- Cenovus has SAGD projects with very low operating expenses.
- A steam-to-oil ratio (SOR) of 3.0 is the norm in the industry.
- Athabasca Oil has a SOR capacity of 3.5 in its Hangingstone project and thus has higher opex.
I called on Seeking Alpha that the recent rally in the stock price of Athabasca Oil would help clear the massive short positions.
Unfortunately, the shares sold short decreased by only 350,000 as we saw from the Top TSX Short Positions published today. I thought that the push over the 50-day moving average of the stock price would mean a greater decrease in the amount of shares sold short after a double bottom. The stock was put back to its place by the 200-day moving average but should be fine in the short-term, as long as it can hold over the 50-day moving average.
As such, I now believe the only thing that will lead to shorts covering their bets will be a sustaining rise in the price of oil. Therefore, patience is warranted. The stock will most likely test its 50-day moving average.
Disclosure: I am long ATH.
- The company will always carry a heavy discount because of its operations in the Middle East.
- The NAV of the company clearly signals that the company is undervalued.
- On the other hand, the company is fairly valued compared to its oil production.
- The company has an NAV of over $3.1 billion.
- The NPV of the company’s reserves is over $1.6 billion.
- The long-term potential of the company will be more profitable for current shareholders.
- Speculation on M&A activity should help boost the stock price in the short term.
- The company has significant proven and probable reserves and acreage in Alberta.
- The company has a substantial cash position and a good balance sheet.
- Liquidity will be very tight if the sale isn’t completed by year-end.
- The company could boost its capex.
- The company could erase all concerns of a cash squeeze.
- The O’Hara Group is gone; Alejandro Betancourt Lopez is the sole owner of the stake.
- The planned capex, capped to cash flow, will barely keep the production stable.
- The Rubiales field production still accounts for 55,000 bopd of net production.
- The Z-Score still indicates bankruptcy.
TransGlobe Energy recently abruptly crashed at the C$3.50 per share mark. The stock tried to stay over the 200-day moving average. However, the bears got too strong.
This recent decline is a great opportunity for me to rebuild the small position I had last spring. I believe the company is undervalued at this level. On the other hand, I will keep this position small compared to my portfolio because of the obvious risks of operating in Egypt.
Disclosure: I am long TGL.
- The company will have a Q2 cash flow of about $400M.
- The company will need to further raise cash this year.
- Cash flow of the year will be negative even under a bullish scenario.
How did this investment played out? Buying Pacific Rubiales Energy was not always meant to be a short-term, all in investment. Should I say speculation? Yes, I think I should.
Indeed, I was surprised at how quickly the value I called on April 21 was reached. After such a big return in a period this short, and with growing uncertainties concerning the company, and other problems lurking around the corner, it made sense to turn this buy into a short-term speculation.
Disclosure: I have no position in PRE.