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Petrobank and TriStar to Create a Premier Southeast Saskatchewan Bakken and Light Oil Producer
Press Release
Source: Petrobank Energy and Resources Ltd., TriStar Oil & Gas Ltd.
On Tuesday August 4, 2009, 7:22 pm EDT
http://finance.yahoo.com/news/Petrobank-and-TriStar-to-ccn-3728755223.html?x=0&.v=1
CALGARY, ALBERTA--(Marketwire - Aug. 4, 2009) - Petrobank Energy and Resources Ltd. ("Petrobank") (TSX:PBG - News) and TriStar Oil & Gas Ltd. ("TriStar") (TSX:TOG - News) are pleased to announce that their respective Boards of Directors have unanimously agreed to the strategic combination of TriStar and Petrobank's Canadian Business Unit (the "Transaction"). The combination will create a new publicly listed company, PetroBakken Energy Ltd. ("PetroBakken" or the "Company"), that will be a premier, Bakken-focused, light oil exploration and production company. PetroBakken is expected to trade on the TSX under the symbol "TSX:PBN" immediately following the successful completion of the Transaction.
Petrobank will capitalize PetroBakken with its Canadian Business Unit assets and $400 million of cash. PetroBakken will then acquire all the outstanding shares of TriStar. In return, Petrobank will receive 109.8 million common shares of PetroBakken which will represent approximately 64% of PetroBakken's anticipated shares outstanding. Consideration to TriStar shareholders will consist of a combination of PetroBakken common shares and cash. At the election of the holder, a TriStar shareholder will receive $14.75 cash, or 0.5350 of a PetroBakken share, or a combination thereof, being approximately $3.75 per share in cash and 0.3989 of a PetroBakken share, for each share held. Based on $14.75, the consideration received by TriStar shareholders represents a 29% premium to TriStar's 10-day weighted average trading price. In aggregate, TriStar shareholders will receive approximately $580 million in cash and 61,762,500 shares of PetroBakken, representing 36% of PetroBakken's anticipated shares outstanding. In the event that the holders of TriStar shares elect to receive more or less than the set amount of cash, or more or less than the set amount of PetroBakken shares of which they are entitled, the amount of cash or shares to be received by a holder will be adjusted pro rata and the balance of the consideration will be paid in cash or PetroBakken shares, as the case may be.
Alberta Asset Dispositions
Following completion of the Transaction, PetroBakken plans to divest a package of Alberta-based assets consisting of approximately 9,500 boepd (44% light oil, 56% natural gas), and 40.1 mmboe of proved plus probable reserves to further enhance the focus of PetroBakken on southeast Saskatchewan light oil resource plays. Proceeds from the disposition will be used to further solidify the strong PetroBakken balance sheet. Following the divestitures, PetroBakken will primarily be a pure-play, southeast Saskatchewan, light oil-focused company with 2009 exit production of more than 37,000 boepd, more than 95% light oil, more than 70% of which will be from the Bakken.
Dividend Policy
Based upon the underlying strength of PetroBakken's high-netback light oil asset base and flexible balance sheet, PetroBakken intends to adopt a dividend policy initially targeting payments of $0.96 per share per annum, payable monthly, with the first dividend expected to be paid in November to shareholders of record on October 30, 2009. This dividend policy will allow PetroBakken shareholders to benefit in the Company's industry leading high netback production on a monthly basis.
The Transaction
John Wright, President and CEO of Petrobank, commented, "This is a unique opportunity to bring together two like-minded organizations to create a premier southeast Saskatchewan light-oil producer offering exceptional growth potential, focused on applying leading-edge technology to major resource plays, with our primary attention directed initially at the Bakken formation. At Petrobank, our Canadian Business Unit has consistently delivered exceptional per-share production and reserves growth and we have positioned PetroBakken to continue this legacy of growth, while also providing an attractive dividend yield."
Brett Herman, President and CEO of TriStar stated, "TriStar has achieved significant growth over the past three years, assembling a high quality, long life asset base with tremendous upside. We believe the consolidation of the southeast Saskatchewan and Bakken assets of Petrobank and TriStar, and the combination of each company's strong technical staff is the next step in the evolution of our company. With recent technological innovations, together, we have just begun to unlock the true potential of the Bakken and I am excited to be a part of the PetroBakken story going forward."
The Transaction will be completed by way of plan of arrangement (the "Arrangement") and is subject to TriStar shareholder approval. The information circular for the Arrangement is expected to be mailed to TriStar shareholders on or about August 31, 2009 and it is anticipated that the special meeting of TriStar's shareholders will be held on or about September 30, 2009 with closing of the Transaction to occur on or about October 1, 2009. The successful completion of the Transaction is also subject to customary regulatory, stock exchange, court and other approvals.
The Board of Directors of TriStar has concluded that the Transaction is in the best interests of the TriStar shareholders from a financial point of view and has unanimously resolved to recommend that TriStar shareholders vote their shares in favour of the Arrangement. All of the directors and officers of TriStar have entered into lock-up agreements with Petrobank and PetroBakken to vote their TriStar shares in support of the Arrangement.
The Arrangement prohibits TriStar from soliciting or initiating any discussion regarding any other business combination or sale of material assets, contains provisions enabling Petrobank to match competing, unsolicited proposals and, subject to certain conditions, provides for a reciprocal termination fee of up to $80 million.
Key Attributes of PetroBakken
PetroBakken will combine significant, high growth, long-life Bakken reserves and production with legacy conventional light oil assets, which provide high netbacks and a low production decline profile. PetroBakken will be the premier Bakken player in Canada with a greater proportion of its production coming from the Bakken than any other material producer, and will represent a compelling new investment opportunity for investors. In addition, the Company will have significant future development opportunities in the Horn River and Montney gas resource plays in northeast BC that will add long term growth to PetroBakken's attractive light oil position. Pro forma the expected divestiture of the majority of the Alberta assets, PetroBakken will have the following key attributes:
- 2009 total Company exit production greater than 37,000 boepd (after the planned Alberta asset dispositions), more than 95% light oil.
- More than 27,000 boepd from the Bakken (greater than 70% of total Company exit 2009 production).
- More than 127 mmboe of high quality, primarily light oil, proved plus probable reserves (as at December 31, 2008, except for TriStar's acquisition of Talisman properties with reserves reported based on a March 31, 2009 effective date) with significant future reserve growth potential through revisions, additions, improved recoveries and the application of technology.
- Proved plus probable reserve life index of more than 9 years.
- Significant land inventory of over 1.0 million net acres with over 800,000 net acres in southeast Saskatchewan, making PetroBakken the single largest landholder in this region. Of this, over 280,000 net acres (440 net sections) are located in the Bakken play fairway with significant further exposure to Bakken exploration activity, including 80,000 net acres in Montana.
- Further reserve enhancement capabilities on 110 net sections of existing producing Bakken acreage.
- More than 1,300 future Bakken drilling locations.
- Significant upside gas potential in the Horn River and Montney plays in northeast BC, with potential resource capability of 5 to 20 TCF of original gas-in-place ("OGIP") contained in more than 63,000 net undeveloped acres, with over 400 potential drilling locations, providing an additional long-term growth platform.
- Industry leading operating netbacks in excess of $57.00/boe based on US$75.00 WTI.
- Expected operating costs of approximately $8.00/boe.
- Approximately $1.9 billion of tax pools.
- Run rate cash flow of more than $700 million based on US$75 WTI oil price and 2009 exit production.
- 2010 capital budget of approximately $550 million based on a US$75 WTI oil price.
- Initial dividend of $0.96 per share per annum, payable monthly, representing a payout ratio of 23% based on run rate cash flow.
- Excellent financial flexibility with a pro forma debt to cash flow ratio of less than one times.
- 172 million PetroBakken shares outstanding.
- Industry leading technical team.
Strategic Rationale
The combination of the Petrobank and TriStar assets are highly complementary as it creates a pure play investment opportunity for exposure to high-netback light oil and the Bakken resource play. In the Bakken resource play alone, the combined asset base creates a dominant, operationally complementary land position providing significant visible development growth through the drilling of 1,300+ identified locations.
The combined entity is expected to have an improved cost of capital as a result of the focused nature of the high netback conventional and Bakken light oil assets in southeast Saskatchewan.
