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Devon Shire
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Author of the value investing newsletter detailing the formation of the "Punch Card Portfolio" (http://valueinvestorcanada.blogspot.com/). Devon Shire is an accountant and an investor with 15 years experience managing a private portfolio. Devon Shire's preferred portfolio management... More
My company:
Canadian Value Investing
My blog:
Canadian Value Investor
My book:
CVI - Punch Card Portfolio
  • Petrobank - At least 100% upside ? 0 comments
    Jun 25, 2010 1:45 PM | about stocks: ATPAQ, COP, XOM, CNQ, CHK
    I recently started in on Petrobakken. Detailed a few points here.

    valueinvestorcanada.blogspot.com/

    Then moved briefly into Petrominerales. And now taking the next step and looking at the parent of the two Petrobank.

    I'm still working and will document for readers, but I feel pretty comfortable that both Petrobakken and Petrominerales are undervalued.

    Here is what Petrobank owns. Each PBG share owns:

    1.04 shares of Petrobakken @ 23 = $23

    .64 shares of Petrominerales @ $27 = 17

    Total is $40

    Current share price of PBG is $40

    But that is not all. PBG owns 100% of Whitesands which is Petrobank's heavy oil business unit that owns a best estimate contingent rerecoverable bitumen resource of 670 million barrels.

    Per the most recent company slideshow the PV10 value of Petrobank's share of Petrobakken and Petrominerales is about $3.5bil. The PV10 value of it's HBU is also about $3.5bil.

    So very rough estimate. Petrobank owns $40 per share of public securites in PBN and PMG, then with the same PV10 it would also own about $40 per share of HBU. That would be about $80 per share vs the current share price of $80.

    But there is more. The also own a potentially very valuable THAI technology that may be a breakthrough on significant improvement on bitumen upgrading.

    And don't forget that both Petrobakken and Petrominerales appear quite undervalued and that both have significant growth in front of them.

    I will be delving deeper into these companies.

    Disclosure: Small position in Petrobakken
    Themes: value investing, energy Stocks: ATPAQ, COP, XOM, CNQ, CHK
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