PetroBakken (PBN.TO) is up 15% today on very heavy trading volumn. This is driving up the price of Sweet 16 member PetroBank.
Both stocks are well below my Fair Value estimates. You can find my forecast models for both companies under our Sweet 16 tab. Just click on the PetroBank logo.
PetroBank
Re: PetroBank
I see this deal as a positive development for PetroBank. Nexen is a former Sweet 16 member. I like it and think $30/share is a conservative price target. - Dan
Alert: NXY: CNOOC Acquisition of OPTI Big Positive for Nexen
OPTI Acquisition – This morning OPTI Canada, Nexen’s financially strained minority partner in the Long Lake project (NXY 65%, OPC-T 35%) announced it will be acquired by Chinese National Offshore Oil Corp (CNOOC) for ~$2.1 billion, including Opti’s ~$2.0 billion of outstanding debt. The transaction is expected to close in Q4’11 pending government and regulatory approval from Canada, China and the province of Alberta, which we do not expect to present a challenge. Also, ~55% of OPTI’s bondholders have already approved the transaction with ~66.7% needed for the deal to go forward.
Implies ~$6/share For NXY’s Interest In Long Lake – This transaction values OPTI’s 195 MMBbls of bitumen (~167 MMBbls of crude oil equivalent) at ~$13/Bbl for proven only reserves, implying a valuation of $3.2 billion (~$6/sharea) for Nexen’s 366 MMBbls of bitumen (314 MMBbls of crude oil) proven reserves in the region, which we believe the market has not been giving any credit to in NXY’s shares.
Positive Implications – CNOOC’s entry into the Long Lake project provides Nexen with a financially sound partner for the long-term, in our view, which we see as a positive for NXY. Nexen indicated it will retain its 65% WI and remain the operator in the project and the adjacent Kinosis SAGD project. As we noted in our
NXY Q2 Earnings Overview, Long Lake is currently producing ~18 MBOE/d net (~28 MBOE/d gross), comprising ~9% of NXY’s current production, and we expect volumes to ramp-up to ~24 MBOE/d net (10% of total) and ~28 MBOE/d net (~10 of total) in 2012 and 2013, respectively.
Reiterate Buy Rating – Our 12-month price target remains unchanged at $30/share based on the stock achieving 2011/2012 EV/DACF multiples of 6.8x/4.7x and 73% of proven-only NAV using our $100/Bbl and $5.25/MMBtu ‘normalized’ price deck.
Alert: NXY: CNOOC Acquisition of OPTI Big Positive for Nexen
OPTI Acquisition – This morning OPTI Canada, Nexen’s financially strained minority partner in the Long Lake project (NXY 65%, OPC-T 35%) announced it will be acquired by Chinese National Offshore Oil Corp (CNOOC) for ~$2.1 billion, including Opti’s ~$2.0 billion of outstanding debt. The transaction is expected to close in Q4’11 pending government and regulatory approval from Canada, China and the province of Alberta, which we do not expect to present a challenge. Also, ~55% of OPTI’s bondholders have already approved the transaction with ~66.7% needed for the deal to go forward.
Implies ~$6/share For NXY’s Interest In Long Lake – This transaction values OPTI’s 195 MMBbls of bitumen (~167 MMBbls of crude oil equivalent) at ~$13/Bbl for proven only reserves, implying a valuation of $3.2 billion (~$6/sharea) for Nexen’s 366 MMBbls of bitumen (314 MMBbls of crude oil) proven reserves in the region, which we believe the market has not been giving any credit to in NXY’s shares.
Positive Implications – CNOOC’s entry into the Long Lake project provides Nexen with a financially sound partner for the long-term, in our view, which we see as a positive for NXY. Nexen indicated it will retain its 65% WI and remain the operator in the project and the adjacent Kinosis SAGD project. As we noted in our
NXY Q2 Earnings Overview, Long Lake is currently producing ~18 MBOE/d net (~28 MBOE/d gross), comprising ~9% of NXY’s current production, and we expect volumes to ramp-up to ~24 MBOE/d net (10% of total) and ~28 MBOE/d net (~10 of total) in 2012 and 2013, respectively.
Reiterate Buy Rating – Our 12-month price target remains unchanged at $30/share based on the stock achieving 2011/2012 EV/DACF multiples of 6.8x/4.7x and 73% of proven-only NAV using our $100/Bbl and $5.25/MMBtu ‘normalized’ price deck.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group