I read over the report and was somewhat disappointed on 2 fronts:
1) I fully expected the operational update to show production above 55,000 boe/d - with the acceleration of the $100 million into Q412 and the heavily weighted 1Q13 budget, I was expecting strong numbers out of the gate, yet we find ourselves below 50,000 with 36 net wells waiting to be completed and tied in. That seems like an unnecessarily high inventory of very expensive wells not producing any revenue - this does not demonstrate solid execution to me. This is below my expectations for performance.
I actually thought the low share price would motivate everyone at the company to pull together and deliver top quartile results. They may very well be working hard, but the current production numbers don't show it in my view.
2) In 2011, the company added close to 48 million BOE's of reserves, yet in 2012 it was around 36 million, that is 12 million or 25% less. If we could have done as well as in 2011, our reserve increase would have been a more respectable 8% growth. 2% net reserves growth was a real disappointment to me.
I will add a third, given some of the disappointing news for me, I found it a bit hard to swallow the 10's of thousands of shares that were recently doled out (at 5 cents a share – if I understood the insider report properly) to all the senior people at the company.
I expect this report will do nothing to arrest the share decline. That said, I do believe the shares are undervalued and at some point they will correct to a more reasonable price range. When that will happen, I have no idea.
The company really needs to do a better job of adding reserves and making the most effective use of capital employed - and that means maintaining a low inventory (10 - 15) of drilled wells not generating revenue...