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Devon Shire
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Author of the value investing newsletter detailing the formation of the "Punch Card Portfolio" (http://valueinvestorcanada.blogspot.com/). Devon Shire is an accountant and an investor with 15 years experience managing a private portfolio. Devon Shire's preferred portfolio management... More
My company:
Canadian Value Investing
My blog:
Canadian Value Investor
My book:
CVI - Punch Card Portfolio
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  • ATP Presentation Update
    ATP at Howard Weil tomorrow. Slides are on the website. A few noteworthy things. Here is the link:

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzczOTMyfENoaWxkSUQ9MzcxOTEwfFR5cGU9MQ==&t=1

    1) New valuation slide on page 14. Shows how the value of the infrastructure (Titan, Pipelines, etc) is roughly equal to the total debt. I think this is our margin of safety now, selling infrastructure can rapidly reduce debt or provide liquidity. I always thought the value was there in those assets, but when the capital markets were frozen getting a deal done was not a sure thing.

    2) Slide 18 - Notice the size of the reserves at Mirage being converted to PDP this year vs the size of the Atwater 63 well that is just being put on. The Mirage conversion is much larger. Makes you wonder about the production rate on the next two wells.

    3) Slide 19 - More production coming from Gomez in late 10 and early 11 than expected. We knew they had a #9 well planned, now it seems there is a number 10. The Gomez wells are 70% oil and pretty significant producers.

    4) Slide 19 - The two Canyon Express wells have been put on production since the earnings call, so that means all 3 are producing gross 65MMcf/day. ATP gets 55% of this. They had guided 60mmcf/day so slightly better than expected.

    5) Slide 19 - Another Canyon Express well being drilled next quarter. Surprising that they feel this is worth spending the money on at this point given cash constraints. Glad they feel they can do it. These Canyon wells are typically about 30mmcf/day so will be useful to ATP although all gas and a 55% interest.

    6) Slide 30 - Saying days until Telemark and on other slides referred to this month, so seemingly still on schedule.

    Disclosure: Long ATPG
    Tags: ATPG
    Mar 23 1:36 PM | Link | Comment!
  • ATP Q1 Cash Position Much Better Than Expected
    ATP presentation slides on their website today for a presentation tomorrow. Have a look at page 12. Monetization tranche debt at the end of Jan $146mil vs $161mil. That means that the $155mil that they received for the Gomez sale didn't have to have 75% of it go to debt repayment.

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzcwOTIyfENoaWxkSUQ9MzY3ODIxfFR5cGU9MQ==&t=1

    If you go to page 32 of the credit suisse presentation that they did it shows that they had $119mil cash at Dec 31, 2009.

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY3NzA2fENoaWxkSUQ9MzYzMjI5fFR5cGU9MQ==&t=1

    So that means that they had $119mil plus likely $140mil from the Gomez sale of available liquidity for Q1. And cash available pre Titan sale and pre Telemark production increase (which is about to happen) was one last concern for me.

    Also positive on the liquidity front is that the Atwater 63 well was drilled using the NPI program.

    All adds up to much better cash position than I expected.   It's been a long wait, but I believe this share price is about to move much, much higher.
    Mar 01 9:51 AM | Link | Comment!
  • Atwater 63 #4 Well Test Results

    In presentation slides on the company website.  10,700 BOE per day was the rate of the flow test.  It was 87% oil.

    Keep in mind this is a company that produced 13,600 BOE per day in Q4 09.

    They will exit Q1 2010 having added this well 10,700, plus the Gomez well 4,600 and 3 Canyon Express wells 3,500.

    That means Q1 exit rate is going to be 32,400 per day vs the Q4 09 exit rate of 13,600.  2.3x higher.  In other words a totally different company leaving the quarter than the one that came into it.

    More good news should be on the way.  The first Mirage well will be added in April/May and given that they found 3 times the pay sands that they had modelled 5,000 BOE production from it could also be a big one.

    Then more wells coming in the year make for 60,000 BOE per day for total production in late 2010 or early 2011.  What a dramatic increase from the 13,600 they entered the year with.

    Oh, and the Titan monetization which will radically change the balance sheet is also still expected in the next month or two.

    All in all.  Great news.
    Tags: ATPG, EOG, CHK, XOM, COP
    Feb 17 12:14 PM | Link | Comment!
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