# Petrobakken Energy Ltd. (PBN) vs Crescent Point Energy Corp. (CPG)



## beans

I own CPG, however PBN is getting stupidly low... things have to turn around at some point. is anyone thinking of taking p a position, or adding! earnings should be reported soon... but heck, i am a bit of a gambler.

If anyone would care to share their insight, i would greatly appreciate it.

currently ruining my finances from berlin!

beans


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## gibor365

beans said:


> I own CPG, however PBN is getting stupidly low... things have to turn around at some point. is anyone thinking of taking p a position, or adding! earnings should be reported soon... but heck, i am a bit of a gambler.
> 
> If anyone would care to share their insight, i would greatly appreciate it.
> 
> currently ruining my finances from berlin!
> 
> beans


I own both, and I'd add to both 50/50 if i had money available....


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## KaeJS

I like CPG. Own 400.

PBN didnt please me when I had it.

PBN seems to be in a consistent downtrend and has lost 22.39% YTD

CPG is not in a consistent downtrend and has only lost 5.05% YTD

CPG has a slightly higher yield and my thoughts are that CPG is just on a correction (as is everything else, getting slaughtered, oil, etc) but definitely has that potential to regain what it has lost.

I just don't see it with PBN...


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## andrewf

I had CPG. I sold is around $45 a few months ago. Mostly because oil prices were unsustainable, and I had a nice gain. I'm also trying to get away from holding individual companies. It seems easier to be unemotional about ETFs--I find you get attached the companies or their stories and it can cloud your judgment.


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## Financial Cents

andrewf said:


> It seems easier to be unemotional about ETFs--I find you get attached the companies or their stories and it can cloud your judgment.


Are you not planning to buy and hold at least a few stocks anymore andrew?


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## andrewf

I'm enrolled in a share ownership program with my employer, which keeps their shares rolling in. I usually sell once a year or so when the stock breaks trend. It'd be a lot more challenging if the company was in a downtrend.

I may still dabble in a few stocks, but it will be a small part of my portfolio. I've already gotten it down to <20% of my portfolio, looking to get it to 5 or 10%. I currently have MFC, for instance, at an ACB around where it is now price-wise. I think the company has potential, but it might not be realized for 5 years. I'd rather not care what happens to MFC.


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## dubmac

Agree with andrewf...I'm choosing fewer stocks and more ETF's ...
anyway, wrt PBN and CPG, I would advise against PBN. I bought 5 months ago when it hit its 1 yr low. I'm down 13%, and plan to sell anytime soon. I suggest that you explore the discussion on investor village - there is much information on why production targets have not been met (too wet, also the fact that many of the oil reserves are held in deposits that require "fracking", and fracking is under much scrutiny these days by the industry and gov't). Bottom line, PBN's production forecasts are lower than CPG. CPG has it's own issues (ie: dividend dependent on new share issues -not on growth within the company). But my CPG holdings are up 25% since I purchased - will hold for a while yet...Check out investor village for DD 

http://www.investorvillage.com/smbd.asp?pt=m&mb=16274


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## KaeJS

CPG up 3% today.

PBN up 1% today.


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## humble_pie

andrew how so you "had" cpg but sold it "a few months ago."

this means you would have bought it at a time not so long ago when you were guffawing & scoffing & jeering at individual stock pickers like myself who dared to say they could do better than the indexes.

and you were bombasting incessantly about how only indexed etfs could match the market over time therefore everybody else who was not a hedge fund was a dead loser.

now you are claiming that you were a closet stock-picker after all ? what a hypocrite. And here i always thought you were a realio honest kind of guy ...


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## andrewf

I had CPG since shortly after it converted.


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## andrewf

Oh, and I didn't buy it because I thought it would beat the index. It seemed like a pretty safe and stable company with less volatility than the market. All still true.


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## humble_pie

so if you were secretly holding crescent point and a hand-picked portfolio of other stocks, why did you spend so much time guffawing, scoffing and jeering at anyone who dared to deviate from the indexes that, you insisted (complete w countless footnotes) rule all with an iron hand. Deviants other than hedge funds were all losers, you said. No exceptions, you said.

unfortunately, i for one have difficulty believing you were ever a holder of cpg since shortly after it converted to corporation. That was years ago. You have zero history here of any interest in this company, either as original unit trust or as subsequent corporation. You may have snuffled up some shares reasonably recently in a copycat reaction after reading what was being posted in this forum. I myself have a traceable pro-cpg record here that dates back to 2009. Were you copying me. Andrew.


