2Q16e Quarterly Preview
26 Jul 16
Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly reversed into summer, market likely to ignore financials for natural gas producers and look ahead to winter and formalization of sell-side 2018e estimates in coming months. Spot AECO natural gas prices recently crested C$2.60/mcf, and with a reasonable alignment of previously distressed NE BC Stn2 differentials, augmented by a withdrawal expected next week, view the market psyche as constructive and looking ahead, with the analogy that this market is shaping up to mirror 2012 still holding. That said, with crude oil poised to retest support levels, combined with strong stock price performance broadly observed YTD, we would characterize sentiment as slightly pessimistic in the near-term which could reduce or unwind momentum-based investment strategies that have worked thus far in 2016.
Striker Exploration Corp. Announces Business Combination With Gear Energy Ltd.
08 Jun 16
The transaction provides shareholders of Striker with a larger, more diversified and better capitalized combined entity that has an established production base from the Gear assets, which will provide stable cash flow in an improved commodity price environment to continue to delineate and develop Striker’s emerging Belly River play. The transaction is subject to the customary court and regulatory approvals along with the approval of both the Striker and Gear shareholders. That said, directors and officers of Striker and certain shareholders of Striker, whom in aggregate represent 33.2% of the outstanding shares, have unanimously approved the transaction and entered into voting support agreements with Gear. In light of the acquisition agreement, we have placed a Tender ranking on the stock while placing our target price under review, as we are currently restricted on Gear Energy due to our participation in the Company’s concurrent equity financing. Our revised target price would have been based on applying the 2.325x exchange ratio to our Gear target price.
Announces 1Q16 Results, No Update on Strategic Alternatives Process
27 May 16
Striker reported its 1Q16 financial results that were in line with our expectations in terms of production and spending, although trailed our thinking in terms of cash flow due to lower realized pricing and higher operating costs.
Announces Fourth Quarter Results
27 Apr 16
Striker reported its year-end financial results that were reasonably in line with expectations, apart from cash flow which trailed our thinking on the back of higher operating costs. Recall, reserves were reported in March and were largely flat across the PDP and 1P categories, although were up modestly on a 2P basis. There was no update to the Company’s previously announced strategic alternatives process nor has Management provided any guidance for 2016e. With only minor tweaks to our forecast we have maintained both our Speculative Buy ranking and $2.00 per share target price.
Domestic E&P Statistical Package and FD&A Review
12 Apr 16
With this publication we highlight various metrics and statistics forthcoming from yearend reserve books for our Domestic E&P coverage universe (Integrateds, Large Cap, Oilsands, Intermediate, Mid Cap, and Small Cap). Similar charts for YE2014 reserves can be found in our Statistical Package dated April 7, 2015.
Exploration Reports 2015 Year-End Reserves, Initiates Strategic Review Process
17 Mar 16
Striker reported its year-end reserve book, which came in largely as expected given a year that saw limited capital investment. Reserves were largely at across the PDP and 1P categories, although were up modestly on a 2P basis. More noteworthy would be the announcement of a strategic alternatives process with a view to enhance shareholder value. In light of the strategic review process, we have pulled back on our 2016e capital spending assumptions leading to a downdraft in our production forecast. We have also updated our NAV methodology resulting in a new risked exploration NAV of $2.44 per diluted share using our price deck. We maintain our Speculative Buy ranking on an elevated target price of $2.00 per share.
ANNOUNCES 2015 YEAR-END RESERVES AND REVIEW OF STRATEGIC ALTERNATIVES
15 Mar 16
Impact: Neutral to slightly positive. Striker's valuation has remained on the low end of its Small Cap peer group since inception, and thus we expect that incremental value could be unlocked for shareholders through the strategic alternatives process
Intermediate/Mid/Small Cap Commodity Price Update Impact
08 Feb 16
With this publication we highlight forecast revisions associated with our crude oil commodity price update. Concurrent within a dynamic time for E&Ps, some of which have already begun the process of 2016 capital budget downdrafts, revised estimates attempt to directionally capture a shift towards capital conservation, though severely weakened futures curves have influenced our thinking for the better part of 6 months anyway. We expect further capital investment reductions forthcoming from E&Ps in the coming weeks.
