Misleading Chart of the Month
Check out this presentation by Angle Energy (TSX: NGL), a Canadian E&P. Please flip to slide 3.
As you probably know, natural gas is in the gutter today, while oil prices are strong. Natural gas liquids and condensate, which are more closely linked to oil prices than gas prices, are the only saving grace for natural gas plays these days. It's no surprise, then, that Angle chooses to brand itself as a "Liquids-Rich Mid-Cap Value."
Now look at the chart. For the company's projected exit rate for 2010, we've got production of 1,500 bbl/d of oil, 3,500 bbl/d of NGL & condensates, and 51 mmcf/d of gas. That adds up to 13,500 boe/d, as seen at the top. So far, so good.
But wait. Look at the size of the green section and the blue (blurple?) section compared to the red section, at the right-hand side of the chart (Dec 2010). Combined, they're a lot bigger than the red section. This visually suggests that the company is over 50% liquids by production volume.
The problem, of course, is that 1,500 + 3,500 is only 5,000 bpd of liquids, or 37% of exit production. 51 mmcf/d equals 8,500 boe/d (the conversion is simple: 51,000 mcf divided by 6, given the approximate 6:1 energy equivalency). There's your other 63% of production.
Now how did this chart get so deceptive? Look at the bottom left corner. There's a little zigzag, indicating that the chart has compressed everything from 0 bbl/d to 6,000 bbl/d into the same scale afforded to 1,000 bbl/d increments at points above 6,000 bbl/d. In this way, 5,000 boe/d of gas production is hidden from the eye.
This has all the looks of a company desperate to characterize itself as something it is not: a "Liquids-Rich Mid-Cap Value."