Summary of Oil & Gas Valuation 101 - Oct 23 2022 Deep Dive on Coelacanth, Avila, Southern, Canadian Spirit

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00:00:00 - 01:00:00

This video provides an overview of how oil and gas valuation works, with a focus on Avila Energy and Silicon Energy. It explains that the current market valuation of the company may not be accurate, due to the fact that a majority of the company's value is represented by warrants that are scheduled to be exercised. The presenter advises investors to pay close attention to the breakdown of reserves, as this can provide a more accurate evaluation of a company's worth.

  • 00:00:00 The speaker discusses the importance of Deep Dives for oil and gas valuation, focusing on the junior companies tracked by White Hunter. He argues that shotgun approaches are detrimental to portfolio performance and recommends a more selective approach.
  • 00:05:00 This YouTube video provides an overview of the oil and gas market and discusses some of the different valuation methods used for oil and gas companies. The presenter then discusses two of their own investments in oil and gas companies and warns investors about the risks associated with these types of investments.
  • 00:10:00 The presenter provides an overview of the oil and gas market, focusing on Southern Energy's queued spike in natural gas pricing this summer and their pre-positioning for that. He also discusses Canadian Spirit Resources, a small company with a land play that has changed in the last call. The presenter believes that the company is worth investing in, and they have taken a position.
  • 00:15:00 The video discusses oil and gas valuation and how companies approach it differently now that the price of oil and gas is higher. It explains that the coelacanth team has already done a lot of work on the Prada field, giving them an advantage over other, less experienced, companies. The model is well-known and there are existing infrastructure and production resources in place, so growth is expected in the near future.
  • 00:20:00 The video discusses oil and gas valuation, highlighting that some of the factors to consider when valuing an oil and gas production are the age of the production, the amount of development inventory, and the potential for future growth. It also explains that, due to regulations on fugitive emissions, some Canadian producers are opting to install VRUs (vacuum gas recovery units) to reduce emissions.
  • 00:25:00 The presenter explains that, based on the latest data, the cost of a two-mile lateral for an oil or gas well in the Martini formation in the Montney region of Canada is reasonably priced at 8.5 million dollars. The presenter also states that, with the strong oil and gas prices and low storage levels, Alberta gas pricing has some upside potential if there is a cold winter. Finally, the presenter provides a brief overview of the Vermillion Wells development in the Montney region.
  • 00:30:00 This video discusses oil and gas valuation and how wells can produce differently based on their intensity and age. The video also discusses how unconventional wells can be discounted more harshly than traditional wells, which can impact the NPV (net present value) of a project.
  • 00:35:00 Oil and gas valuation is a complex topic and can be difficult to understand. This YouTube video provides a brief overview of how oil and gas valuation works, focusing on Avila Energy and Silicon Energy. Silicon Energy is a newly-founded company with a few recent acquisitions, and its stock is trading at a low price due to the uncertainty around its future profits.
  • 00:40:00 This YouTube video provides an overview of the valuation of oil and gas companies, including an explanation of warrants and options. The presenter notes that the current market valuation of the company may not be accurate, due to the fact that a majority of the company's value is represented by warrants that are scheduled to be exercised. The presenter advises investors to pay close attention to the breakdown of reserves, as this can provide a more accurate evaluation of a company's worth. The presenter also notes that Avila is expecting production growth of around 12,000 boes per day within the next three to six months, which makes the stock a good investment, even in light of current market conditions.
  • 00:45:00 The video discusses oil and gas valuation, with particular focus on the value of a Northeast BC Nelson asset and East Central Alberta asset. The video also discusses the asset retirement obligations associated with the assets, and the impact this has on the market valuation. Finally, the video discusses the acquisition of the assets by Avila, and the positive short-term pricing behavior of the asset's sellers.
  • 00:50:00 The presenter discusses the oil and gas valuation process, highlighting the importance of land and wells in a given area. They note that while Avila's land is not visible on the map, the company has wells that were spotted after January 1st 2021. The presenter also discusses the phenomenon of wells that were drilled but never completed, and how the current oil market conditions may not be favorable for some of these wells.
  • 00:55:00 The video discusses oil and gas valuation and the various factors that can affect a company's value. It explains that, in the current oil and gas market, junior companies are especially vulnerable to production declines. The video also points out that, when wells are brought back online, the cost of capital can be very low.

01:00:00 - 02:00:00

This video provides an overview of how to value oil and gas assets, with a focus on the Canadian Spirit Resources company. The company has recently undergone some changes that have increased its value, and the author recommends that investors consider investing in the stock.