Striker Reports Continued Success from Wilson Creek Belly River Play, Agreement to Sell Non- Core GORR Assets
15 Dec 15
Striker has announced that it has entered into an agreement to sell its non-core GORR at Killam for gross cash proceeds of $5.2 mm with equivalent transaction metrics of $108,000 per boe/d or ~9.5x annualized cash flow. Operationally, the Company’s 4Q15e Belly River program continues to yield promising results with Striker’s most recent well, targeting a Belly River channel sand, having delivered initial production rates in excess of 180 bbl/d of light oil over the first 12 days of production. On average, Striker expects its 3x Belly River wells put on production in 4Q15e to date to generate IRRs in excess of 30% within a WTI US$45.00/bbl commodity environment.
STRIKER EXPLORATION CORP. (SKX) ANNOUNCES OPERATIONAL UPDATE AND AGREEMENT TO SELL NON-CORE ASSETS FOR $5.2 MILLION
14 Dec 15
Impact: Positive. Cash proceeds of $5.2 mm from Striker's GORR disposition at Killam will help fund further development of its Wilson Creek Belly River asset, with the Company's most recent wells drilled as part of its 4Q15e Belly River program continuing to deliver promising initial results, while maintaining its balance sheet as well as throughout this challenging commodity environment.
New Commodity Price Outlook Impact
14 Dec 15
“Worse? How could they get any worse? Take a look around you, Ellen. We’re at the threshold of hell”. These are the words spoken by Clark Gris-wold in the holiday classic “Christmas Vacation”, and seem aptly suited for the general sentiment in the Canadian energy space at the moment as we roll out a summary of our regular forecast revisions extending from our most recent crude oil and natural gas price forecast update.
Striker Announces 3Q15 Financial Results Ahead of Expectations, Reports Strong Early Performance from Belly River Program
27 Nov 15
Striker’s 3Q15 financial results featured production and cash flow ahead of our outlook from lower than anticipated capital spending. Operationally, the Company has provided initial results from its latest 2x Belly River wells with early performance from both wells trending above Management’s internally generated Tier 5 type curve. Completion of the remaining 4x wells is underway with further results from at least 2x more wells expected by the end of this year.
FirstEnergy- DAILY RESEARCH SUMMARY
27 Nov 15
Reissue: Global and Canadian Carbon Emissions - A Graphical Tour | LGX Oil + Gas Inc. (OIL) Announces 3Q15 Results | Striker Exploration Corp. (SKX) Announces 3Q15 Financial Results Ahead of Expectations, Reports Strong Early Performance from Belly River Program
INTERMEDIATES, MID CAPS & SMALL CAPS - 3Q15e Quarterly Preview
23 Oct 15
With this publication we briefly summarize our projections for 3Q15e quarterly results for our Junior E&P (Intermediate, Mid & Small Cap) coverage universe. Within the backdrop of continued weakness in the commodity price complex that saw the retrenchment of crude oil pricing during the quarter, after what was a short lived rally during the second quarter, we are anticipating yet another lacklustre reporting period in the Junior E&P space, with the key themes coming out of the quarter likely to be centered on further reductions to capital programs, ongoing takeaway capacity constraints, potential dividend cuts, reduced bank lines from fall credit reviews, continued weakness in the Station 2 and CREC natural gas price markers, and for some, the rollout of formal 2016e budgets.
INTERMEDIATES, MID CAPS & SMALL CAPS - Crude Oil Downdraft, Though Remain Far More Constructive Than Current Forward Strip Would Suggest
31 Aug 15
With this publication we highlight forecast revisions stemming from an interim commodity price update centered around the crude oil pricing complex. Moves for crude oil weighted producers are significant, with 2016e cash flows down 12%-15%, and portended NAVs reduced sizably on the employment of a materially lower terminal value within the scope of the forecast period, though not reflective of the potential attrition in E&D capital investment and dividend policy should the current forward strip come to fruition in the cash market.
