I talked to the company yesterday. Asset sales and cash flow from operations are more than enough to keep the banks happy and pay dividends. 3rd quarter results should be very close to my forecast, which you can find under the Watch List Tab.
Cash Flow Per Share from operations will be approximately $3.20Cdn this year.
Cash flows exceed capital expenditure, so Lightstream is generating "Free Cash Flow".
There is near zero risk the dividends will be cut, unless there is a significant drop in oil prices. Even if oil goes to $80 tomorrow and stays there, Lightstream will remain cash flow positive.
Lightstream Resources
Lightstream Resources
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Lightstream Resources
Dan, any thoughts on the destruction of LSTMF?
TIA
TIA
Re: Lightstream Resources
LSTMF closes sale:
<<https://finance.yahoo.com/news/lightstr ... 00447.html
Commodities still getting hammered today as US$ continues to fly. Pressure on gold eased for the
time being.
<<https://finance.yahoo.com/news/lightstr ... 00447.html
Commodities still getting hammered today as US$ continues to fly. Pressure on gold eased for the
time being.
Re: Lightstream Resources
DXY's down, cl's up--so far so good as of this writing.
Re: Lightstream Resources
This sale is a good thing. Lightstream raised more money on asset sales than expected - $725 million vs. $600 million, used it to reduced debt and they continue to generate free cash flow from operations. Their balance sheet will be in decent shape by year-end. 3rd quarter production should be approximately 41,000 boepd (80% light oil) and 4th quarter production should be approximately 36,700 boepd (78.5% light oil). First half of 2015 should be approximately 36,000 boepd, then they should begin ramping up production again to an exit rate near 38,000 by 12-31-2015. 2015 capital program should be fully funded by cash flow from operations. Lightstream is going to be fine and unless there is a big drop in oil prices (below $80Cdn/bbl) the monthly dividends will continue. You can find my detailed forecast model for Lightstream under the Watch List Tab.- Dan
CALGARY, ALBERTA--(Marketwired - Oct 1, 2014) - Lightstream Resources Ltd. (the "Company" or "Lightstream") (LTS.TO) is pleased to announce the closing of our previously announced agreement with Crescent Point Energy Ltd. to sell the remaining assets in our southeast Saskatchewan Conventional business unit for gross proceeds of $378.4 million. Proceeds include cash consideration of $375 million (before customary adjustments) and three key parcels of Bakken rights valued at $3.4 million that will enable us to accelerate the expansion our Creelman enhanced oil recovery ("EOR") project.
Further positive attributes of this transaction include: the elimination of $38.5 million of future abandonment and reclamation liabilities on our balance sheet to reflect the disposition of approximately 450 net wells and associated facilities; a reduction in our capital expenditure guidance for 2014 by $15 million; and the elimination of future regulatory compliance costs associated with sour gas venting at these properties.
Consistent with other divestment activity in 2014, we applied cash proceeds to reduce corporate debt which, pro forma June 30, 2014, and following the transactions to date, is approximately $1.5 billion. The amount drawn on our secured term credit facility is now approximately $500 million, leaving $650 million of available liquidity under the facility.
With our balance sheet strengthened and divestiture targets exceeded, we remain focused on operational efficiency and the effective deployment of capital in our core operating areas. We currently have 3 rigs drilling in our Cardium business unit and a 4th rig active in our Bakken business unit. We are also on target to commence natural gas injection in two further patterns in our Bakken EOR initiative before year end.
CALGARY, ALBERTA--(Marketwired - Oct 1, 2014) - Lightstream Resources Ltd. (the "Company" or "Lightstream") (LTS.TO) is pleased to announce the closing of our previously announced agreement with Crescent Point Energy Ltd. to sell the remaining assets in our southeast Saskatchewan Conventional business unit for gross proceeds of $378.4 million. Proceeds include cash consideration of $375 million (before customary adjustments) and three key parcels of Bakken rights valued at $3.4 million that will enable us to accelerate the expansion our Creelman enhanced oil recovery ("EOR") project.
Further positive attributes of this transaction include: the elimination of $38.5 million of future abandonment and reclamation liabilities on our balance sheet to reflect the disposition of approximately 450 net wells and associated facilities; a reduction in our capital expenditure guidance for 2014 by $15 million; and the elimination of future regulatory compliance costs associated with sour gas venting at these properties.
