DeeThree Exploration (DTX.TO / DTHRF) is working some oil projects. They're currently producing and have 2P reserves, which I think is terrific. They're operating in Canada, a safe jurisdiction. I just have to wonder whether this stock is fairly valued. The CEO had several successes with exploration companies but I can't tell from his bio whether he's a petroleum engineer.
Their current portfolio has three active areas. They have a sufficient number of wells that the cost of operating each one is less relevant to the company as a whole. Try as I might, I just can't figure this one out. I admit I have some open questions . . .
What is their estimated reserve life in light of these wells' decline rates? They have steadily increased bpd production for several years, according to the corporate materials they've published. .
Will the API gravity become heavier as production increases on some wells? If it does, production costs will increase.
How much capex must they expend to develop new wells? Maybe some capex is better spent extending the life of wells that have experienced steep declines.
If these questions have no satisfactory answers then perhaps this company would be better off as a royalty trust structure. That would allow it to guide investors' expectations as production declines. Investors sure do like this stock and they've bid the price up since late 2012. I just don't have solid answers to the questions above. This may be a waste of a blog article, but I had to at least check out DeeThree.
Full disclosure: No position in DeeThree Exploration at this time.
Their current portfolio has three active areas. They have a sufficient number of wells that the cost of operating each one is less relevant to the company as a whole. Try as I might, I just can't figure this one out. I admit I have some open questions . . .
What is their estimated reserve life in light of these wells' decline rates? They have steadily increased bpd production for several years, according to the corporate materials they've published. .
Will the API gravity become heavier as production increases on some wells? If it does, production costs will increase.
How much capex must they expend to develop new wells? Maybe some capex is better spent extending the life of wells that have experienced steep declines.
If these questions have no satisfactory answers then perhaps this company would be better off as a royalty trust structure. That would allow it to guide investors' expectations as production declines. Investors sure do like this stock and they've bid the price up since late 2012. I just don't have solid answers to the questions above. This may be a waste of a blog article, but I had to at least check out DeeThree.
Full disclosure: No position in DeeThree Exploration at this time.
