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Devon Shire
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Author of the value investing newsletter detailing the formation of the "Punch Card Portfolio" ( 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
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Canadian Value Investing
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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.

    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

    Stocks: ATPAQ, COP, XOM, CNQ, CHK
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