Consistent with other divestment activity in 2014, we applied cash proceeds to reduce corporate debt which, pro forma June 30, 2014, and following the transactions to date, is approximately $1.5 billion. The amount drawn on our secured term credit facility is now approximately $500 million, leaving $650 million of available liquidity under the facility.
With our balance sheet strengthened and divestiture targets exceeded, we remain focused on operational efficiency and the effective deployment of capital in our core operating areas. We currently have 3 rigs drilling in our Cardium business unit and a 4th rig active in our Bakken business unit. We are also on target to commence natural gas injection in two further patterns in our Bakken EOR initiative before year end.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Lightstream Resources
I certainly thought it was a good thing though the stock price suggests otherwise. I am at a loss, no pun intended,
to comprehend the price action on this stock.
to comprehend the price action on this stock.
Re: Lightstream Resources
As of 3:45, LST is @ an all-time low of 4.25 = 9% drop, on heavy volume (407K+ shares). Somebody must dumping shares at any cost.
Has this been a waterfall of stops? Does make a body wonder if someone knows something about drillbit results, eg, that has yet to see light of day.
Has this been a waterfall of stops? Does make a body wonder if someone knows something about drillbit results, eg, that has yet to see light of day.
Re: Lightstream Resources
It's been in free fall for months. Biggest loss I've ever suffered in 24 years of investing and I still don't even comprehend
the reason for it. I haven't bought anymore (I've got more than enough) nor have I sold any. A year from now I'll either
be relieved or regret having ever heard of this one.
the reason for it. I haven't bought anymore (I've got more than enough) nor have I sold any. A year from now I'll either
be relieved or regret having ever heard of this one.
Re: Lightstream Resources
not a premium member........can you pass on the hilites??
Re: Lightstream Resources
just cut and paste the link - should work without problem...
when I cut and paste the article (see below), the graphs/tables don't come up.
cheers - Laurin
Is The 10.7% Dividend Safe For Lightstream Resources? What Is The Downside Risk?
Is The 10.7% Dividend Safe For Lightstream Resources? What Is The Downside Risk?
Oct. 3, 2014 10:46 PM ET | About: Lightstream Resources Ltd. (LSTMF) by: David Braunstein, CFA
Disclosure: The author is long LSTMF. (More...)
Summary
During the last 10 to 40 years of a shale well’s life production in the Bakken declines between 5% to 10% per year.
If the LTS.T stopped all exploration and focused only on paying the existing dividend, how long could the existing dividend be maintained based on 2Q2014 production?
Case I, doomsday scenario, where oil prices and production drop by 10% per year; even with extreme assumptions the dividend is safe.
Case III demonstrates a conservative scenario where prices stay flat for the next 10 years and production drops by 5% per year showing LTS.T should not be below C9.11.
If the Company uses excess funds to successfully grow the company, then LTS.T could trade much higher because 70% to 90% production occurs the first year in shale plays.
This report is about the dividend safety of Lightstream Resources, and about using a NPV (net present value) approach to valuing a company that pays a dividend. NPV can be described as the value in today's dollars of the future dividend stream for a given number of years at today's cost of capital. Cost of capital is the interest rate one uses in the NPV calculation. It is the interest rate the investor can be expected to receive with a comparable alternative investment. For purposes of this analysis I assume one could invest in 10-year, A-rated Corporate bonds and get 3.62%. That is the interest rate I am using as cost of capital because the investor in Lightstream would be giving up the opportunity to earn 3.62% (cost of capital). Lightstream is an interesting subject because it pays 4 cents Canadian per month that adds to C0.48 per year. I will use the C0.48 per year instead of the C0.04 per month to simplify calculations in my analysis.
Lightstream Resources is a Canadian exploration and production company with an over 670,000 acreage position, primarily in the Bakken and Cambian shales with proved developed and proved undeveloped reserves of 179 million barrels of oil equivalent. Current production is about 42,500 per day. The Company has over 1,950 drilling locations representing over 10 years of drilling inventory. Lightstream trades on the Toronto Stock Exchange with the symbol LTS. It also trades in the United States in the over the counter market with the symbol LSTMF.
In the analysis of Bakken production curves one experiences 70% to 90% of primary production the first year and the industry commonly applies a terminal constant decline rate of 5% to 10% per year for the next 10 to 30 years of production. Growth of a fracing company is very tricky. The steep decline curves replacing last years production requires an exponential increase in new wells. Managements that understand this start very slowly.
