PetroBank / PetroBakken

[dan_s]

I have gotten several e-mails asking why PetroBank is up so much today.
> They are going to report a big increase in production for Q4
> Results in PetroBakken's (owned 59% by PetroBank) Cardium drilling program are very good and getting better.
Plus this announcement.

PetroBakken sees 2012 exit production 2-10 pct up vs 2011

* PetroBakken expands hedging program

* PetroBakken sets div reinvestment plan

* PetroBakken shares up 7 pct, Petrobank up 6 pct

Dec 13 (Reuters) - Canada's PetroBakken Energy Ltd forecast a rise of more than 15 percent in production and expanded its hedging program for next year to cash in on high oil prices and the drilling success at its light-oil fields in Saskatchewan and Alberta.

PetroBakken also set a capital expenses budget of C$700 million ($683.16 million) for the next year, the majority of which will be used to drill, complete and equip more than 183 wells in the Bakken and Cardium light-oil plays.

The company expects to end 2012 with a production rate of 50,000-54,000 barrels of oil equivalent per day (boepd), about 2-10 percent higher than the 49,000 plus boepd it expects to produce towards the end of this year.

PetroBakken's expanded hedging program targets up to 20,000 barrels of oil per day (bopd) of net production in the first half of 2012, of which 12,750 bopd has already been hedged at an average floor-price of $80.49 and a ceiling of $113.92 to date.

It usually hedges only about a fourth of its production.

Oil prices have risen about 10 percent so far this year. Both OPEC and the International Energy Agency have trimmed their oil demand growth forecast for 2012.

It also set a dividend reinvestment plan (DRIP) for shareholders in Canada, allowing them to reinvest monthly cash dividends in new shares at a 5 percent discount to the market price at that time.


PETROBANK CAPEX PLANS

Petrobank Energy and Resources, which owns about 59 percent of PetroBakken, plans to reinvest about half its dividend-earnings in the DRIP, its said in a separate statement.

At current dividend levels, Petrobank would get more than C$52.5 million in cash and and an equivalent amount in PetroBakken shares per year, Petrobank said.

That would fund Petrobank's 2012 capital expenditure program of C$34 million, including a C$10 million project to raise production at its Kerrobert project and bring it to commerciality.

About C$10-C$12 million will be used at the Dawson project, Petrobank added.

The company will defer further work on the Dawson project till the second quarter of 2012, when permanent grid power from the Kerrobert project will be tied into the site.

Petrobank expects to submit the regulatory application for its commercial project at Dawson by mid-2012.

PetroBakken's shares were up 7 percent at C$10.65, while those of Petrobank were up 6 percent at C$9.29 in early trade Tuesday on the Toronto Stock Exchange.

[danross70]

Currently, Petrobank is selling around a 20% discount to the value of its Petrobakken holdings alone, with no value assigned to its other assets, like the heavy oil business or the THAI/CAPRI technologies. Does PBG represent a value investment or a value trap? I see nothing coming that will function as a catalyst to bring up the price of PBG, and I fear it is "dead money" for at least 6 to 9 months. Any views on this question?

[dan_s]

PetroBakken is going to report a significant increase in production from Q3 to Q4 and with oil priced where it is today, the value in their Cardium drilling program is very good. PetroBank has some value in their heavy oil acreage even if THAI does not work.

That said, I am dropping PetroBank back to the Watch List.

[prince_jake_33]

CALGARY, ALBERTA--(Marketwire - Jan. 11, 2012) - PetroBakken Energy Ltd. ("PetroBakken" or the "Company") (TSX:PBN.TO - News), is pleased to announce that average production for the month of December, 2011 (based on field estimates) exceeded 50,000 barrels of oil equivalent per day ("boepd") (87% light oil and NGLs), a 23% increase over third quarter 2011 production and an 18% increase over December 2010 production.

[dan_s]

This is why you guys pay me the Big Bucks! I have been telling you for weeks that PetroBakken was going to report very strong 4th quarter. They have a solid base in the Bakken Shale but the Cardium is where they have the most near-term upside. [See our Flash Alert today on Vero Energy.]

PetroBakken
My 2012 Forecast if they keep production at 50,000 boepd (which they should)
EPS = $1.30
CFPS = $4.75

So PetroBakken is trading at about 3 X CFPS and it pays a very nice dividend.

PetroBank owns 59% of PetroBakken stock.

[ko10068]

CIBC on PBN:

PetroBakken Energy Ltd.
Positive Update; December Production Of 50,000 Boe/d Exceeds Guidance

PetroBakken provided an operational update last night, highlighting that December production averaged more than 50,000 Boe/d, exceeding the high end of its 2011 exit guidance of 46,000-49,000 Boe/d, and with another 1,450 Boe/d of production currently shut-in and awaiting tie-in.

We view the update as positive and have bumped our 2012 production forecasts modestly by 1%. We also highlight that PBN is now ~40% hedged for H1/12 (at an US$84/Bbl floor and a US$117/Bbl ceiling) and ~20% hedged for H2/12 (with a US$77/Bbl floor and a US$121/Bbl ceiling).

No update was provided on asset sales, but PBN stated that it remained $150MM undrawn on its $1.35B credit facility at the end of December (essentially unchanged from the end of June). PBN continues to assess options to address its $750MM conv. debentures (putable in Feb. 2013).

We maintain our Sector Outperformer rating and $21 price target. We continue to view shares of PBN as grossly undervalued at current levels, trading at a 2012E EV/DACF multiple of 4.8x and a P/Risked NAV of 50% (vs. the group averages of 8.1x and 76%, respectively).

[dan_s]

I will update my forecast model for PetroBakken today and post it under the Watch List Tab.

[ko10068]

PetroBakken Energy Ltd.
CIBC Update on PBN:

Not PetroBroken Anymore; Convertible Debentures Addressed

PetroBakken Energy announced today its plans to issue US$750MM of senior notes. (We expect to know the coupon within two weeks.) A portion of the proceeds will be used to fund a tender offer for up to $450MM of PBN's 3.1% convertible debentures (which have a Feb. 2013 put option).

The remainder of the proceeds will be used to pay down the company's credit lines, which (in addition) will be increased by $150MM to $1.5B. If the senior note is fully subscribed, the company will have ~$600MM of available capacity on its credit lines (vs. $150MM previously).

We view this as a significant positive catalyst to the stock, as it should remove the overhang associated with the put option on PBN's $750MM of convertible debentures because the company now has the flexibility to meet this potential obligation with cash (rather than shares).

We reiterate our Sector Outperformer rating and our $22.00 price target on PetroBakken, as we believe the company is well on its way to a turnaround. Our price target remains based on a discounted 0.8x target multiple to our Risked NAV (vs. the group average of 1.0x).

[prince_jake_33]

Petrobakken has been on a tear in the last month. Does anyone have an opinion for the next few weeks?