Seeking Alpha
Newsletter provider, deep value, long/short equity, commodities
Profile| Send Message|
( followers)  

I'll end this series on the overlooked Canadian oil producers with the Part 3. Here are links to Part 1 and Part 2. No matter how long an investor searches the online financial publications for an article about them, he will hardly find one. In the meantime, many articles for the US-based oil and natural gas producers are being released on a weekly basis. I think it is quite unfair as the following companies are proven producers with consistent production and growth year-over-year. The other contributors may ignore or pass them and I would like to cover this gap.

In addition, the majority of them have lower ratios than the US-based peers according to my analysis below. So let's start:

1) Crew Energy (OTCPK:CWEGF): Crew holds 984,000 net acres at Princess of Alberta (light oil), in Lloydminster of Saskatchewan (heavy oil) and in British Columbia (natural gas). The core area of Crew (Princess) is adjacent to the core area of Terra Energy (OTC:TTRHF) which managed to sell some assets few days ago. As Terra will use the money to pay off its long term debt, it will be very undervalued then as it has been mentioned in one of my recent articles.

Crew produces 26,300 boepd (52% oil and liquids) currently. The Enterprise Value (NYSE:EV) is $980M currently so it trades for $37,300 per flowing barrel.

The current market cap is $800M, PBV=0.7 and the annualized FFO is $180M, so the company trades 4.4x its FFO annualized.

The long term debt stands at $330M in a bank facility of $430M so the DCF ratio is 1.8. It has 2P reserves of 137.4 MMboe so the company trade for $7/Mboe.

The operating netback is almost $20/boe assuming WTI at C$85 per barrel and WCS at $70 per barrel. The insiders' ownership is 8% (diluted). According to regulatory filings, there are no purchases or dispositions from the insiders during the last 3 months. The fund Natural Gas Partners sold part of its stake lately.

From a forward looking standpoint, the company guides for an exit 2012 production rate of over 28,000 boepd.

2) Longview Oil (OTC:LGVWF): Longview is a spin off from Advantage Oil (NYSE:AAV) which has also been captured in one of my articles. After this spin off, Advantage kept the natural gas part and Longview took the oily part.

Advantage Oil still holds 45% of Longview and makes the management of Longview. Longview and Advantage have also entered into a Technical Services Agreement, which provides for the shared services required to manage Longview's activities and govern the allocation of general and administrative expenses between the parties. As a result, Longview has access to a broader range of technical and administrative personnel than would otherwise be available to an entity of a similar size and Longview will benefit from Advantage's experience and knowledge relating to its assets. The aforementioned Technical Services Agreement with Advantage will also assist Lonview in maintaining lower than average general and administrative costs on a per unit of production basis. That being said, Longview's corporate developments and operational future is strongly associated with Advantage.

Longview holds 190,000 net acres in West Central Alberta, Southeast Saskatchewan and the Lloydminster area of Saskatchewan and it is a dividend payer ($0.60 per year) so the income investors will like this 9,5% annual yield. It produces 6,100 boepd (75% oil and liquids) currently. EV is $415M currently so it trades for $68,000/boepd.

The current market cap is $300M, PBV=1.1 and the annualized FFO is $60M, so the company trades 5x its FFO annualized.

The long term debt stands at $115M so the DCF ratio is almost 2. It has 2P reserves of 38 MMboe so the company trades for $10.9/Mboe. The operating netback is $26/boe. According to regulatory filings, there are zero insiders' purchases or dispositions during the last 2 months.

The company guides for an average production of 6,200 boepd (76% oil and liquids) for 2012.

3) Marquee Energy (SKWEF.PK): Marquee holds 147,000 net acres in Pembina, Coutts, Michichi and Lloydminster areas of Alberta. It produces 2,500 boepd (55% oil and liquids) currently.

EV is $78M currently so it trades for around $31,000/boepd. The current market cap is $48M, PBV=0.5 and the annualized FFO is $6M. As a result, the company trades 8x its FFO annualized.

The net debt stands at $30M after the recent sale of a property in Willesden Green so the DCF ratio is as high as 5.

It has 2P reserves of 9.5 MMboe (the latest acquisition and disposition included) so the company trades for $8.2/Mboe.

The operating netback is $20/boe. The insiders' ownership is 6.3%. According to regulatory filings, there is one insider who has been buying during the last 2 months.

Marquee has not provided any guidance for 2012 thus far.

4) TriOil Resources (OTC:TRIAF): TriOil is a light oil producer with 94,530 net acres in Alberta. It produces 3,000 boepd (80% oil and liquids) currently. After the recent placement, EV is $180M currently so it trades for $60,000/boepd.

The current market cap is $180M, PBV=0.9 and the annualized FFO is $30M, so the company trades 6x its FFO annualized.

The company has zero debt in an undrawn bank line of $50M. It has 2P reserves of 10.25 MMboe so the company trade for $18/Mboe.

The operating netback is almost $40/boe. The insiders' ownership is just 2%. According to regulatory filings, there are zero insiders' purchases or dispositions during the last 2 months.

TriOil guides that it will meet its 2012 exit production target of 3,400-3,600 boepd (80% oil and liquids).

5) Freehold Royalties (OTCPK:FRHLF): Freehold holds significant land in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. It produces 8,700 boepd (64% oil and liquids) and it pays C$1.68 dividend annually which is an 8% annual yield. The income investors will definitely like this yield. EV is $1.39B currently so it trades for $159,000/boepd.

The current market cap is $1.36B, PBV=4.25 and the annualized FFO is $100M, so the company trades 13.6x its FFO annualized.

The long term debt stands at $25M so the DCF ratio is as low as 0.25.

It has 2P reserves of 22.2 MMboe so the company trades for $62.4 per Mboe. The operating netback is $46/boe. According to regulatory filings, one insider has been buying shares during the last 2 months.

Freehold guides for an average 2012 production of 8,600 boepd (64% oil and liquids).

Disclaimer: This article is not an investment recommendation and does not provide a view on the value or price direction of any security. Any analysis presented in this article is illustrative in nature, is based on an incomplete set of information and has limitations to its accuracy and is not meant to be relied upon for investment decisions. Please consult a qualified investment professional for advice on your own investment strategy.

Source: Overlooked Oil-Weighted Companies Of The Canadian Oil Patch (Part 3)