  • 01:00:00 The author examines oil and gas valuations in the northeast British Columbia area, noting that the land is cheap and the wells can be drilled consistently and profitably. When looking at the Rat Race of bidding wars for clear water oil fields, he recommends a different and more economical way of looking at the same problem: buying land for cheap and drilling for natural gas. The author gives an example of a 77 mm SCF per day gas processing plant being worth 77 million dollars.
  • 01:05:00 The video explains oil and gas valuation basics, discussing how the value of a company can be determined by the value of its gas production. The video also discusses the value of gas production in relation to other assets.
  • 01:10:00 This company is planning to bring its wells back online, which will increase production to 36 million per day. The company also has additional wells that may need to be reactivated, and oil prices are currently high enough to cover these costs.
  • 01:15:00 The video discusses the different ways to value oil and gas wells, and provides an example of how to value a well in Southern Energy. The company has raised money and is drilling new wells, and is hedged against price fluctuations.
  • 01:20:00 The company has 20 million barrels of reserves and a NPV10 of $88 million. Management is targeting acquisitions to grow the company's reserves. The market cap is $120 million.
  • 01:25:00 The video discusses oil and gas valuation and how it can be done through the use of futures contracts. It also discusses the different types of resources in the area being drilled and the geology of each. It concludes by discussing the different plans for drilling in the area and how the rate of production may not be consistent with the geology.
  • 01:30:00 In this video, an oil and gas valuation expert discusses the Southern Company's deep drilling program in Northeast British Columbia and how it could affect its share price. He also discusses the type of oil and gas that Southern produces and how it has been performing recently.
  • 01:35:00 The presenter provides a detailed overview of oil and gas valuation, highlighting the importance of data processing and structural analysis. They explain that one of the wells drilled in the oil and gas zone had a strong output, indicating a low geological risk. They also mention that the company has a strong view on macroeconomic factors, making them a trustworthy investment.
  • 01:40:00 The authors discuss the challenges of shale gas in the U.S., including production rates declining by 27% and the need to maintain rigs to keep up with demand. They also mention the Bakken dilemma and Eagle fruit and Permian Shale Sweet Spot exhaustion.
  • 01:45:00 This video provides an overview of oil and gas valuation, focusing on the Canadian Spirit Resources company. Recently, the company has undergone a number of changes, including the issuance of new equity and the acquisition of new assets. These changes have increased the value of the company, and the author recommends that investors consider investing in the stock.
  • 01:50:00 The video discusses the oil and gas market and the impact of maintenance on pricing. It also covers the growth of production in the region due to high prices in early 2022. Finally, the presenter discusses the company and its assets.
  • 01:55:00 The video discusses the oil and gas valuation of a land parcel in southwestern Alberta, Canada. The land is surrounded by a silicandrium resource, has a JV oil and gas plant, and is adjacent to two pipelines.

02:00:00 - 02:45:00

The video discusses oil and gas valuation, and provides an overview of three different oil and gas wells. The wells produce good liquids and are on trend with Arc activity. The land is worth more than the stock is trading at, which suggests that the wells and Arc are attractive investments.

  • 02:00:00 The video discusses oil and gas valuation and provides an overview of three different oil and gas wells. The wells produce good liquids and are on trend with Arc activity. The land is worth more than the stock is trading at, which suggests that the wells and Arc are attractive investments.
  • 02:05:00 Arc Resources is restarting production from wells that have been inactive for seven years, and is looking to bring its water pipeline and fracking operation up to Apache. The company owns 27,000 acres of land, 35 wells, and two gas pumps.
  • 02:10:00 The video discusses oil and gas valuation and how it can be different when production is shut in for a few months or years. The presenter explains that, based on the information they have seen thus far, Canadian Spirit is likely to come back online and produce more gas than before.
  • 02:15:00 The video discusses oil and gas valuation, and explains that, while the market may be undervalued, there are several reasons why the company might be worth investing in. The video also mentions the Chinese lockdown and the potential for it to end soon.
  • 02:20:00 The video discusses oil and gas valuation, and provides an overview of the current situation for Westcan Energy Corporation. The company has been facing delays and has had to reduce its sampling and cutting operations due to high oil output. If the production continues at this rate, the valuation for Westcan Energy Corporation may need to be updated.
  • 02:25:00 The video discusses oil prices, and how if Russian oil comes back into the market, OPEC will likely increase production to make up for the lost supply. The presenter also mentions high-debt companies that may struggle to make money at current oil prices, but will be profitable if oil prices reach 100 dollars per barrel. Finally, the presenter shares a thesis on using arrows to produce assets, and how this strategy can be successful even if oil prices remain low for a long period of time.
  • 02:30:00 The author of the video provides a one-paragraph summary of how he would allocate his money in a portfolio if he were limited to seven or eight companies. He chooses companies that are in his portfolio and that are also white-caps. He does not believe that the portfolios will be affected by the financials coming in two to three weeks.
  • 02:35:00 The presenter discusses oil and gas valuation, focusing on how long-term timeframes are important in investing. He recommends adding more junior oil and gas companies to one's portfolio, and notes that there may be some surprises after financial reports around Q3. He also recommends watching the Q3 preview session, in which he runs through a list of companies.
  • 02:40:00 The speaker discusses oil and gas valuation, margin calls, and pink sheets. He notes that he has never traded anything on pink sheets, but has access to both CS CSE and CRC warrants through a broker. He predicts that the OPEC meeting will result in a new regime of OPEC+, and that his positions are already up 20-30% due to this news.
  • 02:45:00 The presenter discusses oil and gas valuation, highlighting three stocks that they believe will outperform the market in the near future.

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