28 Aug 15
Striker has reported its 2Q15 financial results which were consistent with our outlook for production (which was pre-released as part of the Company’s Wilson Creek Belly River acquisition at the end of July), cash flow, and on a capital spending basis. Given ongoing restrictions on the Nova system (~350 boe/d) and temporary production shut-ins at Striker’s non-core properties (~120 boe/d), the Company has re-iterated its 2015e production guidance of 2,650 boe/d from net capital spending of $30 mm (including the Company’s most recent Belly River acquisition for $8.0 mm).
Striker Exploration Expands Belly River Position at Wilson Creek, Announces $8.0 mm Equity Financing, and Provides Operations Update
29 Jul 15
Striker’s most recent Belly River transactions further consolidate the Company’s land position at its Wilson Creek property by increasing its light-oil Belly River development well inventory to 41 (37.9 net) locations and prospective Belly River acreage to 202 (155 net) sections. Further, operationally the Company’s current volumes of ~2,640 boe/d appear to be ahead of its formal 3Q15e guidance levels and our forecast calling for production of 2,500 boe/d which, along with the newly acquired volumes of ~130 boe/d, has prompted a modest increase to our annual 2015e and 2016e volumes to 2,700 boe/d and 3,000 boe/d, respectively.
STRIKER EXPLORATION CORP. (SKX) ANNOUNCES BELLY RIVER ASSET ACQUISITION, BELLY RIVER LAND ACQUISITION, $8.0 MILLION EQUITY FINANCING AND OPERATIONS UPDATE
27 Jul 15
Impact: Neutral to Slightly Positive. Striker's most recent Belly River transactions further consolidate the Company's land position at its Wilson Creek property, increasing its light-oil Belly River development well inventory by 8 (7.4 net) locations to a total of 41 (37.9 net) locations. Further, operationally the Company's current volumes of 2,640 boe/d appear to be ahead of its formal 3Q15e guidance levels and our forecast calling for production of 2,500 boe/d despite TCPL restrictions amounting to 350 boe/d.
INTERMEDIATES, MID CAPS & SMALL CAPS 2Q15e - Quarterly Preview
23 Jul 15
With this publication we briefly summarize our projections for 2Q15e quarterly results for our Junior E&P (Intermediate, Mid & Small Cap) coverage universe. In what could be viewed as the “Perfect Storm”, we are anticipating yet another weak reporting period in the Junior E&P space as continued deterioration of the commodity price complex will surely influence 2H15e capital investment plans, exacerbated by ongoing takeaway capacity constraints that have resulted in rolling shut-ins for many of the names that we cover, within the backdrop of an uncertain fiscal regime in Alberta in the interim. Typically the second quarter is already a relatively quiet period to begin with in terms of activity in the field due to the onset of spring breakup, though with most shuttering operations early in late February motivated in part to extract service cost deflation in a volatile pricing environment, activity specific to 2Q15e should be muted.
Striker Exploration Reports 1Q15 Financial Results Ahead of Expectations, Increases 2015e Capital Spending and Production Guidance
28 May 15
On the heels of the Company’s latest Belly River acquisition, Striker has rolled out its first full quarter of results following the significant acquisition activity that took place in 4Q14. Recall, the Company closed the acquisition of Exoro Energy while also completing a concurrent property acquisition at Killam in east central Alberta.
STRIKER EXPLORATION CORP. (SKX) ANNOUNCES FIRST QUARTER OPERATING AND FINANCIAL RESULTS AND INCREASED GUIDANCE
27 May 15
Impact: Slightly Positive. Striker's 1Q15 results featured production and cash flow that was ahead of our expectations from capital spending that was lower than we had anticipated. Further, the Company's Board of Directors has approved an expanded 2015e capital budget of $22 mm, up from $11 mm prior, which will allow for 3 additional Belly River wells to be drilled with a corresponding 10% increase to its annual production guidance to 2,650 boe/d (up from 2,400 boe/d prior).
Striker Exploration Announces Fourth Quarter and Full Year 2014 Financial and Operating Results
01 May 15
In 4Q14, Striker’s first, partial quarter of operations following its Killam asset acquisition and the corporate acquisition of Exoro Energy that were completed in late November 2014 for total consideration (including debt) of $113.8 mm, the Company’s 4Q14 financial and operating results were largely in line with our thinking.