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Oil Exploitation Zargon's core business is the exploitation (increasing recovery factors) of existing oil reservoirs through enhanced recovery methods, development drilling or production optimizations. We focus on smaller and technically complex, but very profitable oil exploitation projects that tend to be overlooked by our larger competitors. In particular, we are excited about the Little Bow Alkaline Surfactant Polymer ("ASP") tertiary recovery project. Click here to view our ASP presentation. Oil Production Weighting Since Q4 2007, Zargon has been focused on oil weighted acquisitions and exploitation projects and has successfully increased its oil production weighting from 42 percent to 59 percent as reported in Q3 2011 (6:1 equivalency). This trend is expected to continue in 2011 and 2012. Zargon's Dividend Policy Zargon is committed to deliver a steady, but supportable dividend. Dividend payout levels are ultimately targeted to be 35% of cash flow and should not exceed 50% of cash flow.
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ZARGON Q3 2011 RESULTS
Zargon has engaged the services of Sayer Energy Advisors to assist in the divestiture of its high working interests in a total of 31.75 sections (20,320 gross acres, 19,917 net acres) of land. To view a copy of the disposition package, please click here.
On November 9, 2011, Zargon updated their Investor Presentation. To view a copy of the presentation, please click here.
(PDF 31 KB)
KEY TAKEAWAYS (November 8, 2011 Share Price of $14.79) Zargon has considerably improved its business by focusing on its core oil exploitation strengths.
Hamilton Lake, Killam, Taber, Williston Basin and other Zargon oil exploitation assets provide good visibility of profitable oil exploitation projects. • These projects are economic to pursue at much lower oil prices. The Little Bow ASP project could be very significant to Zargon. • Success at Little Bow could lead to significant follow-on projects at Little Bow and other Zargon properties. Zargon shares represent good value. • Investors pay only for proved and probable producing reserves and receive a rich opportunity set that includes 165 net oil exploitation locations plus the high impact Little Bow Alkaline Surfactant Polymer tertiary flood project. Zargon provides a long dated call option on future oil prices and pays a 8% dividend in the interim. • Downside is now protected by a strong balance sheet and in-the-money forward oil hedges.
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