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## andrewf

What, you want me to post my account summary?

At the point we had that debate, I was in the process of moving my holdings into index funds.

I got burned on a couple of companies that seemed safe, and I realized that for some average joe like me, it was pretty pointless trying to beat the market. I didn't want to become a part time analyst, and I don't think it would have helped me much anyway. 

You also seem to be torquing what I said. I never said that no one ever beats the index. Clearly some do. Some kids make the NHL, doesn't make putting your kid in hockey a good retirement plan.

Sorry if you think I need to go on the forum to beat the drum for a company just to hold it. I also have held some Rogers Sugar for a few years, and never mentioned it until this post. I comment on interesting companies, and tended to invest in boring ones. I comment on RIM, but I wouldn't try to trade it (beyond what I have through XIU).


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## andrewf

CPG converted in late 2009. As I recall, I bought it around $40 in November 2009. I collected dividends for a bit over a year and sold for a slight gain. I'm not exactly advertising my genius here. I would have done better with XIU over the time.


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## dubmac

I see that Brian Acker is back at it..pushing the "Don't Buy" signal on CPG in stockchase.ca...seems like he does this every 4-5 months, even though the stock has run up quite a bit despite his opinion.


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## Betzy

So PBN just released Q1 profit report and its not good, stock has taken another hit, now I wish i had sold this when I was 3k down instead of 5k now. I already averaged down once and have not big enough ones to do it again, plus no cash right now.
Anyone have news of this turning around?


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## gibor365

Betzy said:


> So PBN just released Q1 profit report and its not good, stock has taken another hit, now I wish i had sold this when I was 3k down instead of 5k now. I already averaged down once and have not big enough ones to do it again, plus no cash right now.
> Anyone have news of this turning around?


This was last drop for me. I sold it 1.5K down. Yes, should've sell it earlier. Last hope was Q1 that was sux. I don't believe it will be some improvment in summer


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## dubmac

check out some of the PBN posts on investor village
http://www.investorvillage.com/smbd.asp?pt=m&mb=16274
I plan on selling sometime soon & taking about a 10% loss.


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## al42

I had a stop loss set on this @ $17.00 and it got triggered early this morning.
Down a little more than you Betzy so I feel your pain.
From what I've been reading looks like the downward pressure will continue at least until after the 2nd qtr. I will be watching and hopefully be getting back in under $16.00. It almost happened today....maybe tomorrow?


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## gibor365

al42 said:


> I had a stop loss set on this @ $17.00 and it got triggered early this morning.


I should've sell it 1st thing in the morning. I had a little hope and set stop limit on 3rd support level, so sold it only for $16.68...


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## Freedom45

So at what point does everyone feel PBN to be a buy again? I'm considering jumping in somewhere around the $16 level if it keeps sliding.


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## davext

I might consider buying it when/if it stops hitting new lows.


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## gibor365

Freedom45 said:


> So at what point does everyone feel PBN to be a buy again? I'm considering jumping in somewhere around the $16 level if it keeps sliding.


I think much lower, today it already hit 15.57 , I think "jumping" is can be good below 14


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## Ethan

I've been watching PBN for a while now, I know several people involved in the oil business in SE Saskatchewan that are very bullish on PBN. I am waiting for their Q2 results to be released, I can't see how any driller is going to hit their drilling targets in the Bakken play this spring given the flooding we've been having in SE Saskatchewan:

http://www.leaderpost.com/news/Bienfait+state+emergency/4769704/story.html

My expectations are for a dissapointing Q2 (results released early August), at which point the shares will pull back further and I'll consider establishing a position.


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## Ethan

To add to my last post, there are still several road bans in effect in SE Saskatchewan making it difficult for the rigs to move equipment around. There are provincial road bans in Tecumseh, Elcapo and Wolsely. I'm not sure about municipal road bans but I imagine there are several in place given the wet conditions out here.

http://www.highways.gov.sk.ca/adx/a...,Documents&MediaID=4825&Filename=neworder.pdf


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## davext

Is anyone concerned with CPG's ability to keep paying the dividend, after the rosy results today?