Additionally, the strategic merger results in the combination of premier technical teams focused on unlocking the value embedded in the large resource in place asset base. Independently, each of TriStar and Petrobank have been industry leaders in applying new, leading-edge technologies to unlock the true potential of the Bakken resource play. Bringing these two teams together in PetroBakken will create the preeminent Bakken resource team utilizing best practices to continually enhance and ultimately maximize recovery factors.
It is expected that PetroBakken's increased scale, particularly in the Bakken, will provide superior operating efficiencies, particularly with respect to complementary gathering systems, oil processing facilities, marketing arrangements and gas plant synergies.
Corporate Strategy
PetroBakken will target significant production and reserves growth through an internally funded capital program underpinned by strong cash flows which will provide an attractive dividend yield to our shareholders. Based on the anticipated dividend policy PetroBakken shares are expected to yield approximately 3% based on a $0.96 annualized dividend and anticipated trading levels for PetroBakken.
A Portfolio of Assets to Support Long-Term Growth
Bakken Resource Play
The Petrobank and TriStar teams have been industry leaders in the application of new technology to maximize value from the Bakken. These efforts have resulted in cost effective drilling and completion methods, superior production rates and high expected ultimate oil recoveries. In 2007, the TriStar and Petrobank relationship began with a 50/50 ownership in 22,000 gross acres that has resulted in joint operations in numerous wells and two facilities. The combined land interests of both parties represents 70,000 net acres of developed land and over 210,000 net acres of undeveloped land for a total of 280,000 net acres or 440 net sections on the Bakken resource play. The synergies of combined facilities and infrastructure will minimize total future investment capital required to fully develop lands as well as improve gas conservation and continue to reduce operating costs.
The drilling and completion plan for the undeveloped lands will predominantly be executed using multi-leg horizontal drilling technology that reduces inter-well distance between horizontal legs from 400 metres to 200 metres, and completion techniques that utilize new fracture stimulation technologies providing much higher fracture intensity along each horizontal leg. Existing developed lands can also benefit from the same technological advances by re-entering existing wells and adding a second horizontal leg adjacent to the existing horizontal well which is then fracture stimulated with increased fracture intensity. Combining bi-lateral horizontal wells with increased frac intensity allows access to considerably more reservoir in an extremely cost-effective manner. The result is a significant increase in rates of return with much higher productivity and expected ultimate oil recoveries.
A typical Bakken section is generally recognized by third party reserve evaluators as containing approximately 4.0 mmbbls of original-oil-in-place with proved plus probable reserve recovery estimated at 12.5%. PetroBakken's internal assessments, based on ongoing strong production performance combined with increased well density and frac intensity is ultimately expected to increase reserve recovery to up to 22.5%. PetroBakken will control 440 net sections of land, with an estimated ultimate recovery factor of 22.5%, the potential recoverable resource could approach 400 mmbbls.
Southeast Saskatchewan Conventional
PetroBakken will also be strongly positioned in the complementary conventional oil plays in the Midale, Frobisher, Alida and Tilston formations of Southeast Saskatchewan. Production of approximately 10,000 boepd from these Mississippian aged reservoirs provides a stable platform of low decline production and strong cash flows while offering future growth through infill drilling. Our current inventory is represented by 144 net proved undeveloped locations and a further 235 net unbooked development locations identified internally. These relatively low-risk, high netback, light oil wells offer attractive investment opportunities at approximately $1.0 million to drill, complete and tie-in. A typical conventional southeast Saskatchewan well has initial production rates in the range of 75 to 200 bopd and reserves in the range of 50 to 150 mbbls per well. In addition to these low risk development opportunities, the Company will have 510,000 net undeveloped acres of land providing the opportunity for seismically driven step-out and exploration drilling.
Montney and Horn River Gas Resource Plays
Additional long term growth will come from PetroBakken's large land position in the Montney and Horn River natural gas resource plays located in northeast British Columbia. The company has 17 sections of land (100% working interest) in the Monias area with Montney potential of upwards of 30 to 50 Bcf of Original Gas in Place (OGIP) per section, providing a total resource potential of 510 to 850 Bcf of OGIP with recoveries expected to range between 25% and 35%. In addition, the Company will have a further 97 (84 net) sections north of Fort Nelson in the Horn River basin. Various industry sources estimate that the prospective zones within the Horn River basin may contain between 30 and 300 Bcf of OGIP per section, providing a total resource potential of 2.5 to 25 Tcf of OGIP with recoveries expected to range between 20% and 30%. PetroBakken's technical team has successfully drilled over 400 horizontal wells with multi-stage fracture stimulations, more than any other operator in the Western Canadian Sedimentary basin. This experience positions PetroBakken to be a leader in the development of these massive unconventional resource plays.
PetroBakken Management and Board of Directors
Certain of the Senior Executives of Petrobank will also serve in the following roles for PetroBakken:
John D. Wright, Chairman of the Board & Chief Executive Officer
R. Gregg Smith, President and Chief Operating Officer
Corey C. Ruttan, Executive Vice President and Chief Financial Officer
The Board of Directors will consist of nine members, six appointed by Petrobank, including John D. Wright, and three appointed by TriStar, including Brett Herman, current President and CEO of TriStar.
Financial Capacity
Prior to closing, PetroBakken expects to finalize a $1.05 billion borrowing base credit facility currently being arranged by TD Securities Inc. ("TD Securities"), and it is expected that approximately $950 million will be drawn on closing, prior to the anticipated Alberta asset divestiture. TD Securities and BMO Capital Markets have pre-committed to fund up to $400 million of the facility. Debt to run-rate cash flow, following the Alberta asset dispositions, is expected to be less than one times providing for excellent financial flexibility. PetroBakken plans to maintain an active hedging strategy to provide certainty to a portion of our revenue stream.
Advisors
TD Securities acted as sole financial advisor to Petrobank for the Transaction.
Macquarie Capital Markets Canada Ltd. ("Macquarie") and BMO Capital Markets acted as financial advisors to TriStar. Macquarie and BMO Capital Markets have advised the TriStar Board of Directors that they are of the opinion that the consideration to be paid to TriStar pursuant to the Transaction is fair from a financial point of view, subject to review of final form documentation. A copy of the fairness opinions will be included in the TriStar information circular to be sent to shareholders for the special meeting to be called to approve the plan of arrangement.
Haywood Securities Inc., and UBS Securities Canada Inc. are acting as strategic advisors to Petrobank.
CIBC World Markets Inc., GMP Securities L.P., and National Bank Financial are acting as strategic advisors to TriStar.
All advisors have agreed to receive a portion of their fees in the form of PetroBakken shares.
FirstEnergy Capital Corp., and TD Securities have agreed to manage the sales process for PetroBakken's Alberta assets.
Joint Conference Call and Audio Webcast
A joint conference call and webcast hosted by management of Petrobank and TriStar will be held for investors, financial analysts, media and other interested persons on Wednesday, August 5, 2009 at 9:00 a.m. (MST) (11:00 a.m. EST) to discuss the Transaction.
Live-Call Audience Dial-In Number: 416-340-2216 or 866-226-1792
Replay Audience Dial-in Number & Codes: 416-695-5800 or 800-408-3053
Participant Number: 1786213
A live audio webcast of the investor call is available via: http://events.onlinebroadcasting.com/petrobank/080509/index.php
Forward-Looking Statements. Certain information provided in this press release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Specifically, this press release contains forward-looking statements relating to the Transaction, benefits of the Transaction, timing of the Transaction and go-forward operational plans of PetroBakken. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in Petrobank's and TriStar's Canadian securities filings. Such factors include, but are not limited to: TriStar shareholder approval of the Transaction not being received, customary approvals to the Transaction not being received, general economic, market and business conditions; fluctuations in oil prices; the results of exploration and development drilling; timing and rig availability; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; and other factors, many of which are beyond the control of both Petrobank and TriStar. There is no representation by Petrobank or TriStar that actual results achieved during the forecast period will be the same in whole or in part as those forecast. Except as may be required by applicable securities laws, neither Petrobank nor TriStar assumes any obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
The original gas-in-place and original oil-in-place figures included in this press release are Petrobank management estimates only, actual figures and recovery factors may be less.
BOE. Disclosure provided herein in respect of boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent an economic value at the wellhead.
