LRU

[rossi]

SUBJECT: A 10 + Bagger with Strong Certainty Posted By: TheRock17
Post Time: 5/17/2007 18:14
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It is evident from many of the posts on this board, that most posters dont have much of a clue as to what their investment here means in terms of future value. And so, tommorow or next week they will sell out, not even realizing that this asset play has yet to make its bigger move.

Credit Suisse has provided estimates of EV ( EV= Market cap + Debt ) for oil sand stocks over the past 2-3 years ( along with an excellent summary of oil sands themselves ), and these can be viewed here......

http://www.altanet.or.jp/CreditSuisse.pdf

As can be seen from this table on p12, the valuations of oil sand stocks has been increasing recently, and values in excess of $2 per boe for oil in the ground have been recorded up to 2006.

This week, PBG ( $25.50 /85 million shares ) paid $120 million to acquire the remaining 6000 acres ( 16 % ) of its undeveloped Whitesands bitumen that it did not already own.

That amounted to $26,000 per acre.

Whitesands has 39,500 acres and is being tested from the McMurray Formation by SAGD, much the same as PFM.

Note, from the PBG website, that the updated resources for Whitesands is 2.6 billion barrels of bitumen in place.

That computes to about 65 million barrels of bitumen per 1000 acres.

Today, for its initial 14,700 acres of oil sands ( my guess is very close to PBG's ) PFM has 1.15 billion barrels of bitumen.

That computes to 80 million barrels of bitumen per 1000 acres.....significantly higher than that of PBG.

PBG just paid $26,000 per acre for that bitumen.

PFM has 25,800 acres of higher density bitumen which, even at $26,000 per acre, amounts to an asset value of $675 million.

That asset will be fully delineated within a year and it will cost only $10-$15 million to do so.

3 years later when it will be producimg, it will be worth $250,000 per acre..or well over $5 billion.

Even better, PFM is closing in on more oil sands land very close to its current premium land. That acquisition should put PFM on equal footing with PBG in terms of acreage and likley more in recoverable oil, putting it in the same league as UTS.

As we all should know, conventional oil and gas production is on a decadal and permanent decline in N America, including Canada. Its costing more and more to replace such conventional supplies, which is why so many junior oils are facing a bleak future, as finding costs per boe are rapidly increasing, with consequent negations on their debt to equity ratios.

The only source of abundant new supplies is the oil sands, and , as conventional production continues to decline, the oil sands will continue to increase in value...ie the 3-fold increase over the last 3 years is a real trend and not an anomaly.

This is why getting in on the ground floor of an emergent oil sands play makes good investment sense.

PFM is rapidly developing into a premium asset enhancement play that is bound to attract cash rich suitors over the next 1-2 years.

When it does, we will be getting at least $1 per recoverable barrel and perhaps double that.
Thats the first 10 bagger .

Who knows, perhaps PFM already has its sugar daddy already lined up...