Lightstream Resources is having a struggle
Lightstream Resources is a stock I have only started looking at closely for a little while.I did a blog on it on Tumblr after the release of second quarter results.Third quarter results came out on October 30,2014.But my blog on Tumblr was not very accurate in predicting the course of Lightstream Resource's (LTS) share price.At the time the stock was trading at about $3.75 per share and my blog predicted a share price of $6.50 for the end of 2014. This did not happen as the stock now trades in the $1.25 to $1.50 price range.At the time my former blog stated that more debt should be pared down or the price might fall. And they did pare down more debt.They apparently sold off more non-core assets and paid down debt in Q3.But they still have total debt of $1.56 billion if the secured notes are counted but now only $489 from their secured debt facility.Presumably the latter is bank debt.But by standard measures of acceptable amounts of debt LTS has debt of only 2.5 times funds flow.So this does not explain how LTS headed down to $1.25 per share instead of moving up to the $6.00 area.
Q3 Results
Lightstream Resources says that they sold off $729 million of non-core assets and apparently they sold off $476 million in Q3.This should have impressed shareholders but they were more interested in the price of oil.That is with a weak price of oil shareholders looked at which companies would get most impacted and then fled from LTS shares.On the other hand, production did fall from42,500 barrels per day in Q2 to 38,837 in Q3.This was partly due to the lost production from the assets that were sold;this accounted for almost 6500 barrels per day of lost production.So they paid down debt partly with lost production.Still production fell only 9 %.But with the drop in the price of oil total revenues for 9 months in 2014 were less than that for 9 months of 2013.Worse still, 9 months funds flow fell from $582 million to $482 million in 2014.This upset shareholders and they punished the stock price.
Capital Expenditures and Drilling
Capital expenditures were $90 million in Q3 which is a drop of 36% from Q3 2013.Still 18 wells were drilled and 8 new wells were brought onstream.In total, in 2014 LTS drilled 69 wells and brought onstream 62 wells.26 more wells are planned for the next quarter.
Lightstream has acreage in three main areas- the Cardium,the Alberta-British Columbia border and southeast Saskatchewan. The Cardium and southeast Saskatchewan showed small decreases but there were no surprises here because acreage was sold off.The surprise was in the Albert-British Columbia area.LTS has done a lot of work on the Swan Hills area.They have about 1500 barrels per day of production now and were expecting down the road to have 3500 barrels.However they experienced some flowback problems.They need to get more production from a known reservoir here.
A real bargain
When I wrote my blog in Tumblr I fully expected that Lightstream Resources would be at least in the $5.00 price range now.However the price of oil has taken quite a tumble instead.LTS might still pare a little more debt but they do not have a significant debt problem now.Their debt to funds flow is about 2.5 times and this is quite reasonable.Now they need to concentrate on the same problems as other intermediate producers,that is, to increase production.They can really help obtain the necessary increases by getting their drilling back onstream in the Swan Hills area.This shouldn't be too costly as they know the resources are there.Production of 2500 to 3000 barrels per day here would really help total production.This small correction might send Lightstream Resources back where it belongs in the $2.50 price range in the near future and $4.00 to $4.50 by March or April.This blog feels that LTS is about the best bargain available in oil producers that pay a dividend.
Q3 Results
Lightstream Resources says that they sold off $729 million of non-core assets and apparently they sold off $476 million in Q3.This should have impressed shareholders but they were more interested in the price of oil.That is with a weak price of oil shareholders looked at which companies would get most impacted and then fled from LTS shares.On the other hand, production did fall from42,500 barrels per day in Q2 to 38,837 in Q3.This was partly due to the lost production from the assets that were sold;this accounted for almost 6500 barrels per day of lost production.So they paid down debt partly with lost production.Still production fell only 9 %.But with the drop in the price of oil total revenues for 9 months in 2014 were less than that for 9 months of 2013.Worse still, 9 months funds flow fell from $582 million to $482 million in 2014.This upset shareholders and they punished the stock price.
Capital Expenditures and Drilling
Capital expenditures were $90 million in Q3 which is a drop of 36% from Q3 2013.Still 18 wells were drilled and 8 new wells were brought onstream.In total, in 2014 LTS drilled 69 wells and brought onstream 62 wells.26 more wells are planned for the next quarter.
Lightstream has acreage in three main areas- the Cardium,the Alberta-British Columbia border and southeast Saskatchewan. The Cardium and southeast Saskatchewan showed small decreases but there were no surprises here because acreage was sold off.The surprise was in the Albert-British Columbia area.LTS has done a lot of work on the Swan Hills area.They have about 1500 barrels per day of production now and were expecting down the road to have 3500 barrels.However they experienced some flowback problems.They need to get more production from a known reservoir here.
A real bargain
When I wrote my blog in Tumblr I fully expected that Lightstream Resources would be at least in the $5.00 price range now.However the price of oil has taken quite a tumble instead.LTS might still pare a little more debt but they do not have a significant debt problem now.Their debt to funds flow is about 2.5 times and this is quite reasonable.Now they need to concentrate on the same problems as other intermediate producers,that is, to increase production.They can really help obtain the necessary increases by getting their drilling back onstream in the Swan Hills area.This shouldn't be too costly as they know the resources are there.Production of 2500 to 3000 barrels per day here would really help total production.This small correction might send Lightstream Resources back where it belongs in the $2.50 price range in the near future and $4.00 to $4.50 by March or April.This blog feels that LTS is about the best bargain available in oil producers that pay a dividend.
Comments
Post a Comment