SSN 0.00% 1.5¢ samson oil & gas limited

CLR 2014 Reserves Statement

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    Anyone be paying attention to CLR - the grandaddy of the Bakken.

    Out with their Dec 31, 2014 Reserves:
    Proved reserves of 1.35 BBoe, 83% operated by the Company, 36% PDP, and 64% crude oil. Continental has grown its proved reserves at a compound annual growth rate of 39% per year since year-end 2010.

    PDP reserves increased 21% from year-end 2013 to 490 MMBoe at December 31, 2014.
    2,994 gross (1,565 net) proved undeveloped (PUD) locations at year-end 2014. The Bakken accounted for 82% of PUD locations at year-end.

    Estimated total production for full-year 2014 was 63.6 MMBoe, an increase of 28% compared to full-year 2013. Crude oil accounted for 70% of total production, or 44.5 million barrels, in 2014. Estimated natural gas production for the year was 114.3 billion cubic feet. The Company reached a new net production milestone of 200,000 Boe per day in late December 2014.

    Continental's year-end 2014 proved reserves had a net present value discounted at 10% (PV-10) of $22.8 billion, a 13% increase over PV-10 of $20.2 billion for year-end 2013 proved reserves. The Bakken accounted for 866 MMBoe of Continental's year-end 2014 proved reserves, with a PV-10 value of $15.2 billion.

    The above NPV10 is of course using a backward looking price deck of WTI ~$95 and gas ~$4.50. Now if your long term view coincides with that pricing then CLR's closing Friday EV of ~$22.77B suggests company has lots of upside as the you're getting the 2P/3P/Resources for next to nothing. If you're more in the $70 range I'm guessing it looks fairly valued and if you're a bear then it looks overpriced. BTW the oil futures curve to end 2020 says oil $72.

    More interesting maybe is PDP reserves growth (21%) for the year significantly behind production growth (28%). At CLR's rate of production (63.6MmBoe) the PDP Reserves are exhausted after 7.7 years (assuming no growth).

    If you take just the oil of the Reserves PDP (314Mmbo) and PUD (550Mmbo) what would that be worth "now" and what is that worth through the cycle as an "in the ground asset"? Now value of PDP @$15/Bbl and PUD $6 gives above $4.7B + $3.3B so roughly $8B plus all their infrastructure (but HH sold much of that to KMI just recently). Through the cycle value of maybe $25 and $12 for $14.5B. In both cases subtract Debt of $6B and equity looks not so good.

    Another view might also be how much Capex was spent in 2014 (circa $4B) for an annual increase of $2.6B in Proved Reserves ... interesting math but obviously skewed by pricing (but 2013 Reserves statement price has similar pricing).

    SSN has had a very busy infill drilling program in last 12 months - so likely reasonable to expect sizeable growth in PDP reserves as the PUDs are converted to PDP. What will PDP be ~1.5Mmbo and maybe PUD 0.5Mmbo? More?

    Just another way to look at value.
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