half of 2008. It will come on production in 2000. -- -- -- -- When when he -- And explain this a little bit to 346000. Dollar yellow stripe. Was the proved reserve discount -- 10%. At the mid year pricing which was ten dollars. -- -- -- Is black that says net proved asset value 31 dollars this year. That index two types of debt that we have we have -- eighteen million dollar outstanding revolver. And we have a forty million dollar what you call petrol preferred which means you never pay it back nine and a quarter dividend. You pay it back later if you want to. But nobody in college Andy can't convert so it's it's a quasi. -- -- -- deduct that debt from the -- -- that gets you 31 dollars. If you look at the red line that's using the seven dollars for MC. That we currently have in our hedged positions. Net of the debt so. At at that. Valuation itself that's 21 dollars. Per share not too much -- of the twenty dollars I showed you on just -- proved reserves. 22 -- -- two dollars and fifty cents in the ground. And yet the probable about. In the possible at fifty cents. And the value future through could. It can be achieved through the pipeline that we already having -- in operation. We have twelve inch thirteen mile pipeline. Can do a hundred million a day in and probably more with some additional compression. If you use some of the old metrics and even -- -- some new metrics. On what these kind assets. Values are in in them -- And in about ten times the multiple of cash flow that we add another. 6070 million dollars of potential. And we're focused very explicit specifically on that asset as a value growth and it could in its own right have. As much the not as much systems to make for our second biggest day cash flow project. In the company's four. So -- that. I'll conclude with a quick summer as a nation. I -- the alliance along arrived assets. Through the third quarter are even -- was -- over twenty million dollars. We have a lot of cash flow in a lot of borrowing capacity. We have a lot of wonderful highly economic projects. With a significant amount of running room. We have 225. Future drilling locations in the Catalina unit that we control. We over 700 additional locations. Through our major projects that are operated by other good operators. And I think in -- long run more importantly. We control a lot of our infrastructure. And therefore we're going to be controlling some of the economic -- -- you know. Throughput in -- pipeline doesn't care what the prices. The commodity itself so it's -- very. Stable part of our future cash and asset. With that I thank you for your time.