This article pretty much sums up why I keep PetroBank in the Sweet 16:
http://seekingalpha.com/article/259202- ... urce=yahoo
IMO, PetroBank has a ton of upside with very little downside risk:
> Each share of PetroBank = 1.03 shares of PetroBakken, which IMO is grossly undervalued by the market
> Kerrobert, the first real heavy oil project, will start ramping up production in July. I should go from 100 bopd now to over 7,000 bopd within 18 months.
> The Dawson Project iw all set to be on-line in December. It is designed to ramp up to 10,000 bopd in 18 months.
> Recent drilling at May River Project has added an estimated 40 million bbls of best estimate continget resource.
If Kerrobert works, this stock is going a lot higher.
PetroBank
Re: PetroBank
My update on PetroBank and PetroBakken:
If you are looking for a low risk / high yield investment, you should check out PetroBakken. The current annual yield is 5.8% and the company has a rock solid reserve base.
Petrobank (TSX: PBG and Pink Sheet: PBEGF) was one of my “Top Picks” going into 2011. I do expect the share price to remain well below my Fair Value estimate until the market sees production growth from subsidiary PetroBakken (PBN.TO) and some real progress on PetroBank’s heavy oil projects this year.
PetroBank is one of the two companies in the Sweet 16 that gives us exposure to the Canadian Oil Sands. Gulfport Energy (GPOR) is the other.
Each share of PetroBank equals 1.03 shares of PetroBakken (PBN.TO and PBKEF.PK) plus a proportionate share of the Heavy Oil Business Unit and Archon Technologies Ltd. Archon is a wholly-owned technology subsidiary, which holds the THAI and CAPRI patents plus several others. Archon, as a stand alone business would be worth over $Billion.
Revised Fair Value: Based on my revised Net Income and Cash Flow forecast model, the Fair Value of PetroBank shares after the spinoff of Petrominerales was over $40/share as of 12/31/2010. After reviewing PetroBank’s 1st quarter results, I have raised my Fair Value estimate to $44/share.
• $34/share for their 59% stake in PetroBakken, plus
• $10/share for the Heavy Oil Business Unit & Archon
PetroBank’s Heavy Oil Business Unit ("HBU")
• In 2011 the HBU plans to bring two projects on-line:
• Kerrobert should be ramping up production in July. PBG has completed the 10 well pair expansion for the project. Nine of the new horizontal production wells are drilled, with five completed and the remaining five on schedule to be completed and tied in by June 30. Kerrobert is expected to ramp up to 7,000 bopd by the end of 2012.
• Their Dawson Project in the Peace River region of Alberta should be on-line during the 4th quarter of 2011. Dawson is designed to ramp up to 10,000 bopd with production growth to accelerate late in 2012.
• The May River Project is moving forward: Additional resource evaluation, including eleven oil sands evaluation wells that were drilled during the first quarter, has confirmed significant oil in place. Based on internal estimates, these wells added approximately 40 million barrels of best estimate contingent resource and PetroBank has asked their external reserve evaluator, McDaniel & Associates Consultants Ltd., to update the 2010 reserve report to reflect these drilling results.
• PetroBank now believes the May River Project has the potential to be a 100,000 bopd project.
PetroBakken (PBN.TO): ~59% held by PetroBank
• Reported 1st quarter production of 41,562 boepd, just slightly higher than 4th quarter production. Weather related problems caused delays in getting several wells completed until late in March. Second Quarter production is expected to be down slightly, then ramp up to an exit rate near 48,000 boepd by December.
• PetroBakken drilled 110 (77.4 net) wells with a 99% success rate in the first quarter; including 51 (37.7 net) wells in the Cardium, 45 (33.1 net) wells in the Bakken, 12 (4.6 net) wells in conventional plays in southeast Saskatchewan, and 2 (2.0 net) wells in northeast BC. At the end of the quarter, 35.3 net wells were waiting to be completed and/or placed on production. The majority of these wells are in the Cardium area, 14.4 of which are anticipated to be put on production during the second quarter.
• Currently, PBN has eight rigs drilling in the Cardium play in central Alberta and eight rigs drilling in southeast Saskatchewan, with seven of those rigs working in the Bakken and one in conventional Mississippian plays.
