Energy Prospectus

The following is a press release from Moody's: Moody's Views Lightstream's Capital Focus As Credit Positive
http://www.moodys.com/page/viewresearch ... _PR_287455

Lightstream Resources Raised to Buy From Hold by TD

In my opinion, Lightstream is going to be fine. This company has ~46,000 boepd of production and most of it is light oil. The "Strategic Plan" they announced last week is a positive for the common stock. Yes, they did cut the dividend in half, but that is outweighed (IMHO) by the plan to reduce debt and increase stability of long-term growth. Even at the reduced dividend, the annual yield is over 8%.- Dan

From "The Energy Letter" dated November 26:

Most investors may not have heard of Calgary-based Lightstream Resources (OTC: LSTMF), but they may have heard of its predecessor, PetroBakken Energy, which was spun out of Petrobank Energy and Resources. The latter struggled to make its novel Toe-to-Heel Air Injection (THAI) technology commercially viable, and partially as a result of Petrobank's struggles, PetroBakken suffered as well.

So in May of this year the company announced it would break from its past and move forward under a new name, Lightstream Resources. But Lightstream struggled with some of the legacy issues from PetroBakken, like dividends that had to be cut and high debt levels, and shares declined. Following the name change in May, shares have fallen 36 percent.

In the US, we associate the Bakken mostly with North Dakota, but the Bakken formation also lies underneath parts of South Dakota, Montana, and southern Saskatchewan. Lightstream Resources is developing Bakken acreage in Saskatchewan. In addition the company is focused on growth in the Cardium formation in central Alberta, and in north-central Alberta it's working on emerging light oil resource plays. Lightstream also has land holdings in the Horn River and Montney plays in northeast British Columbia.

While the company has struggled in recent years -- and the share price has suffered -- it may be turning the corner. Last week Lightstream unveiled its strategic plan and 2014 capital program and production guidance. The plan involves reducing 2014 capex while holding production flat for the year, cutting the dividend in half, eliminating the dividend reinvestment plan, and targeting $600 million from sales of non-core assets.

The immediate market reaction was negative, but these are all moves that should put the company in a much better financial shape. Further, the shares appear to be oversold at this point, and the company is trading at a discount to its asset value. On the downside, investors have been generally unhappy with management decisions, and the same managers continue to run the company.

For aggressive investors, though, this one could be worth the plunge. The downside looks fairly limited at this point, and if the quarterly results begin to show the positive effect of the recent changes, there is tremendous upside.
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My Fair Value Estimate for LTS.TO is $13.25Cdn/share as of today. You can find my forecast model under the Watch List Tab. - dan

Any idea where the bottom might be? I'm somewhat amazed at the reaction to the news and the daily new lows.
Certainly disconcerting to see the stock slaughtered after an upgrade to buy and positive view from Moody's.

Don't read too much into the last few days since everything has been down with concerns that Obama's deal with the devil (Iran) may cause a dip in oil prices. I don't think it will, but who knows. I will have more on this in my next newsletter, which should be published on Friday.

At today's closing price, the annual yield on LSTMF is 8.9%.

Most yield investors are VERY CONSERVATIVE. Many of them don't have a clue how to value an oil & gas company or anything else for that matter. They just chase high yield. I like Lightstream's new plan and think it will result in a much stronger balance sheet by the end of next year. Strong Q4 results and a strong year-end reserve report should calm the market and bring in some new money.

Thanks Dan. Btw, have a great Thanksgiving.

http://www.pinnacledigest.com/blog/pinn ... ment-48981

At least he's putting his own money out there, got to love a CEO with skin in the game.