I worry about the long silence on production.
With the Laricina creditor protection today, and the Southern Pacific bankruptcy in January, it is clear that lower-than-expected production and low prices are trouble.
I know DWOG is carried by the farm out agreement and has no debt, but is the Sawn Lake project producing as the reservoir model predicted? If the actual production rate is at significant variance with the forecast production rate, that could be real trouble. We deserve to know.
We should have had a production update last week, because that's when they predicted reaching the top of the steam chamber.
So where is the news?
The last announcement we had was on Dec. 1, 2014.
At that time POE released the following information:
Bitumen production commenced at the Sawn Lake, Alberta Steam Assisted Gravity Drainage ("SAGD") demonstration project on September 16, 2014. Bitumen sales, on a 100% basis for the producing well, averaged 126, 150, and 221 barrels of bitumen per day during the first, second and partial third thirty day periods since the start-up of SAGD mode production and ending November 24, 2014. Corresponding steam oil ratios were estimated at 8.39, 7.61 and 6.32 respectively. These early stage production numbers compare favorably to an analogous reservoir in a demonstration project operated by another company of similar reservoir type that we are monitoring and using as a basis of comparison.
We know they need to hit about 350 barrels a day, and a SOR below 5, for the project to be economic. One explanation for the silence is they are nowhere close to those rates. If they have reached the top of the steam chamber, and they haven't cracked 300 barrels a day, they are a dud like Southern Pacific.
If they are doing well, or meeting targets, they should let us know. The silence only spreads fear and uncertainty.I just don't understand why you would keep information away from investors who need to make an informed decision.
