Lightstream Resources reduces debt
Lightstream Resources had a press release a few weeks ago that announced they had sold their remaining assets in southeast Saskatchewan for proceeds of $378 million;$375 million in cash and $3.4 million in Bakken lands valued at $3.4 million.Their liquidity increased to$600 million and most importantly their secured debt was reduced by $150 million to$1.5 B.Their property had 3300 boe/day of production and 13.2 million barrels of proved plus probable reserves.This was 8.5% of production and 7% of proved and probable reserves.Now they have 11.5 sections of land in the Bakken and three active injection wells with a fourth coming onstream.They sold this last property for 5.6 times annualized cash flow which is a reasonable price.
The debt picture
Lightstream's stated objective was to divest $600 million worth of assets by 2015 and they are ahead of schedule.They got proceeds of $729 million in 2014.The proceeds have been used to reduce debt from $2.3 B to $1.5 B .This will have cash savings of $25 million annually of interest expenses.Their new gas wells in the Bakken lands have increased funds flow of $20 million and reduced capital expenses by $15 million.However they lost 4750 barrels /day of production and $36 million of net cash flow from properties that were sold.LTS plans to drill 38 wells in the Bakken and Cardium lands and all but 7 will be onstream by year end.
Forecast for 2014
An earlier blog of mine published on Tumblr forecasted a price of $6.50 per share for the end of 2014.But it has fallen lower in tandem with the rest of the market.It still had a lot of debt and sold off another piece of land in southeast Sakatchewan for $225 million.As reported, this reduced debt from $2.3 billion to $1.5 billion.Also their drilling in the Swan Hills area was quite successful and is expected to reach 3500 barrels per day in 2015.But the price is close to $5.00 per share now and may only recover marginally during 2014.They may have to sell off more non-core assets and bring debt closer to $1 billion.
Comparison to Pengrowth
LTS is in the same price range as Pengrowth-a competitor.But Pengrowth's prospects look better for the rest of the year.LTS only has production of 42,500 barrels per day while Pengrowth had 75,000 barrels per day in the last quarter.LTS does have new resources in the Bakken but it is mostly natural gas while Pengrowth has a new heavy oil property coming onstream in the fourth quarter of 2014.LTS has a 9%yield while Pengrowth is about 8% and Pengrowth needs a new source of production for 2014 so total production doesn't fall in the fourth quarter. This blog calls for LTS to sell off another piece of land with little production(maybe in the Bakkens) and then it might climb back to the $6.50 area.Proceeds must pare debt a little more. Pengrowth needs more successful drilling in the third quarter or early fourth quarter or else it must report substantial production from Lindberg(it's heavy oil plant).This will send it back to the $6.75 to $7.00 area in the fourth quarter.Without these actions this blog sees little movement in either stock price.
The debt picture
Lightstream's stated objective was to divest $600 million worth of assets by 2015 and they are ahead of schedule.They got proceeds of $729 million in 2014.The proceeds have been used to reduce debt from $2.3 B to $1.5 B .This will have cash savings of $25 million annually of interest expenses.Their new gas wells in the Bakken lands have increased funds flow of $20 million and reduced capital expenses by $15 million.However they lost 4750 barrels /day of production and $36 million of net cash flow from properties that were sold.LTS plans to drill 38 wells in the Bakken and Cardium lands and all but 7 will be onstream by year end.
Forecast for 2014
An earlier blog of mine published on Tumblr forecasted a price of $6.50 per share for the end of 2014.But it has fallen lower in tandem with the rest of the market.It still had a lot of debt and sold off another piece of land in southeast Sakatchewan for $225 million.As reported, this reduced debt from $2.3 billion to $1.5 billion.Also their drilling in the Swan Hills area was quite successful and is expected to reach 3500 barrels per day in 2015.But the price is close to $5.00 per share now and may only recover marginally during 2014.They may have to sell off more non-core assets and bring debt closer to $1 billion.
Comparison to Pengrowth
LTS is in the same price range as Pengrowth-a competitor.But Pengrowth's prospects look better for the rest of the year.LTS only has production of 42,500 barrels per day while Pengrowth had 75,000 barrels per day in the last quarter.LTS does have new resources in the Bakken but it is mostly natural gas while Pengrowth has a new heavy oil property coming onstream in the fourth quarter of 2014.LTS has a 9%yield while Pengrowth is about 8% and Pengrowth needs a new source of production for 2014 so total production doesn't fall in the fourth quarter. This blog calls for LTS to sell off another piece of land with little production(maybe in the Bakkens) and then it might climb back to the $6.50 area.Proceeds must pare debt a little more. Pengrowth needs more successful drilling in the third quarter or early fourth quarter or else it must report substantial production from Lindberg(it's heavy oil plant).This will send it back to the $6.75 to $7.00 area in the fourth quarter.Without these actions this blog sees little movement in either stock price.
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