10% decline in yoy production after investing 60mm to 70mm says it all.
Indeed, 1Q results (not good) pretty much confirmed my earlier post. Production is down yoy by about 10% - circa 2,800 boe/d in 2012 vs. 2550 boe/d in 2013. Per management, there were field problems, Hurricane Isaac (an oldie but goodie), etc., etc. that contributed to this decline. But, if you put the projected (per Saratoga) production losses from those problems back into the production number, yoy production is flat. That's after investing about 60mm to 70mm in wells, workovers, etc. and bringing 3 new wells on-line in the last few months. That's very poor, to say the least.
My guess is that 2Q results are going to be even worse. 2Q last year had about 3,500 boe/d in production. If you extrapolate what management said about production coming back on line, etc, etc, and believe management's word (risky), we have about 2,800 right now. No new wells are coming on production. Unless there is a dramatic change, my guess is that we are going to miss last year's production totals by about 15% to 20% (about 500 to 700 boe/d). That's not good.
The call last quarter was pretty tame because most of the callers were analysts whose firms have clients in the stock. Therefore, management gets very few tough questions. But, the drilling program has been poor and finding costs are extremely high. Given that the Company has declining yoy production in both this quarter and very likely next, this stock may have some additional room to fall.