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## Freedom45

Bought PBN yesterday @15.73, and still holding CPG.


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## davext

How about VSN? It has been paying monthly dividends steadily for a long time although it hasn't been raised. The dividend is about 7%. 


Seems like something I might want to pick up.


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## gibor365

and how about COP? numbers(P/E, P/S, Payout, dividends growth) are pretty good and it's relatively cheap


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## Betzy

Here is the latest with PBN some shuffling around of management, anyone think this is good or bad?



> PetroBakken Energy Ltd. ("PetroBakken" or the "Corporation") (TSXBN) is pleased to announce that Mr. John D. Wright, currently the Chairman and Chief Executive Officer of the Corporation, will assume the role of President and Chief Executive Officer effective May 24, 2011. With this appointment, Mr. Wright will be further focusing his attention on the long-term strategic direction of PetroBakken, as well as performance accountability for our growth plus yield model and shareholder communications. Mr. Gregg Smith will continue in his role as Chief Operating Officer of the Corporation, focusing on the efficient and innovative technical execution of our business plan through our four Business Units. In connection with this appointment, Mr. Wright will resign as Chairman of the Board of Directors but will continue to serve as a board member. Mr. Kenneth R. McKinnon will assume the role of Chairman of the Board.
> 
> We invite all shareholders to join us for a corporate update at our Annual General Meeting, to be held on Wednesday, May 25, 2011 at 9:00 a.m. in the Main Ballroom of the Metropolitan Center, 333 - 4th Avenue S.W., Calgary, Alberta. The Meeting will be webcast live and available for replay at www.petrobakken.com/investors.


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## Betzy

*In for long*

Ok PBN is getting tanked real bad these days, I originally bought this one for the long term and now I am 8k down, anyone else think this is a good long term stock or should I cut my losses(confirm them) and move on??


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## gibor365

Betzy said:


> Ok PBN is getting tanked real bad these days, I originally bought this one for the long term and now I am 8k down, anyone else think this is a good long term stock or should I cut my losses(confirm them) and move on??


I took my losses month or two ago and walked away. But still hold DAY that also got tanked last month


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## dubmac

Betzy said:


> Ok PBN is getting tanked real bad these days, I originally bought this one for the long term and now I am 8k down, anyone else think this is a good long term stock or should I cut my losses(confirm them) and move on??


that's a tough one to answer. I haven't sold yet - yes it is 25% down from where I bough in, but I wasn't surprised to see it go lower in the summer. My plan is to hold for at least a year - I'd like to see what will happen in Sept-Oct. My expectations for this one are quite low.


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## gibor365

dubmac said:


> that's a tough one to answer. I haven't sold yet - yes it is 25% down from where I bough in, but I wasn't surprised to see it go lower in the summer. My plan is to hold for at least a year - I'd like to see what will happen in Sept-Oct. My expectations for this one are quite low.


I checked now.....if I wouldn't sell PBN, I'd lost another 13%! Too bad I was waiting too long and didn't sell when it dropped first 8% after bad earnings. 
Yes, it's lower in summer, but still it's much lower than for ex CPG and SU, so IMHO better to invest into those 2 if you (btw me 2) expecting improvment in fall.


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## dubmac

sold PBN today...
down 25%...didn't have a big position..still smarts though...what a sh^tb%x of a stock!
I have learned a few things form the experience though...
Note to self - 1. just because a divvie stock (with close proximity to the Bakken) hits a 1 yr low doesn't make it a "good deal". 2. do more thorough DD on all future purchases. 3. prefer ETF's over stocks - less volatility - less prone to wide swings in price.


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## KaeJS

*dubmac*

more importantly:

4. cut your losers short, and let the winners ride.

If it goes down 10%, you should have gotten out. But I know sometimes it can be hard to sell at a lot cause you're always thinking "it cant possibly go lower now..."

I held PBN and sold out. I think I just broke even on it. But I was pissed.