• PetroBakken's 2011 capital plan is predominantly focused on the company’s large inventory of light oil locations and they intend to invest approximately $800 million to drill over 200 net wells, about half of which will be in the Cardium play in central Alberta and the other half in southeast Saskatchewan.
• Exit production for 2011 is forecast to be between 46,000 and 49,000 boepd, with most of the growth in production generated from their Cardium play.
• A detailed company profile for PetroBakken is available on our website under the Sweet 16 tab.
If you are looking for a low risk / high yield investment, you should check out PetroBakken. The current annual yield is 5.8% and the company has a rock solid reserve base.
Petrobank (TSX: PBG and Pink Sheet: PBEGF) was one of my “Top Picks” going into 2011. I do expect the share price to remain well below my Fair Value estimate until the market sees production growth from subsidiary PetroBakken (PBN.TO) and some real progress on PetroBank’s heavy oil projects this year.
PetroBank is one of the two companies in the Sweet 16 that gives us exposure to the Canadian Oil Sands. Gulfport Energy (GPOR) is the other.
Each share of PetroBank equals 1.03 shares of PetroBakken (PBN.TO and PBKEF.PK) plus a proportionate share of the Heavy Oil Business Unit and Archon Technologies Ltd. Archon is a wholly-owned technology subsidiary, which holds the THAI and CAPRI patents plus several others. Archon, as a stand alone business would be worth over $Billion.
Revised Fair Value: Based on my revised Net Income and Cash Flow forecast model, the Fair Value of PetroBank shares after the spinoff of Petrominerales was over $40/share as of 12/31/2010. After reviewing PetroBank’s 1st quarter results, I have raised my Fair Value estimate to $44/share.
• $34/share for their 59% stake in PetroBakken, plus
• $10/share for the Heavy Oil Business Unit & Archon
PetroBank’s Heavy Oil Business Unit ("HBU")
• In 2011 the HBU plans to bring two projects on-line:
• Kerrobert should be ramping up production in July. PBG has completed the 10 well pair expansion for the project. Nine of the new horizontal production wells are drilled, with five completed and the remaining five on schedule to be completed and tied in by June 30. Kerrobert is expected to ramp up to 7,000 bopd by the end of 2012.
• Their Dawson Project in the Peace River region of Alberta should be on-line during the 4th quarter of 2011. Dawson is designed to ramp up to 10,000 bopd with production growth to accelerate late in 2012.
• The May River Project is moving forward: Additional resource evaluation, including eleven oil sands evaluation wells that were drilled during the first quarter, has confirmed significant oil in place. Based on internal estimates, these wells added approximately 40 million barrels of best estimate contingent resource and PetroBank has asked their external reserve evaluator, McDaniel & Associates Consultants Ltd., to update the 2010 reserve report to reflect these drilling results.
• PetroBank now believes the May River Project has the potential to be a 100,000 bopd project.
PetroBakken (PBN.TO): ~59% held by PetroBank
• Reported 1st quarter production of 41,562 boepd, just slightly higher than 4th quarter production. Weather related problems caused delays in getting several wells completed until late in March. Second Quarter production is expected to be down slightly, then ramp up to an exit rate near 48,000 boepd by December.
• PetroBakken drilled 110 (77.4 net) wells with a 99% success rate in the first quarter; including 51 (37.7 net) wells in the Cardium, 45 (33.1 net) wells in the Bakken, 12 (4.6 net) wells in conventional plays in southeast Saskatchewan, and 2 (2.0 net) wells in northeast BC. At the end of the quarter, 35.3 net wells were waiting to be completed and/or placed on production. The majority of these wells are in the Cardium area, 14.4 of which are anticipated to be put on production during the second quarter.
• Currently, PBN has eight rigs drilling in the Cardium play in central Alberta and eight rigs drilling in southeast Saskatchewan, with seven of those rigs working in the Bakken and one in conventional Mississippian plays.
• PetroBakken's 2011 capital plan is predominantly focused on the company’s large inventory of light oil locations and they intend to invest approximately $800 million to drill over 200 net wells, about half of which will be in the Cardium play in central Alberta and the other half in southeast Saskatchewan.
• Exit production for 2011 is forecast to be between 46,000 and 49,000 boepd, with most of the growth in production generated from their Cardium play.
• A detailed company profile for PetroBakken is available on our website under the Sweet 16 tab.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group