Contact:
John D. WrightPetrobank Energy and Resources Ltd.President and CEO(403) 750-4400Corey C. RuttanPetrobank Energy and Resources Ltd.Senior Vice President and CFO(403) 750-4400R. Gregg SmithPetrobank Energy and Resources Ltd.Senior Vice President and COO, Canada(403) 750-4400Email: ir@petrobank.comWebsite: www.petrobank.comBrett HermanTriStar Oil & Gas Ltd.President and CEO(403) 268-7800Jason J. ZabinskyTriStar Oil & Gas Ltd.Vice President, Finance and CFO(403) 268-7800
TriStar Oil & Gas Ltd. - Q4 2008 - TriStar Achieves Continued Production Growth, Drilling Success and Significant Growth in Reserves
On Monday March 9, 2009, 4:05 pm EDT
CALGARY, March 9 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the "Company") is pleased to announce its financial and operating results for the three month period and year ended December 31, 2008.
In this report, all references to barrels of oil equivalent ("Boe") are calculated converting natural gas to oil at a ratio of six thousand cubic feet of natural gas to one barrel of oil.
http://finance.yahoo.com/news/TriStar-Oil-amp-Gas-Ltd-Q4-cnw-14586068.html?.v=1
Alan Knowles, Haywood Securities: Finding that Elusive Bottom
Source: The Energy Report
12/29/2008
http://www.theenergyreport.com/pub/na_u/641
Haywood Senior Oil and Gas Analyst Alan Knowles says we haven’t seen a bottom yet, advising investors to watch the large companies when the market strengthens again. Meanwhile, demand continues to slide as OPEC plays catch up on a series of announced production cuts. And a pilot project involving a new oil sands technology is exceeding expectations; Knowles explains the significant advantage of upgrading oil in situ and foresees a bright future for the company that patented it.
The Energy Report: Alan, do you think we have seen the bottom yet? When we get to the bottom, how will the oil and gas sector fare against other sectors in terms of rebounding stock prices? Will they lead it, be in the middle, or lag?
Alan Knowles: I know a lot of investors were buying stocks at the end of November because they thought they were seeing the bottom then and we saw some strength in the market at the time. And as we know the market has fallen drastically since then. I don’t think we have all the bad news yet.
As far as the energy businesses go, the oil business will be stronger. You need oil to do your business. The economy thrives on the use of hydrocarbons, as you well know. I have had fund managers ask me ‘what does this company look like with a $30 oil price?’, and so that is the kind of concern that’s out there. Until we have some clear picture of where the bottom is, share prices will continue to erode. I don’t think there’s too much concern over whether prices will come back over time. They definitely will; it’s a cyclical business. You should be forecasting based on the future expectations.
Right now, the spot price is $43 to $45; but if you go out to December 2010 it is $65, and December of 2011, it’s $71. So, that’s the kind of trendology, if you will, that people think is going to happen here. It might happen sooner because these same contracts that are $45 today were $148 last summer, so while the futures indicate current market sentiment, they are not the best indicator of future prices. The contract that we’re talking about right now is the one for January delivery. Futures are not by any means a crystal ball on the world.
TER: As an analyst, what are you looking for to determine when we hit a bottom? What’s the formula you’ll use?
AK: Well, it’s not a formula. I’d like to see some clear indications that buyers are coming back into the market, and we don’t see that right now. There’s limited buying. I know a lot of funds are continuing to buy a little bit every day, and they’re averaging down, essentially, with the view that in two years anything you buy today is going to be doing very well. But you want to make sure you buy a company that is going to be around in two years; hence, the balance sheet focus.
So many investors have a one-, two- or maybe a three-month investment horizon. We were a little spoiled with the kind of strong returns one could achieve in the last several years. Now, I think you have to get back to the fundamentals and the longer-term view on life and you can do quite well. But if you try to make a lot of money in a short period of time in this market, you’re going to get hurt.
TER: If someone has a longer-term horizon, would this seem like a good time to start getting in? I mean how much more can oil go down?
AK: Well, people said that same thing when oil was $55, and now it’s $10 less. So, there’s nothing wrong with waiting for a clear bottom to be formed, and then maybe you wait until the stocks start to come up or the oil price starts to rise. But at least you’re not going to be putting money into a down market. It may be well into the new year before this point is reached. There’s still selling pressure; as well there will be a lot of tax-loss selling going on between now and the end of the year.
And I think that’s going to put some—let’s call it arbitrary—downward pressure on the stocks that has nothing to do with the fundamentals, because, at the beginning of the year, there were a lot of people who had a lot of capital gains. If they realized those capital gains, there’s going to be tax-loss selling, and then you will consolidate your stocks into positions that you think will rise the quickest when the market starts rising again.
TER: As I look at the oil business, the price of crude oil is down to $43 today, which I believe is up a little bit from Friday. I look at the U.S. dollar appreciating, and OPEC decreasing production. What’s going on here?
AK: Well, OPEC is reducing production, but so far they’re probably not even at the reductions they made at the September and October meetings, at least it hasn’t been verified. And then on the demand side, we’re seeing the OECD demand decreasing, and the current estimates are that non-OECD demand is increasing by an offsetting amount so that year-over-year in ‘09 you’re looking at no overall demand growth. But the problem is that I think the OECD demand estimates are probably too optimistic. It probably should be lower. And the same with the non-OECD, so the net-net is going to be (the more likely scenario) a decrease in demand in ‘09 over ‘08—a situation we’ve experienced only once since World War II.
TER: Is this decrease in demand being fueled (pardon the pun) by the recession, or by Green/Alternative Energy coming into play? What’s causing it?
AK: It’s not the Green Movement; in fact, with the decrease in commodity prices, the alternative energy efforts are actually struggling because, in the current environment, people are less willing to commit dollars to the more-expensive energy options. The recession has certainly had something to do with it. Prior to this, the $140 oil did set in motion the demand destruction—you saw people driving less and costs went up for airline flights, so people weren’t flying as much. Now that the price has come down, that ball had already been set in motion, and then it gets compounded (in the U. S., particularly) by the banking situation, which has caused a lot of destruction of wealth, so people just aren’t buying goods. Then the lack of buying goods put people out of jobs, people don’t buy as much, goods aren’t being transported around the country, and transportation is one of the single largest uses of hydrocarbons.
TER: So, the fact that gas pumps are down to $2 a gallon isn’t so much the cause for the drop in oil price, but really the drop in transportation of goods around the country?
AK: Well it’s everything, and Europe pretty well followed. Europe had a lot of the same problems as the U.S. with the financial sector and it similarly suffered, having to put a lot of money into the banking sector. So it’s not just the falling prices; if that were true people would be driving again.
Demand is down, therefore, car sales are going to be down—and all those goods get shipped around the continent. And then demand for goods from China, which obviously makes a lot of goods that are shipped around the world (including North America), are going to be down. Consequently, China’s going into an economic downturn and its demand for hydrocarbons is down as well.
TER: Everyone keeps talking about China as somewhat decoupling from the Western economies because it has a growing middle class, and that middle class is starting to demand things like inexpensive cars. Do you see that taking up the slack of the lack of driving and transportation in the Western countries?
AK: No. There’s been a downturn there as well. For example, if a company—Wal-Mart is a good example— if companies are not making goods to be sold by Wal-Mart around the world, then they have to lay off people in China. So people are getting laid off in China I am sure, and they have had to put stimulus packages into their system as well, although not to the same degree as in North America. And so their economy is still on the positive side, but not growing like it was.
TER: Alan, when you talk about the Saudis "getting their house in order," in terms of verifiable decreases in oil production, do you, as the analyst, really see that happening? Do you trust their statements—that they are going to decrease production; and how do we verify that, going forward?
AK: It’s not just the Saudis—it’s OPEC and all the countries in OPEC. How do we verify that? Well, you track tanker movements around the world; that’s one of the most visible ways for third-parties to do that. To the end of October, they were off side by about 2 million barrels a day from where they said they were going to be, and by the end of November, average production was still off side by a million barrels a day. So, for them to come out here two weekends ago and announce another cut when they really weren’t there yet on the previously announced cuts—their credibility would have suffered. And their credibility is an issue, so there is very much a “wait-and-see, and are-you-going-to-do-it–or-not.” I think that’s why they’re waiting until their meeting coming up here in less than two weeks now. [Note: a week after this interview OPEC announced an incremental 2.2 mmbbls/day cut in production taking the total for the past three months to 4.2 mmbbls/day].
TER: Once they cut the amount, how quickly can they cut the production? Is there normally a delay or can it happen overnight?