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## al42

*CAPP 2011 Oil & Gas Investment Symposium*

I gave a listen to the presentation they gave at the CAPP 2011 Oil & Gas Investment Symposium, Link below, go to June 15th where you will see Petrobakken. Everything sounds good but we might be still a couple of quarters away from heading back up to over $20.00 where this should be. Everything is getting hammered these days even CPG is down $6 -7 dollars from it's high just a few months ago. Don't think this can go much lower, with close to 40000 boe per day and the highest netback's in the area, $52.42 vs $46.63 for CPG, this share price is stupid. I know their debt is a little high, Liabilities to equity ratio of .8 vs .51 for CPG, but they haven't issue equity like CPG. Every time CPG purchases something or needs money they issue more shares and dilute investors, PBN take on debt but do not dilute investors and listening to the web cast they say the debt is manageable. 
It would not be in their best interest to BS shareholders about this.
I also am aware that their production declines are higher than CPG but from what they are saying this normalizes after a couple of years and should be a normal decline rate of less than 30% after initial 60% decline rate on start up of the well. I'm sure CPG and everyone else must go through this when starting up a well. In CPG's case, they are a few years ahead of PBN with their wells so their production curve has already flattened out. I don't think there is any magic here, everyone must face these start up decline problems?

Anyways enough of what I think, read or listen for your selves.
I had bought in around the $20.00 range and got stopped out at $17.00.
Now I have been averaging back in between $15.00 and $16.00.



http://www.petrobakken.com/wp-content/uploads/2011/06/PBN-2011-06013-CAPPpres.pdf

http://a4.g.akamai.net/f/4/79195/30.../79195/4000/5469/5478/9119/Portal/default.htm


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## Ethan

I'm still bearish short-term on PBN. We are getting hammered with rain in SE Saskatchewan. My girlfriends Dads farm, 10km north of Estevan, is underwater from the spring runoff and rainy spring. See this article on the rainfall we've been getting:

http://www.leaderpost.com/Rainfall+wreaks+more+havoc+summer+without/4964448/story.html

You can't move heavy equipment in this weather, which makes it almost impossible to drill new wells. I'm still expecting weak Q2 interim financials, which will drive the stock lower to a point where I'll consider establishing a position.


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## al42

Thanks for the weather update. I'm hoping that this is already mostly priced into
the share price as this was mentioned by every one in their first qtr. reports.


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## m3s

KaeJS said:


> *dubmac*
> 
> more importantly:
> 
> 4. cut your losers short, and let the winners ride.
> 
> If it goes down 10%, you should have gotten out. But I know sometimes it can be hard to sell at a lot cause you're always thinking "it cant possibly go lower now..."
> 
> I held PBN and sold out. I think I just broke even on it. But I was pissed.


Not sure I like that mentality, sounds more like buy high - sell low. This is the time I start to watch stocks like PBN

Couple things that cross my mind when stocks drop is "would I buy at this price, given the new circumstance?" and mainly I try to buy during opportunities instead of highs. I also consider the dividends which typically makes the drop a lot less severe


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## gibor365

KaeJS said:


> *dubmac*
> 
> more importantly:
> 
> 4. cut your losers short, and let the winners ride.
> 
> If it goes down 10%, you should have gotten out. But I know sometimes it can be hard to sell at a lot cause you're always thinking "it cant possibly go lower now..."
> 
> I held PBN and sold out. I think I just broke even on it. But I was pissed.


It's nice in theory, but in practice - it's different (at least for small investors). If RIM or FFIV faling 15-20% after hours, you don't have a chance cut your losses at 10%.
Even in regular trading hours when I had sell stop limit on CLO, my order didn't get executed as this ETF drop sharply...


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## Ethan

Here's some pictures of a few flooded communities within the Bakken play:

http://www.leaderpost.com/Photos+Heavy+rain+causes+flooding+Weyburn+area/4976178/story.html


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## al42

Looks like I might get stopped out of this once again!!
Came close today...I have a tight stop @$13.5 and it almost got triggered today.
Hard to believe that this is getting pounded so much every day.


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## OptsyEagle

To me, the strategy for PBN is quite simple. Wait till they cut their dividend and then buy the daylights out of it.

I know it's possible that they won't cut their dividend, just like it is possible that it won't snow in Alberta, in January.


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## Financial Cents

OptsyEagle said:


> To me, the strategy for PBN is quite simple. Wait till they cut their dividend and then buy the daylights out of it.
> 
> I know it's possible that they won't cut their dividend, just like it is possible that it won't snow in Alberta, in January.


Funny.

