Value Microcaps Junior Energy

[Bobwins]

Every qtr I review the Bryan Mills Iradesso report looking for cheap Canadian producers. The report covers Juniors from 500boepd to 10,000boepd and Intermediates from 10,000boepd +.


http://iq.bmir.com/iq/iQ-2012-Q1-web.pdf

Especially this year, I am looking for producers with a high oil content, probably best measured by netbacks.

As most of you know, the sector is down dramatically. This means there are some cheap stocks with good stories, good potential, lots of acreage and should do well over time.

My top pick is Novus, NVS.v/NOVUF C$.69, FD share count 213.4million, market cap of C$128million. curlews and cliffvb have previously highlighted Novus on the board so it's not new but appears to be a good value.

Novus has a large acreage position in the Viking play with over 660 drill locations. Viking wells are characterized by relatively low production(50boepd-75boepd) but are lower cost to drill and deliver outstanding netbacks due to low drilling costs, low operating costs and long life.

Novus came in 11th out of 53 juniors with 20% ngas/80% oil but were fourth in netbacks at C$42.67/boe in Q1. Novus was 5th lowest in fwd cashflow multiple at 4.1. Production is climbing rapidly.
Novus produced 2,745boepd in Q1 vs 1544 in 2011 Q1 and is guiding for an exit rate of 4500boepd. Given their high netbacks, their price to cashflow ratio should fall dramatically. They are forecasting 2012 cashflow of C$.33 vs the current price of C$.69. Annualized Q4 cashflow is C$.70! They expect oil percentages to increase from 80 to 85% at year end. Novus has a debt to annualized cashflow of less than 1. They have years of steady drilling ahead of them without having to go out and find more land.

Here is their website, latest presentation and Q1 qtrly earnings announcement.

http://www.novusenergy.ca/

http://www.novusenergy.ca/en/investor/press_release_q1_2012_-_may_15_12_final.pdf

http://www.novusenergy.ca/en/investor/press_release_q1_2012_-_may_15_12_final.pdf