Oil and Gas Players Back in the Game Message from the President
Total Page:16
File Type:pdf, Size:1020Kb
iradesso QUARTERLY Q1 2008 CANADIAN OIL & GAS COMPARISON FINANCIAL & OPERATING RESULTS for 65 Juniors & 27 Intermediates Featuring Updated Profiles From Juniors & Intermediates Oil and gas players back in the game Message from the President OIL AND GAS PLAYERS Round the Bases For Investors What a difference a year makes. While most oil and gas players of 2008, the second highest quarterly netback on record since struck out in the stock market in 2007, almost everyone is back we started tracking the numbers in the second quarter of in the game so far in 2008. All but eight of the 92 juniors and 2003. The netback for the intermediates was even higher at intermediates compared in this iQ Report experienced an increase $30.36 per boe. in their share or unit price in the first five months of the year. The The Canadian energy sector saw its fair share of adversity in average intermediate producer has produced a total return since 2007. This adversity weeded out some weaker players and set up the beginning of 2008 of 46 percent while the average junior others to come out even stronger. Now companies with reputable producer has returned 49 percent. We’ve defined intermediates as management teams, strong balance sheets and quality assets companies that produce between 10,000 and 100,000 boe/d while are enjoying renewed access to capital, another key component juniors produce between 500 and 10,000 boe/d. We decided it that drives growth in the sector. When a company gets a capital is time to drop the shrinking energy trust category from our report advantage, options open up for making acquisitions and expanding and incorporate remaining trusts into the junior and intermediate drilling programs. In this way, success can beget success. categories. Our team at BMIR works with many energy companies on capital Fortunately or unfortunately, depending how you want to see market strategies and communications. Admittedly our job has things, the run-up in share prices in 2008 only brings most been more enjoyable so far this year with clients and investors in companies a fraction of the way back to share price highs reached better moods. We hope to see this continue. in 2006. Meanwhile, valuation multiples remain at the low end of recent norms, meaning a great amount of upside may remain. For On a personal note, my wife and I were fortunate to welcome example, the average enterprise value versus production of the babies number two and three to our family less than two weeks juniors at $59,254 per boe/d is well below the high of $82,946 ago. Having newborn twins presents its challenges, but it is made per boe/d recorded in the third quarter of 2005. Annualized first much easier by having an excellent team in my office that carries quarter cash flow multiples for the juniors are also relatively low. on work and picks up slack when I’m not able to be there. Thanks The average enterprise value to annualized cash flow for the especially to Geoffrey Vanderburg for his relentless work, but also first quarter of 2008 was 5.8 times compared with 7.1 times in to the rest of the BMIR iQ team – Suzy, Jory, Ken, Penny, Sam, the first quarter of 2007. The average market capitalization to Kelsey and Steph. Your work is much appreciated by me and the annualized cash flow in the first quarter of 2008 was 4.5 times thousands of investors that subscribe to and read this report. compared to 5.6 times in the first quarter of 2007. Best regards, The stock market has rallied, but so have corporate results. The average cash flow netback for the juniors, the oil and gas equivalent of a gross margin, increased from $22.97 per boe in the first quarter of 2007 to $28.33 per boe in the first quarter Peter Knapp table of contents IN THIS ISSUE | JUNE 2008 4 Junior & Intermediate 68 International Oil and Gas Entrance and Exits Comparison 52 Intermediate Comparison Charts 61 Intermediate Data Table 62 Intermediate Profiles Canadian Companies 80 Operating Abroad Emerging Oil Sands Companies 70 3 Highlights 5 Junior Comparison Charts 21 Junior Data Table 81 Measuring Investor Relations Success 22 Junior Profiles 82 Emerging Conventional Companies Watch List 84 Quarterly Earnings: An Easy Read Means Better Analysis 82 Emerging Conventional Companies Watch List ABBREVIATIONS bbls • barrels of oil mcf • thousand cubic feet boe • barrels of oil equivalent mmcf • million cubic feet boe/d • barrels of oil equivalent per day NGLs • natural gas liquids ASSUMPTIONS • Barrels of oil equivalent calculated using 6 mcf = 1 boe • Net debt calculated by including bank debt, debentures, preferred convertible shares and FEATURING working capital. INVESTMENT PROFILES FROM: • For companies with A/B share structures, B shares have been converted to A shares using end-of-period share prices. Accrete Energy........................................................................... 