This isn't funny:


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## al42

I hear what you're saying but Wright did say at the CAPP conference that's there is a chance that they will increase the Dividend not reduce it.
If they were to reduce it I can only imagine what would happen to the Share Price. It would not be pretty. And to be honest I was really shocked when he said this. Guess we'll have to wait and see what happens especially knowing what is going on out west with all the rain and flooding.








OptsyEagle said:


> To me, the strategy for PBN is quite simple. Wait till they cut their dividend and then buy the daylights out of it.
> 
> I know it's possible that they won't cut their dividend, just like it is possible that it won't snow in Alberta, in January.


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## al42

Looking back at an article from August of 2009 what has really changed other than they purchased Berens and Result and added to their debt? 

http://oilandgas-investments.com/2009/oil-stocks/tristar-bought-out-at-1475-should-we-sell-or-hold/

TriStar bought out at $14.75 – should we sell or hold?

by Keith Schaefer on August 5, 2009

Petrobank Energy and Resources (PBG-TSX; $35.97) announced yesterday it was creating a 37,000 bopd Bakken-focused oil producer by merging its Canadian Business Unit (CBU) with TriStar Oil and Gas (TOG-TSX; $11.51) to create a new company, Petrobakken.

The cash and stock transaction gives TriStar a value of $14.75 cash, a 29% premium over the previous 10 days weighted average price. For my Bulletin subscribers, it was a 35% gain in one month on TriStar, since I bought the stock at $10.70 on July 2, and profiled it in my second issue. (My second stock purchase from that issue is up 71%.)

Should investors take their quick profits or hold on? At first blush it has all the hallmarks of a Bulletin stock selection:

-oil weighted

-low cost, high profit oil

-large undeveloped land position – over 1300 low-to-no risk undeveloped well locations

-debt to cash flow ratio will be less than 1:1

But the global oil price has been on a steep rise while the economy still languishes and crude stocks in the US are up. If the global oil price has a serious pullback, no stock will be immune.

The press release says the $14.75 offer is worth $3.75 cash and a 0.3989 Petrobakken share, or $27.57 in the new company (total value=$31.32 per TOG share). Let’s take a quick look at what the pro-forma numbers for a Petrobakken valuation might show:

These are numbers from the press release and me:

Shares Issued 172 million

Production 37000 boe/d, 95% oil

Dividend $0.96/year

Debt*(my number) $570 million (my number)

Annual cash flow $702.2 million (my number, based on US$70 oil and US$-CAD$ of 1:1)

*(They will have $950 million in debt before they sell off 9500 boe/d production in Alberta assets, 56% of which is natural gas. If they conservatively receive $40,000 per flowing barrel (I see that several junior producers with 50/50 gas/oil production are trading at an average enterprise value of $42,000) they would receive $380 million, leaving $570 million debt.)

What should this company trade at? My numbers show Tristar was bought out at $2.73 billion, or $109,200 per flowing barrel, so it should not trade for less than that – otherwise, why merge? As of July 31, BMO Nesbitt Burns shows Crescent Point’s (CPG-TSX) trades at about $155,000 per flowing barrel. Crescent Point is the best comparable as they have similar production levels, costs and dividends.

Management believes their $0.96 dividend will be 3%, which equates to a $32 share price. The valuation of my remaining stock in the new company is $27.57, so if this $32/share valuation makes sense, I will hold it. This gives the company a market cap of $32 x 172M=$5.5 billion, and an enterprise value (market cap $5.5 B+ debt $570M) of $6.07 billion.

Divide that by 37000 boe/d production and you get a valuation of $164,162 per flowing barrel. Petrobakken will be 5% gas, and CPG has 13% gas, so that incremental value makes sense, but I would suggest there is not much room in this metric for increased valuation.

Another metric the industry uses is Enterprise Value over Cash Flow, which my numbers show 8.6x for the new Petrobakken. This is just above average in the Canadian oil patch – but the comparables are mostly gas weighted companies. I would easily expect the heavily oil weighted Petrobakken to get a 10-11x multiple. So even at $32/share, I think there’s room for an increased valuation.

On a cash flow basis, my $702 million annual cash flow divided by 172 million shares=$4.08 cash flow per share. $32 would be just under 8x cash flow, compared to Crescent Point’s 8.5-9x. So there is room for increased valuation there too.