AK: Well, once they announce it, it’s allocated to the 11-member countries of OPEC, excluding Iraq. And it’s up to each country to cut its pro rata share of, let’s say, that 1.5 million split between the 11 countries. Now, the Saudis are the biggest, and they seem to have the most flexibility. They are the swing producer within the group, but every country is supposed to do its own share. You can’t just shut in the wells, or even a field quickly. There are procedures to go through to shut in the wells properly. Otherwise, you could damage the well or the reservoir, which could cause some problems when you do want to bring back production.
But assuming that they went from the end of October—from the October average to the end of November—let’s say that they decreased their production evenly through the month as they were shutting these wells, as I mentioned. They’d still be off side by 5-700,000 barrels a day from their 2.0 mmbbls/day target. I think they probably are using the two weeks following that last meeting before the next to get as close as they can to their targets to have some credibility for the additional cuts.
There is no doubt that the Gulf States are particularly hurting with these low prices. They have significant ongoing infrastructure projects in their countries. Costs have gone up for their new production; old production has low costs associated with it, but anything new has a higher cost especially infrastructure projects or grassroots.
TER: That’s true worldwide; new production is going to cost more than the older. That’s not just a Saudi Arabia issue.
AK: No, it’s not, but a lot of people associate Saudi Arabia with costs like $5 or so a barrel and that is the case for their old production. But in terms of the new production, they are faced with the same cost pressures as the rest of the world. There is a sense, I guess, among people who don’t spend too much time on it that their cost base is quite low. . .and it’s not for new production.
TER: Do you agree with the concept of peak oil, and have we gotten there yet or do we have numerous decades to go?
AK: Well, I do agree with the peak oil theory, and there’s evidence that it’s happening. The reason we got to $140 oil is the supply and demand numbers were coming together. There wasn’t a lot of excess supply. Let’s say there was an extra 1.5 to 2 million barrels between OPEC nations, but that isn’t necessarily easily brought on stream. It would be there, but it might require some capital, and there is some question whether those estimates are even valid as to how much extra there is. But the point is that you are getting to a level that it’s hard to replace natural declines.
As a result of this low price, a lot of large projects are either outright cancelled or deferred. And we have seen a lot of that in the oil sands; probably, when all is said and done, we might see the deferral of between half a million and a million barrels of production. The world is producing 86 million barrels a day now; the decline rate in that production is 6% to 7%. So, just to keep production flat, you have to add 5 to 5.5 million barrels of production a day per year. In order to meet demand forecasts for 2030, you have to get up to 106 million barrels a day. When you’re deferring projects that add up to the numbers I just mentioned, you’re going to be hard-pressed to come even close to those numbers because once a project is deferred, it’s going to take a year or two just to get back on the drawing board and for the boards of directors to approve it again because the costs will be different.
TER: If everyone recognizes that our production rates are diminishing and our demand, even in a slowdown, is increasing and we have a replacement issue, eventually the oil price has got to go up. Why wouldn’t that future demand cause the current price to go up?
AK: Because the market really tends to pay attention to the near term and near-term prices with decreasing demand, we’re probably looking at low prices for the next year, at least, if not two years. But then when demand does come back, economies strengthen and demand comes back around the world, we’re going to be in an even tighter situation than we were last summer because so many projects—even conventional drilling, a well here, a well there—producers are not going to drill them because at $45 it doesn’t make economic sense to drill those wells. So, it will mean the supply and demand balance will become even tighter and the two will probably get off side even quicker than what happened this last time because projects that were in the queue here a year ago aren’t in the queue now.
TER: So, it sounds like we’re going to yo-yo a bit. We’re going to go from our $140 in July down to something low, and then back up to $140 or more within a couple of years when the economies start to turn around.
AK: Yes, I am not sure how many years it will take. It could take five years. It might even take a little longer, but because the bigger projects have longer lead times, they’re the ones being cancelled; we are running the risk of being whipsawed significantly on the supply side.
TER: Now, I think it was Exxon that came out after Q3 with record quarterly profits. What’s to keep these big oil companies from financing these large projects?
AK: Well, first of all, that’s profits, not cash flow, and there are a lot of nuances into the earnings number that don’t translate into cash flow. So, these large companies—the really large companies—are generating a lot of cash flow, but they’re reinvesting a significant amount of that cash flow into the ground already. Exxon and BP, for example, had so much cash flow at the $140 price that they actually did build a significant cash reserve because they couldn’t spend the money they were making. But that will quickly erode because their capital commitments will continue at an oil price that is a third of those prices so they’re not going to have excess cash in a year or two.
There definitely will be M&A activity going on. Larger companies will acquire smaller companies that might be undervalued but, more importantly, are also a strategic fit for their operating areas or growth plans. But that’s not adding new production, remember. When you see companies acquiring other companies, that’s not adding new production; in fact, as far as the capital expenditures of those two companies, one plus one doesn’t equal two anymore, it might equal 1.5 because the two combined companies will drop projects off the table that separate companies would have done.
TER: Well, as an investor, I am looking at some of the companies you’re following, which range from trading on the New York or Toronto Stock Exchange to trading on the Toronto Venture. What should an investor start looking at—the producers or the explorers?
AK: When we start to see the market strengthen again (as I said, I don’t think we’re at the bottom yet), you want to watch the large companies. The larger companies tend to be the first ones to respond positively when the market turns, followed by the medium and then the smaller companies.
TER: Would you expect to see some of these smaller companies go bankrupt or will they be acquired?
AK: No, I don’t think the larger companies are going to buy a company just because it’s cheap. They’re going to buy companies that offer some strategic value to them and fit with the existing assets. Bankruptcy might not be in the cards, but we’ve already seen quite a few announcements of companies that are seeking strategic alternatives. So, they might not actually go bankrupt; they will be able to service their debt, for instance, but growth is going to be muted. Ultimately some weaker companies will be on the edge of bankruptcy but I expect the assets will be acquired, but now at a discount price.
TER: So, as an investor, we look at this like some of the mining industries where there’s an expectation that many will kind of go away. When it comes back around, there is at least a potential that these smaller companies will eventually make a turnaround with the increase in the economy.
AK: Right now, the equity markets are not really available to any of these companies, and the debt markets are selectively available depending on the quality of the assets and the management; so if a company is not at its bank line already, it has more flexibility to grow. So, you shouldn’t just go in and just buy the sector. You have to be careful which names you pick; you want to pick companies that have quality assets and low costs associated with running that company (i.e., operating costs, admin costs and the interest costs—I’m talking about the cash costs here). In this environment, a company fully extended on its bank line isn’t likely to get that line increased; in fact, it could be decreased, depending on how the banks look at their risk going into the first quarter. So, you want to be looking at companies that have some, if not a lot of, flexibility on their balance sheets going into 2009.
TER: Can you share with us some of the companies that you feel qualify for those three areas you just mentioned—quality assets, low cash costs and bank line availability?
AK: Well, in the large caps, I think both Nexen (NYSE: NXY) and Talisman Energy Inc. (TLM) have that going for them. On the medium size, Petrobank Energy (PBG.TO), which we cover, has room on its bank lines and has a quality asset base that is generating a lot of cash, even in a $45 oil environment. TriStar Oil and Gas (TOG.TO) is another company that we cover that is in that boat. Crescent Point (CPG-UN.TO) has a very good balance sheet and quality assets. And on the internationals, Petrominerales (PMG.TO) right now appears to be there—they’ve got some very positive drilling successes; they’ve got more drilling to do, and they’ve got high net-back oil production even in a $45 oil environment. So, having said that, in a $45 oil environment, all these companies will be reducing their capital investment due to, as I said earlier, the expectations of the oil price coming back in a year or two. I think a lot of these companies will look at the rate of return on the investment now versus a higher oil price and choose to defer drilling wells for now.
TER: Let’s say that oil goes back up. What is a reasonable number to start drilling again—$65, $80?
AK: I think $65 would be a good number. I think Crescent Point, Petrobank, TriStar, and Petrominerales can really do something with $65 oil because of their low royalty, low operating costs. Petrobank, Crescent Point and TriStar are involved in the same play here in Canada, called the Bakken play, and that’s light oil, so it receives quality pricing. The first year’s royalty on those wells is only 2.5%, and the operating costs are in the $8 to $9 range, generally. Even in a $45 oil environment, they have a decent net back but the rate of return on a well at $65 versus $45 is significantly better; so, they wouldn’t stop drilling but rather slow it down in a $45 oil environment.
