500K undeveloped acres for 2B, i don't believe is realistic. You would have to throw some production into the mix. i believe, I'am at the idea our developed acres are with our JV partners or in Trusts. Paying off ALL debt isn't a important or prudant thing to do. You could drill afew wells in the acres that we purchased after the JVs and if ,like what we have drilled. could bring the Value to 2B. Keep in mind we have about 2.5B acres Gross After JVs and Trusts is 1.85 Net to SD so there are ways to raise 2B without losing alot of Production or future drill ing programs. But selling at this time is Silly, we have 2 yrs of Drilling paid for now, wether you like it or not. Wether YOU believe it or not. Doesn't change the facts....250 wells a year should get us the same growth as Japan has experiance the last 10 years JMHO.......Just Sayin
Thanks for your reply. You make good points, but from a risk perspective I would have to disagree with you regarding debt. In today's environment I'd rather see no debt and a cash flow that could sustain operations even in the worst-case scenario. I'm quite frankly tired of all the broken promises and lack of fiscal responsibility. The current debt sucks out more than $350 M per year from the SD coffers. That's 120 wells per year alone. If the price of crude were to fall significantly, the debt would bury us. If we were debt fee, after a few years and the building of a cash pile SD could then grow organically if it was deemed prudent.
I have thought a similar scenario would be favorable also. Sell some units of the trusts, sell a portion of the Miss Lime which is outside the infrastructure. SD has 11,000 targeted drill locations and that far exceeds cap-ex capability. Reduce drill locations to known sweet spots where ESP's are applicable within infrastructure. Use sale proceeds to pay down debt and accelerate drilling/deploying ESP's. With oil falling the Gulf assets probably wouldn't yield a good price at present..but even at that if it's adding to bottomline keep it, if not dump it as well. JMHO..GLTA
I'm beginning to wonder if the trusts aren't going to be written down. At this point its not worth drilling them out, and the remaining units owned are worth half of the IPO value so seems all the $$ has been spent. This would eliminate any capex going into them. Is this plan viable? I'm not informed enough on the trusts but it would seem at this valuation they wouldn't seem worth keeping, loss of distributions to SD wouldn't amount to much. Anyone else's thoughts on this possible scenario? Seems this would eliminate any future required capex and make sale price of the company increase. That would leave us focused on the JV's and drilling carries associated with them, getting most bang for drilling buck. Once those are done, you really get down to the true value of the company.
--All my opinion but trying to think outside the box.