DESCRIPTION: Novus Energy Inc. is pursuing large original-oil-in-place opportunities that have yielded low recovery factors to date. Moving quickly has enabled the company to gain strategic land positions in some of the most prominent oil resource plays in Western Canada: The Viking, Bakken and Cardium. All three offer significant upside through the development of high-netback, light oil reserves. With a large inventory of horizontal drilling locations on its resource plays, Novus is well positioned for high-impact growth.
The information provided below is based on the most recent information we have received from analysts, newsletters and other contributors to Streetwise Reports' The Gold Report or The Energy Report. We encourage you to visit the company's web site and call the company for more specifics on this company before you decide to invest.
The Energy Report Interview with Luc Mageau (11/02/10)
"Novus is spending considerable time in the Saskatchewan Viking. It's amassed 82 sections of land (or ~52,500 acres) and more than 200 future drilling locations. It's going to drill another 11 wells this year and double production year-over-year. All of that growth is essentially going to come from the Viking.
Novus is about 1,000 bpd right now. It's expected to go up to the 2,000-bpd range by the end of the year. . .Novus has $17 million of cash in the bank. Over and above that, it's got a debt line that's unutilized and should almost exit the year without having to use that. Going into next year, between that and cash flow, it should be all right. . .The beauty of the Viking is that the wells aren't very expensive to drill. Each well is $1–$1.2 million to put into production. By deploying $20 million into a play like this, producers can get 16–20 new wells and increase production without having to spend a lot of money or go back to the market for capital very often."
Wendy Liu, Desjardins Securities (10/13/10)
"Viking supercharged, with explosive growth potential; initiating coverage with a Buy rating and C$1.25/share target As Viking development continues to advance, we believe there is material production and reserves growth to be realized. In a scenario where 'more is better,' enter Novus. It is one of the few (almost) pure Viking players in the sector, and we estimate it has among the highest leverage to the upside potential from this resource play.
On production and cash flow metrics, Novus trades at a slight premium to its peers; but, given the early stage of resource development that characterizes the company, we believe a NAV measure should be considered. As the stock trades at only 0.7x our combined resource-build NAV estimate, we see a good opportunity to gain exposure to the Viking play."
Kirk Wilson, Clarus Securities (10/07/10)
"Viking results to date appear encouraging with 60-day average production rates of ~70 boe/d across its first five wells. At an all-in well cost of $975K per well, the economics appear attractive. Should these results be repeatable in the long run, the Viking at Dodsland will underpin Novus' growth moving forward. In Q410, NVS plans to drill 11 net horizontal Viking oil wells at Dodsland, with potential to increase that number if weather conditions permit. NVS has also participated in 3.5 net non-op Viking wells that are due to be on production in early Q410.
On a forward-looking basis, we have NVS trading at a discount to peers based on a 2011E EV/DACF ratio of 3.3x. Having a large oil resource play with repeatable and attractive economics, this valuation gap could diminish as the company continues to execute its Viking drill program and achieves additional economies of scale through land acquisitions. We reiterate our BUY recommendation with a $1.55 target price."
Michael Zuk, Stifel Nicolaus (10/06/10)
"Novus now controls ~82.25 net sections in Dodsland. The company, like many other producers, was hit hard by wet weather during Q310, causing substantial delays to its H210 drilling program. We are encouraged by the company's increased exposure to the Viking in Saskatchewan, as well as its aggressive drilling strategy for a company of its size. We take note of the company's inference that it will still be drilling a minimum of 11 wells in Q410 but could drill additional wells at Rocanville and Dodsland. We reiterate our $1.10 target price and Buy rating."
Jonathan Fleming, Cormark Securities (10/06/10)
"Novus now has 82.25 net sections of land in the Dodsland area. The company also announced that it had commenced its fall drilling program in the Dodsland area with plans to drill a minimum of 11 horizontal Viking oil wells in Q410. Novus may increase the number of wells to be drilled with favorable weather conditions. . .The company has also recently participated in 7 gross (3.5 net) horizontal Viking oil wells at Dodsland (tie in expected in Q410) and a prospective 35% WI Bakken oil well at Rocanville. Novus currently has $16 million of positive working capital and unused lines of credit to fund its growth. We reiterate our BUY recommendation."
News 
Market Data 
Discover 