TER: And with the $45 oil, you indicated that the various oil sands projects are not really moving forward; do they move forward at $65?
AK: $65 causes you to start thinking seriously about them, but you have to see higher prices than $65, especially if there’s an upgrader involved. When demand goes down, then the discount from heavy to light oil is larger, which is what we’re experiencing now. So, the heavy oil producer is seeing a disproportionate decrease in its oil price than a light oil producer.
TER: And the companies you mentioned before—Crescent Point, Petrobank, and TriStar—are all light oil?
AK: Yes.
TER: Very good.
AK: Well, Petrobank does have an oil sands project, but it also has an oil sands technology, which is why it’s more complicated than the other companies mentioned. The company’s oil sands technology is in the pilot stage now, but all indications are that that pilot is working. The oil is upgraded in situ in this process, so instead of producing 9- or 10-degree oil, it produces 20- to 21-degree oil—a significant advantage; and capital costs are a third to a quarter of competing projects. This is a new technology and it is getting a lot of attention now, especially in the lower oil price environment. And Petrobank owns the technology; the company has already signed two contracts for joint venture agreements with third parties to use this technology in their fields. It’s not just an oil sands technology, by the way; you can use this technology in any heavy oil field.
TER: That is quite an advantage.
AK: It is very significant, and it provides the company leverage against the technology in the future. The value of the technology for the company increases as more and more companies do a joint venture with them, and the technology becomes more proven. So far Petrobank’s deal has been to retain a 50% working interest in, and a 10% override on, the other company’s project. The benefit of that, of course—it adds to the company’s growth. The other benefit is that it also recovers 70% of the oil in place in the reservoir, and a competing or just a standard expectation is somewhere between 25% and 40%, depending on the project. So they get almost twice as much oil out of the ground from their well than a competing project would get from their well.
TER: That is substantial. That’s amazing. So, it’s still officially in pilot, and they’re actually going out and doing these joint ventures? You mentioned that they had two that they’re doing.
AK: Yes its still is a pilot project. But the pilot has produced above expectations, and it has upgraded the oil. I guess now you really want to see that pilot kept on stream for an extended period of time, say six months, at least. But so far, it has been very positive; Petrobank has signed two projects—one with Duvernay Oil, which was recently taken over by Shell, and another with a company in Canada called True Energy Trust (TUI-UN.TO). It has signed confidentiality agreements with most South American state oil companies—and there’s a huge amount of heavy oil in South America; and it has ongoing negotiations with other companies besides the state oil companies in South America.
TER: Is this technology capital intensive, meaning to replicate it across several wells, it’s hundreds of thousands of dollars, or is it like pure technology where it’s highly leverageable?
AK: Like I was saying, the technology is actually cheaper; for instance, the estimates are that this will cost $20,000 per producing barrel to put a project together, and it likely will be less, whereas your average SAGD (steam assisted gravity drainage) project is $60,000 per producing barrel. So, it’s a third, and if you add an upgrader, you can get into the $80–$100,000 per producing barrel. And so you’re comparing $20,000 versus those higher numbers, depending on the project.
TER: Wow, these guys could make it just on the technology.
AK: They could. They have this Bakken play in Saskatchewan that I mentioned to you, which by itself probably justifies the current share price because in this market where everyone is beaten up, and the market is not paying for anything unless you actually have it physically in hand, you have it on production. So, our view is this technology is not in the share price at all right now.
TER: That’s going to be amazing. I was wondering what small cap names you cover and if you had any names in that category that you like right now.
AK: Well, Petro Vista Energy (PTV.V) is one that we’ve been watching and I like it because of the inventory of assets it has and the opportunities those assets present for the company right now. Due to their size however, they do have some exposure on their balance sheet compared to their desired level of activity.
TER: Aren’t they in Brazil?
AK: They’re in Brazil and Colombia, and the Brazil project is one that is low risk and can provide a good return that is average. The Colombian assets provide a little bit higher risk but also potentially a greater rate of return. Petro Vista falls into the smaller cap group; and, in terms of funding, its pockets aren’t as deep as a larger company, so it’s in the process of establishing a cash flow base. Its drilling and exploration activities are being funded from the cash the company currently has on hand plus possible asset sales.
Alan Knowles joined Haywood in 2000, having previously worked as a senior oil and gas analyst with two Canadian investment firms. In addition, he has held senior financial positions with Petrorep Resources and Sceptre Resources and has over 20 years of oil and gas industry experience. As a key member of Haywood's oil and gas research team, Alan covers a broad mix of energy producers that range from senior to intermediate to emerging companies.
TriStar Oil & Gas Ltd. to present at the FirstEnergy/Société Générale Montreal Energy Conference, Montreal, QC
Friday December 5, 1:13 pm ET
http://biz.yahoo.com/cnw/081205/tristar_firstenergy.html?.v=1
CALGARY, Dec. 5 /CNW/ - Notification of live webcast event:
TriStar Oil & Gas Ltd. (TSX: TOG)
Live webcast presentation
Wednesday, December 10, 2008, 2:55 PM EST (12:55 PM MST)
To listen and view this online event, please visit:
http://remotecontrol.jetstreammedia.com/15641
The presentation will be available in an archived version at this link for 30 days following the live presentation.
For further information
on the webcast please visit www.firstenergy.com or contact: TriStar Oil & Gas Ltd., Brett Herman, President & CEO, Ph: (403) 268-7800
--------------------------------------------------------------------------------
Source: TriStar Oil & Gas Ltd.
TriStar Oil & Gas Ltd. - Achieves Continued Growth in Production and Cash Flow; Announces 2009 Capital Budget
Wednesday November 12, 4:21 pm ET
CALGARY, Nov. 12 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the "Company") is pleased to announce its financial and operating results for the three and nine month periods ended September 30, 2008.
In this report, all references to barrels of oil equivalent ("Boe") are calculated converting natural gas to oil at a ratio of six thousand cubic feet of natural gas to one barrel of oil.
[continued in following link]
http://biz.yahoo.com/cnw/081112/tristar_q3_results.html?.v=1
TriStar Oil & Gas Ltd. to present at the FirstEnergy/Société Générale EnergyGrowth Conference in Toronto
Wednesday November 12, 10:00 am ET
http://biz.yahoo.com/cnw/081112/tristaroil_firstenerg.html?.v=1
CALGARY, Nov. 12 /CNW/ - Notification of live webcast event:
TriStar Oil & Gas Ltd. (TSX: TOG)
Live webcast presentation
Wednesday, November 19, 2008, 10:00 AM EST (8:00 AM MST)
To listen and view this online event, please visit:
http://remotecontrol.jetstreammedia.com/15491
The presentation will be available in an archived version at this link for 30 days following the live presentation.
For further information
on the webcast please visit www.firstenergy.com or contact: TriStar Oil & Gas Ltd., Brett Herman, President & CEO, Ph: (403) 268-7800
--------------------------------------------------------------------------------
Source: TriStar Oil & Gas Ltd.
Where the Economy is Booming!
http://money.cnn.com/2008/11/03/news/international/birger_saskatchewan.fortune/index.htm
futrcash
Why Your Oil Investments Are Still Profitable
By Keith Kohl | Thursday, October 2nd, 2008
http://www.energyandcapital.com/newsletter.php?date=2008-10-02
"Beginning this moment, this nation will never use more foreign oil than we did in 1977-never."
When Jimmy Carter uttered these words during his Crisis of Confidence speech in 1979, the U.S. was importing eight and a half million barrels of oil every day. At the time, we were dependent on foreign imports for approximately 40% of our oil demand.
He wasn't the only President with energy independence in mind.
Four years earlier, President Ford wanted to lower oil imports by two million barrels per day before 1978. Rather than falling, imports rose more than 2.3 million barrels per day. His plan, however, was less ambitious than Nixon's goal to completely eliminate our energy dependence by 1980.
During the ten years after President Carter stated his energy goals, things appeared brighter. According to the Energy Information Administration [http://tonto.eia.doe.gov/dnav/pet/hist/mttimus2a.htm ] , our imports of crude oil and petroleum products fell to as low as 5 million barrels per day in 1985, or about 40% since Carter's speech.
Today is a much different story. So before I tell you how to invest in oil, let's go over our current situation...
