The Junior Energy board is designed to highlight undervalued junior energy stocks. Commodity prices are going to be volatile and difficult to predict even though the fundamentals point towards higher prices. To help offset the volatility in prices, we are looking for strong increases in production and low price to cashflow or p/e ratios.
Uranium stocks are more difficult to handicap because there are so few producing companies and even fewer profitable companies. To help narrow the search, we will focus on near term producers that have defined deposits and have goals to produce uranium within the next three years.
Many energy stocks are listed in Canada. That is especially true of uranium explorers. However we will discuss any stock that can be traded in the US and Canada thru direct listing or a pink sheet alternative.
Favorite oil plays:
Sundance Energy Australia Limited SEA.ax/SDCJF.pk
S.O 276.7 M
Sundance has assembled 115,450 net acres in various shale oil plays in the US. Their holdings are focused in the Bakken and Niobrara. Company philosophy is to buy the land early and cheap and then sell to bigger JV partners who pay a majority of the cost of drilling. This reduces risk and costs to Sundance. During 2011, Sundance and it's partners will be drilling up to 114 Bakken wells. Sundance exited 2010 around 1,000boepd and is forecasting a 2,000boepd exit rate for 2011. The Niobrara is the next big opportunity for Sundance. They have sold land to Noble Energy with a 3.7% ORRI and JV'd a small parcel with Halliburton. Right now they have a higher working interest in the remaining Niobrara acreage but could sell down more to reduce risk. Sundance also has another early shale oil play in the Atoka, which is in Colorado. May be some exploration by others in the area in 2011. Pawnee is a new area in Kansas/Oklahoma that Sundance has just entered. Sundance has a nice land package in several areas. Their mgmt is excellent and has been grown the company in a low risk way by selling land and working interest to lower cash requirements. As production is increasing, cashflow will provide much of the funds needed to drill and acquire land, reducing the need to issue shares.
Mart Resources MMT.v/MAUXF.pk
S.O 335.5 M F.D. 342M
Mart Resources is a Canadian producer working exclusively in Nigeria. They have been developing what Nigeria considers a marginal field,Umusadege. Umusadege production has grown significantly over the past two years as Mart drilled UM-6 and 7 in 2010 and each tested multiple zones with test results over 10,000bpd each. Each is producing in the 3,000 to 5,000bpd range with several zones behind pipe. UM-8 is being drilled in July 2011 and should be completed and producing by late 2011. Gross production for the field should move over 10,000bpd. Recently Mart has suffered from takeaway pipeline capacity problems. They had an outage in December 2010 when the pipeline was damaged in an explosion. That caused a shutdown for several weeks. Mart still got the revenue from the pipeline company and had to make it up during Q1 2011. With the new wells coming online, Mart has tried to arrange for more capacity. They had a preliminary agreement to boost takeaway capacity to 20,000bpd gross from AGIP, the pipeline operator. Recently they were told the fee for pipeline losses would jump from 1 to 1.5% to over 11%. Mart refused to pay and AGIP has restricted capacity back to the original agreement of around 8500bpd. Mart is negotiating with Shell to build a second pipeline but is at least 1 year away from having a second option. There is likely room for negotiation with AGIP but this takeaway capacity is a crucial near term issue for Mart. In addition to several more development wells at Umudasege, Mart is actively trying to secure additional marginal fields that Nigeria is putting up for bid.
Mart is an undervalued producer. The Nigerian location is a negative as well as the dependence on Umusadege field for all their production. However the production could grow to as much as 30,000bpd gross in 2012 so the company has near term upside. Mart is selling for around 2X fwd cashflow. However the pipeline issue could delay achieving the projected cashflow.
Latest presentation from 2011 AGM:http://www.martresources.com/wp-content/uploads/2010/06/21/events/Mart-Resources-corporate-presentation_June24_updated-2.pdf
Saratoga Resources SROE.ob
S.O. 19.7 million
Saratoga Resources is a US based driller with significant acreage in the shallow Gulf of Mexico. Their acreage is in areas governed by the State of Louisiana versus the deeper Gulf waters governed by the Federal authorities. Saratoga got into cashflow problems and went into Chapter 11 bankruptcy to protect it's assets. The lenders wanted to dilute common shareholders out of the picture and take over the assets. Mgmt are big common shareholders and resisted the proposals and worked thru the court system. Two years later, Saratoga has paid off all vendors and has finally refinanced the old lenders. This should free them up to get better financing and aggressively drill out their near term prospects. Current production is around 2,850bpd with plans to increase production to 4,000bpd by the end of Q3.
Saratoga has a PV10 value of 1.3 billion using total resources and 438million using total reserves and 12/31/10 strip pricing. The current market cap is around 100million. Very undervalued versus resources. Cash has not been available for Saratoga to aggressively drill. The situation is improving with a recent financing giving Saratoga an expanded capex budget to pursue what they say is hundreds of drilling opportunities. They are focusing on oil heavy prospects but the majority of their reserves are gas. Saratoga has several deep Gulf prospects that they are seeking to JV. The recent refinance of their long term debt should allow them to negotiate from a stronger position. Many would be partners have been concerned about Saratoga's ability to finance their end of the deal.
Favorite gas play:
Favorite Oil Sand Plays:
Oil Sand Charts: http://investorshub.com/boards/read_msg.asp?message_id=21045182
PETROBANK ENERGY AND RESOURCES PBG.to PBEGF.PK
F.D. ~89million(8.9million convertible+4 million options)
Southern Pacific Resources Corp. STP.v STPJF.PK
STP has 80% interest in 25 contiguous sections of oil sands.
If STP can deliver the increased new 43-101 resource estimate at 300-500 million barrels in early June, with only 55M shares fully diluted, it will be one of the cheapest oil sand resource companies in Canada.
Alberta Oil Sands(Platform Resource) AOS.v AOSDF.PK
S.O. 39.0 M
F.D. 42.5 M
PFM owns 40 sections (25,600) Acres of lease in Athabasca oil sands area in northeast Alberta. 23 sections have estimated an undiscovered resource of 1.15 billion barrel of initial bitumen
in place (IBIP). The other 17 sections are not explored.
Patch International PTCH.OB
PTCH own 75%-80% interests of oil sand leases, after spending the exploration capital.
Ft. McMurray Oil Sands Area
The Ft. McMurray Oil Sands Area oil sands leases consist of Dover/Ells (32 gross sections, 25.6 net sections) and Firebag (18 gross sections, 13.5 net sections).
PTCH claims to have 1.5 billion bbls bitumen in place (gross)
Muskwa Oil Sands Area
In townships 85/86 and ranges 24/25w4 the Corporation has 10 gross sections (7.5 net) of oil sands leases in the Muskwa area.
NORTH PEACE ENERGY (NPE.V NPCEF.PK)
S.O. 26.3 M
F.D. 34.3 M
Approx 60,000 net (86,000 gross) acres of prospective oil sands leases in north central alberta
Initial results confirm the estimated discovered resource in the order of 2 to 3.1 billion barrels.