Source: Streetwise Reports 05/24/2018
Analyst Tom Erik Kristiansen with Pareto Securities made the case for investing in this energy company.
In a May 7 research note on Blackbird Energy Inc. (BBI:TSX.V), Pareto Securities analyst Tom Erik Kristiansen wrote that “Blackbird is too cheap to ignore” and “the recent oil price appreciation has yet to be reflected in the pricing of the company.”
Of major significance, Pareto reported, is the company has shifted from an exploration entity to “having a development-ready land base” and “production growth.” This is evidenced by all 16 of the drilled wells on its property having been in line or exceeded expectations and having “derisked the value of around 85% of its 115 net sections in Montney.” Whereas Blackbird’s current production capacity is about 2,000 barrels of oil equivalent per day, it expects to boost that to about 7,000 by mid-2019 once it secures additional offtake capacity.
To fund this growth, Blackbird will, according to the report, have a modest need funding of CA$40–80 million (CA$40–80M) that the company plans to obtain via a nondilutive method, perhaps an industry transaction, debt and/or deferred payments. Following the investment, Blackbird “can recycle cash flow to fund further growth as payback on new wells.”
Further, the analyst purported that Blackbird is an attractive partner or takeout target, particularly because its liquid rates and netbacks equal those of Seven Generations and NuVista, its most liquids-rich peers in the Montney. For instance, Blackbird produced 57% liquids and delivered a netback of $28 per barrel in the last quarter. Other factors supporting a potential takeout of Blackbird are its having finished its delineation campaign, it seeing significant interest in its acreage and the oil price having increased, the analyst added. Further, mergers and acquisitions totaling more than $6 billion have taken place in the area in recent years, in which the buyers sought sizable, drill-proven land packages.
Peers are priced at four times higher than Blackbird is, at CA$10M per section versus Blackbird’s CA$2.5M per section, Pareto reported. “This highlights a large repricing potential,” which could happen when Blackbird obtains nondilutive financing.
Pareto has a Buy recommendation and a CA$1.10 per share price target on Blackbird, whose stock is trading at around CA$0.42 per share and “expect the valuation disconnect to peers to narrow going forward.”
Read what other experts are saying about:
Energy Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
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.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Blackbird Energy. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Blackbird Energy. Please click here for more information.
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.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Blackbird Energy, a company mentioned in this article.
Disclosures from Pareto Securities AS, Blackbird Energy, Research Report, May 7, 2018
This publication or report has been prepared solely by Pareto Securities Research.
Opinions or suggestions from Pareto Securities Research may deviate from recommendations or opinions presented by other departments or companies in the Pareto Securities Group. The reason may typically be the result of differing time horizons, methodologies, contexts or other factors.
Conflicts of interest
Companies in the Pareto Securities Group, affiliates or staff of companies in the Pareto Securities Group, may perform services for, solicit business from, make a market in, hold long or short positions in, or otherwise be interested in the investments (including derivatives) of any company mentioned in the publication or report.
In addition Pareto Securities Group, or affiliates, may from time to time have a broking, advisory or other relationship with a company which is the subject of or referred to in the relevant Research, including
acting as that company’s official or sponsoring broker and …read more
From:: The Energy Report