Blindsided by Peak Oil
Here's how the U.S. is stacking up today:
Crude Oil Production has dropped to 5.064 million barrels per day. U.S. oil production peaked 38 years ago in 1970. Since then, we've been going downhill. My Energy and Capital readers know that the U.S. is producing roughly the same amount of oil it did in 1947.
Imports of Crude Oil and Petroleum Products was 13.4 million barrels per day in 2007. If you thought 40% dependence on foreign oil during the Carter administration was a lot, now take into consideration that foreign oil makes up 67% of our oil consumption.
Crude Oil Consumption reached 20.6 million barrels per day in 2007. That's approximately 40% of our total energy consumption, with coal and natural gas coming next in line. Despite the different energy programs over the last 3 decades, fossil fuels remain the dominant source of our energy consumption.
Since U.S. oil production peaked three decades ago, that fact is that we are consuming one-quarter of the world's oil supply, yet only producing 5% of it. In other words, our addiction to foreign oil shouldn't come as a surprise for us.
The problem, however, is that peak oil is no longer just a U.S. problem.
Struggling to Produce Oil
When the subject of our country's oil addiction comes up, the rhetoric coming from Washington has been to reduce and eventually eliminate our dependence on foreign oil. Naturally, they mean oil originating from the Middle East. OPEC's oil.
In order to achieve that goal, that means the U.S. needs to find an extra six million barrels every day. Saudi Arabia is providing over 1.6 million barrels per day alone. We might not have to worry too much about reducing Saudi imports, however. First take into account that production at the Saudis' biggest oil field (and the world's largest, for that matter, Ghawar, is now in decline.
Today, nine out of the world's ten largest oil fields are in decline. In fact, 94% of global production comes from just 1500 giant oil fields. Finding replacements is even more difficult, considering that discoveries of these giant oil fields peaked more than forty years ago.
The U.S. only has two options to make up for the loss of Middle Eastern imports: either boost its domestic drilling or increase their Canadian imports.
What about Mexico? Isn't Mexico one of our biggest importers?
Mexican production, unfortunately, is heading in a downward spiral. Their massive Cantarell field is in serious trouble. Pemex reported that oil production at Cantarell has fallen 29.2% to a mere 1.1 million barrels per day. As if that were not enough, Mexico's second-largest field, Ku-Maloob-Zaap dropped 39%. Let's not forget that nearly 40% of the country's budget is generated from oil revenues.
Imports from Mexico were down almost 400,000 barrels per day in July compared to 2007.
Investing in Oil: The Profitability of Your Oil Plays
Although oil prices have been hammered for the last three months, our long term outlook hasn't changed. The fact remains that oil, coal and natural gas remain our predominant form of energy. On a global scale, fossil fuels still make up 86% of primary energy production.
Regardless of when oil prices begin to rebound, one thing we can count on is that the U.S. will continue to shake-off its addiction to Middle Eastern oil. As I just mentioned, it's going to come down to increasing domestic production and/or relying on Canadian imports. Granted, we won't be able to make up the six million barrels per day we need to walk away from OPEC, but that certainly doesn't mean we won't do what we can.
The bottom line is that the producers are going to be back on top again, and sooner than you might imagine. Energy companies have been slapped hard for the last three months. This means there are a ton of quality companies that investors can pick up at a discount. I prefer to stick with the drillers that have the property and experience to extract our future oil supply.
Investing in Oil: The Canadian Bakken
With that in mind, I see two ways for investors looking to get a piece of the Canadian side of the Bakken.
The first is to look carefully at the smaller producers. Granted, they may not be spending the most or even have the most money in the bank, but they're also not trading for $100 a share. In other words, they can give you the most bang for your buck. They are also, however, a lot more riskier than some of the major players.
As I've said previously, look at Canadian oil stocks like TriStar Oil and Gas (TSX: TOG). The good part is that TriStar seems to be gaining steam.
The second option available for us are oil companies in Alberta expanding their operations into Saskatchewan. If you've been a reader of Energy and Capital for some time, then odds are you know my stance on the Alberta oil sands.
Ever since Alberta has changed their royalty rates, companies are starting to see the grass is greener on the other side of the fence. Over the last few months, some of my favorite oil sands companies have been staking a claim in southeast Saskatchewan.
But no matter how you go about with your personal investments, the most important advice I can offer is that you should always do you own due diligence. Above all else, make sure you comfortable with the company before dishing out your cash.
Until next time,
Keith Kohl
>
Dundee starts 9 Canadian energy companies with positive
Tue Sep 30, 2008 11:20am EDT
(Reuters) - Dundee securities began coverage of nine Canadian junior and intermediate oil and natural gas companies, saying the time was ripe to buy into them as their stocks were trading at discounts to the commodities. The brokerage, however, said given the recent volatility in equity markets, investors need to be patient to realise any gains. "We believe investors with a 12-month horizon will be rewarded," analyst Grant Daunheimer wrote in a note to clients. "When stability returns to the equity markets shares of junior/intermediate oil and gas producers will recover and reflect current commodity price levels."
Among the companies initiated were oil and natural gas producers TriStar Oil and Gas Ltd (TOG.TO) and ProEx Energy Ltd (PXE.TO), both initiated with a "buy" rating. TriStar has diverse crude oil-weighted asset base in Bakken shale and Alberta, said Daunheimer, adding that its assets offered significant potential reserve upside for the company.
[continued in following link]
http://www.reuters.com/article/marketsNews/idCABNG14208920080930?rpc=44
TriStar Oil & Gas Ltd. - Announces Record Production and Cashflow for the three and six months ended June 30, 2008
Monday August 11, 5:41 pm ET
CALGARY, Aug. 11 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the "Company") is pleased to announce its financial and operating results for the three and six month periods ended June 30, 2008.
In this report, all references to barrels of oil equivalent ("Boe") are calculated converting natural gas to oil at a ratio of six thousand cubic feet of natural gas to one barrel of oil.
[continued in following link]
http://biz.yahoo.com/cnw/080811/tristar_q2_results.html?.v=1
Q&A: Crescent Point’s Scott Saxberg
Michelle Magnan
From the August 18, 2008 issue of Canadian Business magazine
http://www.canadianbusiness.com/managing/ceo_interviews/article.jsp?content=20080818_198723_198723
In a world of floundering trusts, Scott Saxberg president and CEO of Calgary-based Crescent Point Energy Trust, has pulled off some impressive numbers. The oil and gas trust recently announced a $200-million increase to its 2008 capital spending budget. And its units hit a total return of nearly 59% in 2007. Crescent Point’s secret? It has a lot to do with developing resources in Saskatchewan. Saxberg spoke with Calgary contributor Michelle Magnan about the discovery of a lifetime, royalty review fallout and why Saskatchewan is attracting tons of oil and gas dollars.
About 75% of Crescent Point’s resources are in Saskatchewan. Why is the province such a good play?
Our main play there is the Bakken [a formation that traverses the southeastern part of the province that’s been around for years but only became profitable recently thanks to new technology]. What’s exciting about it is it’s the second-largest pool discovered in Western Canada, which I think has been a little lost on people. It’s also the largest pool discovered since the 1950s. It’s a once-in-a-lifetime type of event. Even guys previous to my generation never had those discoveries. It’s one of those unique situations where it’s really not valued in the market yet because it is so new.
TriStar Announces Record Quarter; Expanded Capital Program and Upward Revision to Guidance
Thursday May 8, 4:15 pm ET
CALGARY, May 8 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the "Company") is pleased to announce its financial and operating results for the three month period ended March 31, 2008.
In this report, all references to barrels of oil equivalent ("Boe") are calculated converting natural gas to oil at a ratio of six thousand cubic feet of natural gas to one barrel of oil.
TriStar completed several acquisitions during the quarter. However, only a partial effect of these transactions is reflected in the period.
Highlights
http://biz.yahoo.com/cnw/080508/tristar_q1_results.html?.v=1
Since I primarily use Scottrade and a broker to buy TriStar, I can just give you a lead for buying through Ameritrade.
Try using the symbol TOGSF and see it it will take in the Ameritrade platform.
I was just reviewing the March corporate presentation and I'm becoming more and more impressed with this company. My objective was to find a medium sized and primarily oil producing company and TriStar has these characteristics.
Yes, it might become a target for acquisition, but that is something that may turn out to be an advantage.
Tomorrow I will contact the company for the primary purpose of seeing if they have an approved Shareholder Rights Plan Agreement to ensure the fair treatment of all TriStar shareholders in the event of any unsolicited take-over bid for its outstanding common shares.
