TAG Oil’s (TAOIF) Q4 2017

posted in: Earnings Call, Notes | 0

Toby Pierce – CEO

They chose equity to debt for a reason

“As we looked at all the options, and specifically in March timeframe when prices were – oil prices were more robust, they were in the $55 a barrel Brent range. We anticipated the market to stay flat or oil prices to stay about mind you or they increase and obviously we were wrong on that point. So we are actually quite happy that we use that raised equity instead of debt. Debt in an oil and gas company can be very detrimental if you get the timing wrong. In addition, I have to say you definitely need to hedge out any depositions. Most reserves based lenders and most debt providers will require you to hedge out a portion if not all of the debt and that can make, that sort of sets your price and your price floor, so you don’t get to experience the upside in the oil price if you hedge out. We took the opportunity at the time to raise capital to focus on incremental drilling and to really get our cost per barrel down and so move the oil company forward.”

On acquisitions

“Are we going to do more acquisitions? It’s very hard to say. It’s a great deal presents itself. We’ll definitely consider it. In this type of market and sideways market, more distressed sellers may occur, may emerge. And we do have our sights on two or three, but we’re very patient and we’re not going to over pay”

He sees oil prices rising on supply crunches

“my personal view is we will probably edge back in the $60 range by the end of calendar 2017. I think it will be in the high 50s, low 60s….the amount of capital that’s actually come out of spending programs, globally depends on who you read, but its on the order of $1 trillion to $2 trillion, and that capital is not being reinvested in. It will start to cause declines with some point. So while we do have production growth in the Permian and it’s a fantastic resource, I do believe that the supply and other things will have a supply crunch at some point and we’ll see high oil prices. “