Here’s a nice piece on TAG Oil in Seeking Alpha, written by someone who seems to get the significance of “no debt” and “high net-back oil.”
Because TAG Oil is debt free, there are no loan covenant violations to worry about when there’s a downturn. Other companies…and even countries (if you’ve been following the problems in Greece)…would need to pile on the debt, and then figure out how to pay the debt. While we don’t take setbacks lightly, we can shake them off and move on to our next opportunity.
“This is an oil company that does not need the time given by hedges to reduce its costs so it can be profitable. With netbacks like this, the company will do just fine in the current operating environment.”
The author is correct that TAG will go back to the Cardiff-3 well to determine the viability and scope of this deep, potentially large discovery and that we have a long list of shallow drilling opportunities to pursue in the mid-term: extensions of known play areas, in-fill drilling, and several well optimizing opportunities. All of which can be done without the same outlay of capital as deep drilling, offshore drilling and shale exploration.
“New investors will be purchasing shares that are currently more than 70% below the offering price in 2013 (a real bargain).”