I let you know what I hear.
sumi
Billions of gallons of oil in North Dakota, Montana
Geological Survey calls find largest reserves outside Alaska
Posted: April 13, 2008, 10:31 pm Eastern
By Jerome R. Corsi
© 2008 WorldNetDaily
http://tinyurl.com/5jaxs2
A shale formation stretching North Dakota and Montana may have an estimated 3.0 to 4.3 billion barrels of technically recoverable oil, according to a U.S. Geological Survey assessment.
Known as the Bakken Formation, this find would make the recoverable oil in North Dakota and Montana the largest United States oil reserves outside Alaska.
Map of Bakken Formation in northern United States, courtesy Grand Forks Herald
The recently released assessment shows a 2,800 percent, or 28-times increase in the amount of oil recoverable from the Bakken Formation, compared to the agency's 1995 estimate of 151 million barrels of oil.
According to the USGS, the dramatically increased estimate of recoverable oil in the Bakken Formation results from new geological models, advances in drilling and production technologies, and recent oil discoveries.
By the end of 2007, approximately 105 million barrels of oil have been produced from the Bakken Foundation.
"The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest 'continuous' oil accumulation ever assessed by the USGS," said a news release making the announcement.
The Bakken Formation lies in "Williston Basin," a geological formation in the north central United States, underlying much of North Dakota, eastern Montana, northwestern South Dakota, and southern Saskatchewan and Manitoba, Canada, according to the Energy Information Administration of the U.S. Department of Energy.
The EIA attributes the success of horizontal drilling and fracturing efforts in Montana as the reason a decision was made to re-evaluate the 1995 USGS Assessment of Resources that had estimated only 151 million barrels were technically recoverable from the Bakken Formation.
Lynn Helms, the director of the oil and gas division of North Dakota's Industrial Commission told the Grand Forks Herald the USGS announcement had prompted new interest from investment bankers and the oil industry.
"We have had contacts from Scotland and Australia today," Helms told the newspaper. "And of course, lots of Canadian interest, and contacts from across the United States, both from the media and the oil industry. And banks. I think they are looking for a place to invest venture capital."
The USGS announcement should give "a significant boost to North Dakota's already-booming oil industry," according to a news release from the office of North Dakota's Democratic Senator Byron Dorgan.
"The oil industry in North Dakota has already seen substantial growth," Dorgan said, "but this report is important because it gives oil companies another set of eyes."
"The Bakken Shale should attract significant new investment to this region," he continued. "This is an exciting time for North Dakota's oil industry. We're going to see new growth that will boost our economy and help our country shed its dependence on foreign oil."
The USGS report increasing the estimate of oil recoverable from the Bakken Formation supports the arguments of Shell Oil's president of U.S. operations, John Hofmeister, who has recently questioned the validity of the assumptions behind "peak oil."
As WND reported last month, Hofmeister told CNBC's national Squawk Box morning show audience that peak oil theorists, such as Matt Simmons, have dramatically underestimated the amount of non-conventional oil economically recoverable with oil prices hovering at $100 a barrel.
WND also reported that Simmons, a Houston-based oil industry investment banker, also appeared on CNBC's Squawk Box show to defend his peak oil position, arguing that diminishing oil flow is an irreversible worldwide "grim reality," regardless what new oil resources are discovered.
Peak oil theorists maintain that oil is a finite resource and analysis of depleting oil fields demonstrates the world has either already reached or is nearing maximum oil flow.
Non-conventional oil reserves include a variety of oil reserves, including the oil tars in Alberta, Canada, which present technology allows to be converted economically into oil through well understood synthetic chemical processes.
I wouldn't expect the shareholders of Tristar to be happy with an $18 buyout!
sumisu..How does one buy Tristar Oil&Gas @ Ameritrade?
Broker only?
And if so what's the commission schedule?
tia
futrcash
Investors look to oilpatch to fuel returns
David Pett, Financial Post
Published: Monday, April 14, 2008
http://www.financialpost.com/story.html?id=445331
Tyler Brownbridge/Canwest News ServiceEconomist Jeff Rubin says the TSX oil and gas index should be trading about 35% above current levels.
Expectations are high on the Street these days that stocks from the oilpatch can fuel solid returns for investors and help drive the S&P/TSX Composite to new heights in 2008.
Jeff Rubin, chief strategist and chief economist at CIBC World Markets, recently estimated that energy stock valuations appear to price crude oil at about US$75 a barrel, 25% lower than the approximately US$100 commodities market value.
Consequently, he said in a report the TSX oil and gas index should be trading about 35% above current levels.
Those attractive valuations only look prettier given predictions of an active M&A market over the coming months, and with solid opportunities seemingly around every corner, the only question that remains is how best to play the game? A definitive list it is not, but here are a few suggestions to get you started.
Large Caps: Talisman Energy Inc. (TLM/TSX) is a stock that has been hindered by the short reserve life of the company's resources, and over the past two years shares are virtually unchanged at a value that remains well below its peers. But with new CEO John Manzoni on board and a strategic review in motion, the stock has caught some momentum, rising almost 20% over the past month.
Many analysts, including Genuity Capital's Philip Skolnick figure Talisman shares are well positioned to move further on up. "[Mr. Mazoni] understands that assets with short reserve lives don't work for a company this size," Mr. Skolnick said. "What they need to do is focus on long-life resource plays."
Luckily, he adds, Talisman won't have to make a big acquisition to do that, because in North America it has huge land positions in five key resource plays that people are starting to hear about, including the Outer Foothills in Alberta, the Montney shale in B.C., the Marcellus shale play in the northeastern United States, the Utica shale in Quebec and the Bakken in southern Saskatchewan.
Mr. Skolnick is confident that by concentrating its efforts on these plays, Talisman will be able to increase its overall reserve life over time, noting "the market has been rewarding companies who make that kind of strategic shift."
Analysts also like Suncor Energy Inc. (SU/TSX) and Canadian Natural Resources Ltd. (CNQ/TSX) in the large-cap space. Of Canadian Natural, Mr. Skolnick notes that the company's Horizon project is expected to come on line in the third quarter of this year and will reach peak production sometime in 2009 of 110,000 barrels of oil per day. At US$85 a barrel, Mr. Skolnick said, CNQ will generate $1-billion in free cash flow. "Try and find another company out there with a significant near-term project about to come online like Horizon," he said.
The trusts: Thanks to attractive yields in volatile times, energy trusts have done their part, and then some, in driving overall positive, if slight, valuations in the energy sector over the past quarter. Among the myriad "buy" recommendations from analysts who cover the sector, Bonavista Energy Trust (BNPu/TSX) gets great props from all but two analysts who have "sell" ratings on the units.
"Great yield, great management, great company. It's probably our best pick on the trust side" said UBS analyst Grant Hofer. But it's oily weighted Baytex Energy Trust (BTEu/TSX), he said, that offers great momentum for investors right now.
"There's a real heavy-oil story at the moment with heavy oil basically selling for the same price as light oil compared to the 30% discount it usually trades at."
With 60% of Baytex production coming from its heavy-oil assets. Mr. Hofer said nothing comes to mind as a better play on heavy oil prices. He also likes Vermilion Energy Trust (VETu/TSX) for its very conservative 35% payout, strong balance sheet and diverse international operation.
He also said Vermilion will at some point do something with its 42% stake in Libya-based Verenex Energy Inc., giving the stock great option value going forward."
The intermediates A consolidation trend in the junior and intermediate explorer and producer sector is giving new hope to the mid-cap sector following a disappointing 2007.
Canaccord Adams analyst Wendy Liu says reduced access to capital, existing financial pressures and uncertainty concerning the effect of the proposed Alberta fiscal changes is creating a "bigger is better" mentality with new, larger entities worthy of investment being created to fill the mid-cap tier.
Ms. Liu sees no shortage of good names in the space and recently initiated coverage with "buy" ratings on three companies that have bought their way up to the 20,000-barrels-of-oil mark through corporate transactions in recent months.
She said the recent acceleration in merger and acquisition activity, specifically at the Bakken Formation in southeast Saskatchewan is particularly relevant for TriStar Oil & Gas Ltd. (TOG/TSX), which she tagged with a price target of $18 upon initiation. "TriStar holds the third-largest acreage position prospective for the Bakken. It has demonstrated its prowess at acquiring others, but there exists the distinct possibility that it, too, will be bought by a larger entity given the strategic positioning of its asset base. The analyst also likes Iteration Energy Ltd. (ITX/TSX) and NuVista Energy Ltd. (NVA/TSX), whose 12-month price targets of $7.50 and $20, respectively, represent upside of more than 20%. "In our view, the market is not recognizing that the respective fundamentals for Iteration and NuVista are solid," she wrote.
