So Long Reliable Energy

If there has been one thing the company has been reliable about, it has been underperforming its assets.   In its final denouement, it did not disappoint.

Reliable Energy (REL.to) was taken over by Crescent Point on Wednesday.  I was disappointed by the price they received (~36cents) as it was only about a 15% premium to where the stock traded at prior to the offer.  There was also no mention of REL’s current production in the press release, so its impossible to gauge whether the company is selling on the cheap because of an unsuccessful winter drilling campaign, or because they just wanted to give Crescent Point a gift.  At any rate, I sold my shares at 35 cents and am on to bigger and better things.

The one number that was provided in the release was the updated proved and probably reserves number.

Reliable Energy has proved plus probable reserves of 4.1 million barrels of oil equivalent as of Dec. 31, 2011, and the oil explorer has identified 36 net locations for drilling.

Based on those reserves, Reliable was bought up for $22 per bbl.  Based on the most recent production number of 1,000boe/d, the transaction took place at $95,000 per flowing boe.  All boe numbers are 95% light oil.

It could be worse, but I also think they could have done better.  They have an extensive land position, and there were some rumors that Crescent Point had hit a boomer well on offsetting land.

Nevertheless what’s done is done.  Take your money and move on.