NOG Notes

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Zman Company Updated ~ 12/2/09

  • Bakken Player with small working interests in lots of wells,
  • Williston Basin: 85,000 net acres
  • Red River area: 22,000 net acres
  • Balance Sheet: No debt, recent secondary took care of that, provides about $45 mm cash on hand as well.
  • Game Plan:
    • drill 14 to 16 net wells in 2010 (aggregate cost of probably $45 mm)
    • remain as a non-operator (biggest partners EOG and Slawson) to keep costs down.  Average working interest is low but has been rising, sees 15% working interest in the 2010 program
  • Production: Growing quickly, albeit from a small base:


  • They see growing volumes 20 to 30% per quarter next year. This should translate into them underspending cash flow next year (Cash of $50 mm + about $50 mm of EBITDA vs a budget of about $55 mm in the Bakken, not sure Red River budget but it won’t be as large). 
  • Hedges:  225 Bopd hedged at $82.60 through Dec. 2011. That’s a little over 10% of the expected 2009 exit rate.
  • Valuation:

    • 2010 P/CF: of 7.9x, not shabby for an upstart with a TEV to EBITDA of only 6x.
  • Nutshell: Been watching it for awhile, waiting on a pullback that only recently came, now seems like a good time for a "getting to know you" trade.

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