On the one hand, revenues and reported oil production were extremely disappointing. All these wells coming on board with officially published production data off of confidential status, but ESTE reports no increase in production from Q2. Instead we get a statement from Ray that we will begin to see benefits from the new wells in Q4 results, and even more in Q1 of the fiscal year starting April 2013.
On the other hand, a nice bump in reserves, up to 1,895,000 BOE. That’s a 42% increase in just two quarters. It indicates something is starting to happen.
So as an outsider, how are we supposed to know how well things are going. There were 29 wells projected to be developed in the fiscal year starting April 1, 2012 ending in March 31, 2013. How many of these wells contributed to the production in Q3? How many were included in the BOE figure?
Obviously there is some lag from the time a well’s production data is published, vs. when it is recognized into ESTE’s revenue stream. Is it 1 month, 3 months, 6 months? I can’t tell from the information they’ve given us. The same question exists for BOE, but it appears the lag might be different on revenue recognition as opposed to reserve calculations.
Yes, TrueTruth hit the BOE reserve figure dead on when he said 1.9 MM bbls. I also think he is going to hit the total production figures too when all this actually kicks in the next Q and beyond. I guess we will see another huge bump from "True-ups" - just like last time (only more so this time imo)... Of course the stock will most likely suffer on Monday morning. Happens every time a company trys to put out a 10Q late on a Friday. Ray better start his buy-back again when all those cheap shares get sold next week.