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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
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Canadian Value Investing
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CVI - Punch Card Portfolio
  • Energy companies to look at - courtesy of Sprott Inc 1 comment
    Jul 14, 2010 2:10 PM | about stocks: BP, COP, XOM

    I have a position in Sprott Resource Corp. I also like to use the Sprott funds as a place to spot companies to investigate.

    Here are a few that they spoke briefly about to the Globe and Mail.

    But Mr. Nuttall said he looks for companies that can benefit from growing production and reserves, and whose share price can move regardless of the direction of the commodity price. "We look for companies that have current production," he added. "That minimizes my downside if the exploration program is unsuccessful."

    What did we find?

    Most stocks [except for Rodinia Oil Corp. which went public recently] have pulled back slightly after experiencing a nice pop over the past year.

    Among the holdings is Bankers Petroleum Ltd., an oil and gas company with operations in Albania. This company, which has both strong management and a good balance sheet, has been applying Canadian technology to increase production and reserves at the oil field, Mr. Nuttall said.

    The Albanian operation is currently producing 10,000 barrels of oil a day, will exit this year at 15,000 barrels and has "visible growth to produce 40,000 barrels a day over the next four years," he said. Bankers will likely be sold over the next two years and fetch about $12 a share, he added. "If oil increases [from $80 per barrel], that $12 target would increase."

    Mr. Nuttall also sees "tremendous potential" in Delphi Energy Corp., a junior oil and gas company with operations in northwestern Alberta and northeast British Columbia. "We expect that they will have a very meaningful increase in reserves this year," he said. "We see the potential for tripling production, and quadrupling reserves." His target over 18 months is $4 a share.

    He also has an 18-month target of $6 a share for Rock Energy Inc., a junior oil and gas company drilling in the Montney and Nikanassin zones of the Elmworth area of west central Alberta. "If 10 per cent of the acreage in one of these zones proves to be successful, then Rock can triple its reserves," he said. "We think the odds of proving up Montney look very good."

    Disclosure: No position in any stocks mentioned
    Stocks: BP, COP, XOM
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  • raycol42
    , contributor
    Comments (48) | Send Message
     
    In the Adventures In Capitalism blog the author wrote this:

     

    "I looked at Sprott. They have multiple revenue streams beyond just the PHYS vehicle. When i looked at Sprott right after the IPO, I felt that the company was set up in a way that let management cash out of some of their equity--yet still keep much of the economics of the business through salary/bonuses. I do not know if this has changed since then, but at the time, I wasn't interested b/c of this fact. I haven't looked at it in a while so this may have changed. Clearly an increase in revenues will help the business--but will shareholders see any of it?"

     

    Do you know what he is talking about?
    9 Sep 2010, 12:12 PM Reply Like
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