Small caps What with trust taxation, high services costs, low gas prices and Alberta's royalty review, the list is long on negative issues that have impacted the small-cap energy scene over the past two years, with investors turning tail, unwilling to deal with the hiccups that often arise at companies in the sector.
As a result, Wellington West analyst Kim Page said full-cycle exploration companies with long lead times onto production easily get lost in the shuffle, even those with high netback and long-life assets.
"The result is value creation goes unnoticed," he wrote in a recent note to clients. "Concurrent commodity price increases can accelerate value attrition."
He flags Rock Energy Inc. (RE/TSX) among his favourite small-cap plays, rating the emerging oil-and-gas company with assets in Alberta and British Columbia a "strong buy" with a $4.75 price target. The stock continues to trade at a significant discount to its $5-a-share net asset value, he told clients, adding the company's active drilling program slated for the second half of 2008 should increase the company's to 4,100 barrels of oil a day.
He also lists Alberta Clipper Energy Inc. (ACN/TSX) and Arcan Resources Ltd. (ARN/TSXv) as good-quality small-cap companies with strong assets, management teams and in solid financial postion and suggests investors begin building diversified positions ahead of the Alberta government's announcement confirming royalty rates under the New Royalty Framework now expected in some time later in May or June.
"We believe some relief will be provided and act as a catalyst to revalue these stocks."
>I had a similar feeling after reading the management presentations of both companies.
I've been doing a lot of reading and studying lately.
Thanks for your help.
sumi
Tristar reminds me of Petrobank,as they both have serious exposure in the S.E. Saskatchewan Bakken.
Petrobank is by far the largest lease holder developer,but is out of my league pricewise.
A similar comparison would be Marathon to BEXP.
http://www.petrobank.com/investor-package.php
>I knew that would be your response.
Now I have to get some cash to buy it.
It is a definite candidate for any energy/Peak Oil portfolio.
I once owned Bulldog Resources and TriStar took it over. I should have kept the Bulldog and receive shares. I took 150% profits instead.
With recent oil developments, it's time to get into TriStar.
sumi
PS Another boardmark would do.
Sumisu...TOG's a winner!
Allow me to assist you in gathering DD here.
I promise to provide pertinent insight.lol
futrcash
TriStar Oil & Gas Corporate Presentation
March 2008
http://tinyurl.com/5ty8nu
[pdf file]
TriStar Oil & Gas Ltd. announced on 02 07 08 that the plan to acquire Bulldog Resources has been completed.
Bulldog Shares will be delisted from the TSX at the close of trading on Monday, February 11, 2008.
TriStar's oil production is located in Southeast Saskatchewan.
TriStar deal boosts stake in Saskatchewan energy rush
Bulldog increases junior's Bakken holdings
NORVAL SCOTT
December 07, 2007
http://tinyurl.com/36gxrp
CALGARY -- Calgary-based junior TriStar Oil & Gas Ltd. has joined the competitive race to develop oil in Saskatchewan, acquiring Bulldog Resources Inc. for $200-million in stock.
Bulldog, also based in Calgary, mainly produces light oil in southeastern Saskatchewan and holds land in the Bakken play, a red-hot exploration area that's been the subject of numerous deals in recent months as firms seek out light oil properties that aren't affected by the upcoming increase in Alberta's royalties.
"The combination further expands our Bakken position and solidifies our position as a top player in southeast Saskatchewan," said TriStar chief executive officer Brett Herman in a press release.
TriStar will pay 0.59 of a common share for each Bulldog share, according to a statement yesterday from the companies. Including the assumption of $5-million in debt, the deal is valued at about $205-million, TriStar spokesman Brian Purdy said in an interview.
About 75 per cent of Bulldog's production of around 2,200 barrels of oil and gas equivalent a day comes from the Fertile oil project in Saskatchewan, which Mr. Herman called one of the best discoveries in the province in the past 15 years.
This is the second acquisition in less than three weeks for TriStar. The company on Nov. 19 said it agreed to acquire closely held Kinwest Corp. for $80-million plus the assumption of $12.5-million in debt.
After these two deals are completed, TriStar will produce over 8,000 barrels of oil equivalent a day of light oil in Saskatchewan, and be one of the top three participants in Bakken.
As recently as last year, crude from Bakken was perceived as too expensive and tricky to extract, because the tight formation of the reserves prevented large amounts of oil from being recovered. However, advances in technology - including the use of systems developed by Calgary-based Packers Plus Energy Services - that effectively fracture a larger area, allowing more crude to be extracted, has opened up the reservoir for explorers such as Bulldog.
Bidding for resources in the Bakken region has been heated. In September, Crescent Point Energy Trust bought Innova Exploration Ltd. for $360-million in order to boost its holdings in the area. That followed Crescent Point's purchase of Mission Oil & Gas Inc. in September, 2006, for about $700-million. Last month, Petrobank Energy and Resources Ltd. inked a deal to buy Peerless Energy Inc., which also operates in Bakken, for $334-million, including debt.
© The Globe and Mail
TriStar Oil & Gas Ltd. - Q3 For the three and nine months ended
September 30, 2007
Tuesday November 13, 6:14 pm ET
CALGARY, Nov. 13 /CNW/ - TriStar Oil & Gas Ltd. ("TriStar" or the "Company") is pleased to announce its financial and operating results for the three and nine month periods ended September 30, 2007.
As the Real Resources Inc. ("Real") transaction closed on August 16, 2007, the financial and operating results only represent a partial quarter of combined operations.
In this report, all references to barrels of oil equivalent ("Boe") are calculated converting natural gas to oil at a ratio of six thousand cubic feet to one barrel of oil.
[continued in following link]
http://biz.yahoo.com/cnw/071113/tristar_q3_results.html?.v=1
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TriStar engages in the exploration, acquisition, development and production of oil and natural gas reserves in Saskatchewan and Alberta. TriStar's business plan is to create sustainable and profitable per share growth in reserves, production and cash flow in western Canada. To accomplish this, TriStar will pursue an integrated growth strategy including focused acquisitions, together with development and exploration drilling.
"The areas of operation for the Company include southeast Saskatchewan, southeast Alberta, Redwater and Ante Creek.
CONTACT INFORMATION
Head Office:
TRISTAR OIL & GAS LTD
Suite 700, 555-4th Avenue S.W.
Calgary AB Canada T2P 3E7
Phone:403 262-9077
Fax:403 262-6403
Website: http://www.tristaroilandgas.com
LAND INTERESTS
Working interests:
up to 100% in the Rosebank, Carlyle, Hastings, Star Valley and AlidaWest properties (primarily oil) in southeast Saskatchewan;
Countess, Wayne-Rosedale, Swan Hills and Nisku oil and natural gas properties in south central Alberta;
37.5% working interest in West Pembina oil and natural gas property in south central Alberta;
Ferrybank, Crystal and Westerose oil and natural gas properties in central Alberta;
Redwater oil and natural gas property east of Edmonton, Alberta;
West Provost, Neutral Hills, Sounding Lake and Consort natural gas and oil properties in east central Alberta;
Enchant oil property in southern Alberta;
Scandia, McGregor Lake and Atlee/Buffalo natural gas properties in southern Alberta; and
Ante Creek light oil and natural gas property in the vicinity of Grande Prairie, Alberta.
COMPANY MANAGEMENT
Brett Herman, President & CEO; Jason J. Zabinsky, Vice President, Finance & CFO; Graham Kidd, Vice President, Engineering; Eric Strachan, Vice President, Exploration; Jeremy Wallis, Vice President, Land; James M. Pasieka, Corporate Secretary;
BOARD MEMBERS:
Paul Colborne, James V. Bertram, Fred C. Coles, Dallas L. Droppo, Richard N. Edgar, Brett Herman, Martin Hislop, Robert B. Michaleski, James M. Pasieka, Robert G. Peters
COMPANY WEBSITE
http://www.tristaroilandgas.com/
DUE DILIGENCE
TriStar Oil & Gas Corporate Presentation. 03 08
http://tinyurl.com/5ty8nu
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source of chart: dumbas
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