SO….CONCLUSION…I hope you were able to stay with me through all those numbers. I’m holding my stock, now valued at $27.57, because even at $32 – another 16% for me and subscribers who bought TOG – the stock appears to have some valuation room, even without growth.

As long as the global oil price doesn’t fall into the toilet again – which I see as unlikely (this market is not just about fundamentals!) – then Petrobakken’s growth should get recognized in the market over the coming years as these 1300 low cost, undeveloped Bakken locations get drilled. The new trading symbol will be PBN:TSX.

Really, what these two companies have done with Petrobakken is give North American institutional investors a second way to play the Bakken, after Crescent Point Energy. CPG has slightly more production, slightly lower costs, slightly higher dividend than Petrobakken.

Again, well done subscribers.

Lastly, I leave readers with a question: What Canadian listed junior oil company is one of the last significant Bakken players, sits debt free, and is likely the next takeover candidate? Subscribe and find out!


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## OptsyEagle

I don't think anyone is disputing that Petrobakken is undervalued. The problem is that this company has only two choices. The 1st is to cut the dividend very, very soon. This of course, usually results in a share price pummel and hence many investors believing this are exiting the story. Their second choice is to keep the dividend and keep piling on more debt. This will weaken the company and since inevitably they will hit a debt wall, they will be forced to either issue shares at very dilutive rates, sell off their best assets or default on their debts. This of course makes a share pummel look like a positive in comparison to what would happen to existing shareholders in the 2nd scenerio. Again investors are exiting the story in fear of this scenerio.

Management thinks there is a third. That miraculously the stock market will significantly raise the share price, allowing them to issue stock at accretive levels and keep the dividend ponzi scheme going. That will not happen. They will most likely see this before 2011 is over.

As I said above, when they cut the dividend, hopefully the share price will drop some more, but I wouldn't even wait until the end of the day, just buy the daylights out of it. It is indeed undervalued. Until then, stay away from it because until they cut the dividend they are only headed to scenerio number 2 (debt default or distressed asset sales or dilutive share issues).

The above is of course, only my opinion, however, I suspect it is also many others. Good luck to you.


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## Betzy

Update as of July 17th: Shares at $12.53
Dividend still holding for 07/27/11 $0.96
Does anyone know on what day of the month they announce the div release?


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## al42

Already announced on July 15th.

http://www.marketwatch.com/story/petrobakken-confirms-july-dividend-2011-07-15?reflink=MW_news_stmp







Betzy said:


> Update as of July 17th: Shares at $12.53
> Dividend still holding for 07/27/11 $0.96
> Does anyone know on what day of the month they announce the div release?


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## Betzy

Wow what's going on with this one, its up 15% today!!!


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## avrex

That jump occurred on no news that I can find.
The 15% jump only brings me back to the break even point of where I bought bought Petrobank Energy & Resources Ltd. (PBG.TO) a month ago.


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## gibor365

avrex said:


> That jump occurred on no news that I can find.
> The 15% jump only brings me back to the break even point of where I bought bought Petrobank Energy & Resources Ltd. (PBG.TO) a month ago.


I also didn't find any news .. what is going on?


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## al42

This is all I could find. Not really related to PBN but both PBN and PBG seem to trade very close to each other these days.
Kind of happy I took off my $13.50 stop last week. Only need 5 more days like yesterday and I might be in the money on this one.


Petrobank to Reach Full Saskatchewan Oil Output in 12 Months
By Jeremy van Loon - Jul 19, 2011
Petrobank Energy & Resources Ltd. (PBG), the Canadian oil developer with projects in three provinces, will reach full production at a C$100 million ($105 million) bitumen-extraction project in Saskatchewan in 12 months, Chief Financial Officer Peter Cheung said.
The Kerrobert facility will have output of 7,000 barrels a day with reserves of 3 million barrels, Cheung said today in a telephone interview. The project will be profitable with production of as few as 200 barrels a day, he said.
The company, based in Calgary, is using a technology that injects air into underground reserves to recover more of the oil, he said.
Petrobank gained the most in more than two years, climbing C$1.97, or 15 percent, to C$15.16 at 4 p.m. on the Toronto Stock Exchange. It was the biggest increase since November 2008.
Saskatchewan has Canada’s second-largest reserves of oil, including bitumen deposits in the northwest of the province and the Bakken formation in the southern region, according to the National Energy Board. About 95 percent of Canada’s crude reserves are in the neighboring province of Alberta.
To contact the reporter on this story:


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## al42

Article from the Calgary Herald.