Investors need to realize that there can be disappointments in future production predictions by frac companies. Those frac companies that return value to shareholders in dividends are the best ones to own even if the shares plummet due to management not meeting expectations. For a frac company the big danger is that management is not diligent with their costs during the exciting initial production coming from new wells. Money must be saved to pay debt holders and shareholders.
Since almost all revenues come from oil and gas production, it is not a stretch to assume that revenue is a function of oil and gas prices and the amount of hydrocarbons produced. One way to test dividend safety is to assume that oil and gas prices decline by 10% per year for the next ten years and that production declines by 10% per year as is common in Bakken shale wells. If we project out the cash flow from existing production given these harsh assumptions then discount the dividends paid from cash flow over ten years we can derive a current value for the stock assuming very harsh assumptions.
Notice that I am not considering the recent asset sales, but only counting revenues as of the second quarter of 2014. The reason is that we do not know what effect the asset sales will have on production until likely the fourth quarter. At that time I will revisit this analysis. I would speculate that the asset sales will have a positive impact on this analysis, but that is for a later time.
The following spreadsheet shows case I, 10% per year decline in prices and a 10% per year decline in production. All fund flow in excess of dividends is plowed back into cash without being reinvested. This is important since the accumulation is saved to repay outstanding debt at year ten. Funds flow is defined as all cash flow less all cash outflows that include salaries, bonuses, operating expenses, debt expenses, taxes and general and administrative expenses. The interest rate used in these calculations is that of a 10 year A rated corporate bond of 3.62%. Starting prices are those achieved during the second quarter of 2014 in the quarterly report. Notice that expenses associated with funds produced are also likely to decline 10% per year. All amounts are in Canadian dollars.
(click to enlarge)
The net present value after debt repayment of a stream of dividends of C0.48 per share per year for 10 years at 3.62% is C4.15 per share. Notice that the lenders did a good job in testing a worst case scenario as with only existing production all debt can be paid back in year 10 with 18 cents per share of funds left over for the shareholders given draconian assumptions.
Case 2 shows what the NPV would look like using a more favorable decline curve, but still very conservative because it assumes that prices decline by 5% per year. Notice that expenses associated with funds produced are also likely to decline 5% per year.
(click to enlarge)
For Case II the net present value after debt repayment of a stream of dividends of C0.48 per share per year for 10 years at 3.62% is C4.91 per share.
The third case assumes that costs and prices stay flat, but production declines by 5% per year.
(click to enlarge)
Even Case III is very conservative since most people assume that after two years that oil prices will rise because of the steep decline in frac production especially for oil. With flat prices I'm showing that after debt repayment in year 10 the NPV is C9.11 per share.
Conclusion
Lightstream at current prices looks to be very attractive using only current production. It seems that even with draconian assumptions that downside risk is limited. If management can successfully plow excess cash flow into new wells we should see growth from production leading to much higher valuations.
Editor's Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.
Additional disclosure: The author is long LSTMF and has no plans to sell it in the next 72 hours.
when I cut and paste the article (see below), the graphs/tables don't come up.
cheers - Laurin
Is The 10.7% Dividend Safe For Lightstream Resources? What Is The Downside Risk?
Is The 10.7% Dividend Safe For Lightstream Resources? What Is The Downside Risk?
Oct. 3, 2014 10:46 PM ET | About: Lightstream Resources Ltd. (LSTMF) by: David Braunstein, CFA
Disclosure: The author is long LSTMF. (More...)
Summary
During the last 10 to 40 years of a shale well’s life production in the Bakken declines between 5% to 10% per year.
If the LTS.T stopped all exploration and focused only on paying the existing dividend, how long could the existing dividend be maintained based on 2Q2014 production?
Case I, doomsday scenario, where oil prices and production drop by 10% per year; even with extreme assumptions the dividend is safe.
Case III demonstrates a conservative scenario where prices stay flat for the next 10 years and production drops by 5% per year showing LTS.T should not be below C9.11.
If the Company uses excess funds to successfully grow the company, then LTS.T could trade much higher because 70% to 90% production occurs the first year in shale plays.
This report is about the dividend safety of Lightstream Resources, and about using a NPV (net present value) approach to valuing a company that pays a dividend. NPV can be described as the value in today's dollars of the future dividend stream for a given number of years at today's cost of capital. Cost of capital is the interest rate one uses in the NPV calculation. It is the interest rate the investor can be expected to receive with a comparable alternative investment. For purposes of this analysis I assume one could invest in 10-year, A-rated Corporate bonds and get 3.62%. That is the interest rate I am using as cost of capital because the investor in Lightstream would be giving up the opportunity to earn 3.62% (cost of capital). Lightstream is an interesting subject because it pays 4 cents Canadian per month that adds to C0.48 per year. I will use the C0.48 per year instead of the C0.04 per month to simplify calculations in my analysis.