22 • For trusts, exchangable units have been converted to trust units using end-of-period Avery Resources ........................................................................ 72 exchange ratios. Breaker Energy........................................................................... 24 Buffalo Resources ...................................................................... 26 Canext Energy ........................................................................... 28 Crescent Point Energy Trust ........................................................ 62 DISCLAIMER Delphi Energy ........................................................................... 30 DualEx Energy .......................................................................... 74 The information used to compile this report is publicly available. Bryan Mills Iradesso provides the comparison to Galleon Energy .......................................................................... 64 shine the spotlight on this portion of the energy industry, and to communicate the achievements and growth potential Gentry Resources ....................................................................... 32 of the oil and gas companies and trusts. The iQ Report does not constitute a solicitation or recommendation Great Plains Exploration ............................................................. 34 for the purchase or sale of any security; it is provided for information only and is not intended to serve as investment NAL Oil and Gas Trust ................................................................ 66 advice. Bryan Mills Iradesso cannot be held responsible for accuracy and all readers are encouraged to conduct their One Exploration ........................................................................ 36 own research. This report is provided by Bryan Mills Iradesso as a service to the reader without responsibility for accuracy. Petrolifera Petroleum ................................................................. 76 Bryan Mills Iradesso must be credited with developing the iQ Report if any part of it is reproduced. The companies that Petro-Reef Resources ................................................................. 38 have provided a corporate profile for this report have paid Redcliffe Exploration ................................................................. 40 Bryan Mills Iradesso a fee. Reece Energy Exploration ............................................................ 42 Terra Energy ..................................................................................... 44 TransGlobe Energy ............................................................................. 46 Upper Lake Oil and Gas .............................................................. 48 Winstar Resources ..................................................................... 78 PUBLICATIONS MAIL AGREEMENT NO. 41045505 RETURN UNDELIVERABLE CANADIAN ADDRESSES TO: Yoho Resources ......................................................................... 50 BRYAN MILLS IRADESSO 400, 805 - 10 AVENUE SW CALGARY AB T2R 0B4 2 BRYAN MILLS IRADESSO QUARTERLY REPORT - Q1 2008 HIGHLIGHTS JUNE 2008 / VOL. 13 There is a resurgence going on in the intermediate sector. The EDITOR 27 intermediate Canadian producers had total Q1 production Geoffrey Vanderburg of 771,000 boe/d. Twelve of the intermediates are structured as corporations with only 15 still structured as income trusts. PRESIDENT 12/15 Peter Knapp Another handful of corporations seem poised to move from the page 53 junior sector into the intermediate ranks. This shift to corporate DESIGNER Suzy Thomas structure for intermediates translates to renewed hunger for growth by acquisitions and capital investments. RESEARCHERS & CONTRIBUTORS Penny Antoniuk, Jory Debenham, Peter Knapp, Samantha Marcelo, Stephanie Mesher, Kelsey Mullen, Geoffrey Of the 65 junior Canadian oil and gas companies, 45 percent Vanderburg and Ken Wetherell reported positive earnings for Q1, while the remaining 55 percent had a loss for the period. Meanwhile 63 percent of PRODUCTION COORDINATOR Ava Vigna 45 intermediates reported positive earnings. In a period of record high oil prices, these numbers emphasize two things. First, oil PRINTER and gas is an expensive business in Canada. Second, this sector McAra Printing is more weighted to natural gas prices than oil. RELEASE SCHEDULE The median junior oil and gas company’s production by volume is weighted 71 percent to natural gas versus oil and liquids. As Q2 2008 Release: such, this group is benefiting immensely from a run up in natural Week of September 8, 2008 gas prices from around $7/mcf at the beginning of the year to 71 around