Canadian Juniors

[dan_s]

As investors and the Wall Street Gang gains confidence that higher oil prices are here to stay, they may start looking at some of the Canadian companies. Canadian Juniors have be bashed during this cycle. Here is an example.

Market disconnect for a Canadian junior

“Our company is undervalued” is a common phrase heard around investor conferences.

Executives are their own best cheerleaders and they constantly seek innovative ways to create value with their companies. Sometimes the assertion that a company is not being valued in a fashion similar to its peers is more compelling than others, however, and taking a look at EnerCom’sCanadian E&P database, one name – Razor Energy Corporation (Ticker: RZE) – stands out.

The ten-month old company has current production of 4.5 MBOEPD and a market cap of $25 million, and an enterprise value of $45 million, making it one of the smallest Canadian companies in EnerCom’s coverage universe. But no matter how you look at the valuation, and the company’s share price of $1.55, the company comes up significantly undervalued compared to its peers.

Public companies typically trade at a multiple greater than the PV-10 value of their total proved reserves. Razor, which is backed by Alberta’s $100 billion AIMCO pension fund, shares are currently trading 4.4x below the Proved Developed Producing (PDP) assets, which equate to $106.7 million or $6.80 per share. Stepping that analysis out further to encompass upside from PUD locations and 2P reserves less the company’s $22.4 million in net debt, the valuation gap grows even wider.

Read full report on Razor: https://www.oilandgas360.com/serious-ca ... uation-gap


Two small-cap Canadian companies that look good to me are:
Hemisphere Energy Corp. (HMENF)
InPlay Oil (IPOOF)