Lightstream Resources is a Canadian exploration and production company with an over 670,000 acreage position, primarily in the Bakken and Cambian shales with proved developed and proved undeveloped reserves of 179 million barrels of oil equivalent. Current production is about 42,500 per day. The Company has over 1,950 drilling locations representing over 10 years of drilling inventory. Lightstream trades on the Toronto Stock Exchange with the symbol LTS. It also trades in the United States in the over the counter market with the symbol LSTMF.
In the analysis of Bakken production curves one experiences 70% to 90% of primary production the first year and the industry commonly applies a terminal constant decline rate of 5% to 10% per year for the next 10 to 30 years of production. Growth of a fracing company is very tricky. The steep decline curves replacing last years production requires an exponential increase in new wells. Managements that understand this start very slowly.
Investors need to realize that there can be disappointments in future production predictions by frac companies. Those frac companies that return value to shareholders in dividends are the best ones to own even if the shares plummet due to management not meeting expectations. For a frac company the big danger is that management is not diligent with their costs during the exciting initial production coming from new wells. Money must be saved to pay debt holders and shareholders.
Since almost all revenues come from oil and gas production, it is not a stretch to assume that revenue is a function of oil and gas prices and the amount of hydrocarbons produced. One way to test dividend safety is to assume that oil and gas prices decline by 10% per year for the next ten years and that production declines by 10% per year as is common in Bakken shale wells. If we project out the cash flow from existing production given these harsh assumptions then discount the dividends paid from cash flow over ten years we can derive a current value for the stock assuming very harsh assumptions.
Notice that I am not considering the recent asset sales, but only counting revenues as of the second quarter of 2014. The reason is that we do not know what effect the asset sales will have on production until likely the fourth quarter. At that time I will revisit this analysis. I would speculate that the asset sales will have a positive impact on this analysis, but that is for a later time.
The following spreadsheet shows case I, 10% per year decline in prices and a 10% per year decline in production. All fund flow in excess of dividends is plowed back into cash without being reinvested. This is important since the accumulation is saved to repay outstanding debt at year ten. Funds flow is defined as all cash flow less all cash outflows that include salaries, bonuses, operating expenses, debt expenses, taxes and general and administrative expenses. The interest rate used in these calculations is that of a 10 year A rated corporate bond of 3.62%. Starting prices are those achieved during the second quarter of 2014 in the quarterly report. Notice that expenses associated with funds produced are also likely to decline 10% per year. All amounts are in Canadian dollars.
(click to enlarge)
The net present value after debt repayment of a stream of dividends of C0.48 per share per year for 10 years at 3.62% is C4.15 per share. Notice that the lenders did a good job in testing a worst case scenario as with only existing production all debt can be paid back in year 10 with 18 cents per share of funds left over for the shareholders given draconian assumptions.
Case 2 shows what the NPV would look like using a more favorable decline curve, but still very conservative because it assumes that prices decline by 5% per year. Notice that expenses associated with funds produced are also likely to decline 5% per year.
(click to enlarge)
For Case II the net present value after debt repayment of a stream of dividends of C0.48 per share per year for 10 years at 3.62% is C4.91 per share.
The third case assumes that costs and prices stay flat, but production declines by 5% per year.
(click to enlarge)
Even Case III is very conservative since most people assume that after two years that oil prices will rise because of the steep decline in frac production especially for oil. With flat prices I'm showing that after debt repayment in year 10 the NPV is C9.11 per share.
Conclusion
Lightstream at current prices looks to be very attractive using only current production. It seems that even with draconian assumptions that downside risk is limited. If management can successfully plow excess cash flow into new wells we should see growth from production leading to much higher valuations.
Editor's Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.
Additional disclosure: The author is long LSTMF and has no plans to sell it in the next 72 hours.
Re: Lightstream Resources ?? for Dan
If the current crunch in crude prices produces prices around $80 or less, what happens to Lightstream?
Presumably the div would be cut, freeing up some cash but probably also further crushing share price.
How do you see such oil price scenarios playing out?
Presumably the div would be cut, freeing up some cash but probably also further crushing share price.
How do you see such oil price scenarios playing out?