Source: Streetwise Reports 10/06/2018
A Pareto Securities report highlighted the disconnect between this energy company’s current share price and where it should be.
An Oct. 3 research note by analyst Tom Eric Kristiansen pointed out a “valuation mystery in Blackbird Energy Inc. (BBI:TSX.V), which continues to be priced at a large discount to peers and is the most obvious takeover candidate in our coverage universe.”
The company is currently trading at CA$0.35 per share. Pareto’s target price on Blackbird is more than three times that, at CA$1.10 per share. “We view Blackbird as too cheap to ignore and reiterate our Buy,” Kristiansen wrote.
The analyst offered arguments for why the company should be valued higher. Its year-end financials, as of July 30, 2018, were as expected. Management has guided to near-term production of 2,000 barrels of oil equivalent per day (2 Mboe/d), an increase from 1.148 Mboe/d.
“More important,” the analyst noted, “Blackbird delivers an industry leading operational netback of CA$30 per barrel of oil equivalent (CA$30/boe).” It is the highest among its peers, as demonstrated in the graph Kristiansen included in his report, which compares the group on this metric. Seven G’s netback is CA$29/boe, and NuVista’s is CA$24/boe. The lowest is Birchcliff’s at CA$13/boe.
Yet, as shown by Kristiansen, despite having the highest netback per boe, Blackbird has the lowest enterprise value per section of land owned, at CA$2.1 million, as depicted on the same graph. NuVista has the highest, at CA$12.4 million/section; QEC’s is CA$11.9 million/section; and Seven G’s is CA$8.8 million.
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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Disclosures from Pareto Securities AS, Blackbird Energy, News Flash, October 3, 2018
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From:: The Energy Report