CALGARY — A sudden sharp jolt upwards in the stock price of PetroBakken Energy Ltd. and 59 per cent owner Petrobank Energy and Resources on Tuesday is being attributed to short sellers covering their positions.

The two Calgary-based companies — PetroBakken was spun out of Petrobank in 2009 primarily to develop Saskatchewan Bakken oil assets — each rose by about 15 per cent within an hour of the market opening in Toronto.

PetroBakken closed at $14.31, up $1.91 or 15.4 per cent. Petrobank ended the day at $15.16, up $1.97 or 14.9 per cent.

Both stocks have been beaten up on the market so far this year — even after Tuesday’s rise, PetroBakken was down 34 per cent and Petrobank off by 40 per cent so far in 2011.

In short selling, an investor borrows securities and sells them, hoping to return an equal amount of shares at some point in the future when the price is lower.

Analyst Alan Knowles of Haywood Securities, who rates both companies a buy, said the stocks were at a lower price than they deserved to be, despite some production misses by PetroBakken.

“There was a large short position on the stock so I’m wondering if someone hasn’t decided, well, it’s not going to go any lower,” he said.

“The time has come. They’re (PetroBakken) drilling again, the wet weather in Alberta and Saskatchewan is no longer a factor and they’re pretty active again ... someone is either acquiring a position or they’re covering shorts and I think it’s the latter.”

He added positive news on Tuesday by Bellatrix Exploration Ltd. regarding two wells in the Alberta Cardium formation may have helped PetroBakken because of its extensive Cardium land position.

Petrobank chief financial officer Peter Cheung said there is no new information from his company that would have sparked interest in the shares.

He agreed the short-seller explanation is possible.

Cheung said a story published by Bloomberg Tuesday suggesting the company has a new Bakken discovery in Saskatchewan that could be producing 7,000 barrels of oil a day in a year was inaccurate.

Rather, Petrobank is ramping up a previously announced 10-well-pair addition to its two-well-pair Kerrobert, Sask., heavy oil pilot project and the eventual target of the project will be 7,000 bpd, he said.

The project uses Petrobank’s patented THAI or toe-to-heel air injection technology to enhance recovery. All the wells are expected to be producing by mid-July but there will be a year-long ramp up to full production.

The Bloomberg story, which was later corrected, was circulated three hours after the stock began to rise.

Read more: http://www.calgaryherald.com/busine...n+stock+jump/5127189/story.html#ixzz1Seqz6FU8


----------



## Betzy

Good info al42 thanks. I only wish I one day am one pf these traders who can move a stock this much by short selling!!


----------



## Betzy

So earning are great for(PBN) second Q, Will it continue to slide with the market or will it rally soon? Any thoughts


----------



## al42

I wish I new...the market is treating this like an Oil Sands play not Sweet Light Crude that it is.

Now I wish I would have left my $13.5 stop on but at least it looks like the dividend is safe for now. And it looks like production will start increasing in Q3 and Q4. Price should start moving up then.


----------



## al42

Picked this up from another site. I didn't have time to listen to the CC but I will try later.

Here are a few highlights from today's Q2 conference call:

1) Management says that hedging is in place for 2012-2014 at between 5600-8000 barrels/day and $77-$127.

2) Many questions about debt. Management suggests payback period of two (2) years and then long-term annuity and possible further capital spending.

3) Question: 650 locations in just the Cardium at 250 Bpd initial and declines to 75-90 Bpd over the long term. PBN must be the most undervalued stock on TSE at present!

4) Management says the value of Petrobank's PBN holdings will be distributed to Petrobank shareholders within the next 2-5 years in a manner similiar to what happened with Petrominerales.

5) Management says current recovery rate is 15% on 1.8 billion known barrels of oil and they hope to improve this to 25-30% with EOR technology. These are hindsight numbers.









Betzy said:


> So earning are great for(PBN) second Q, Will it continue to slide with the market or will it rally soon? Any thoughts


----------



## al42

Betzy said:


> So earning are great for(PBN) second Q, Will it continue to slide with the market or will it rally soon? Any thoughts




http://seekingalpha.com/article/286232-petrobakken-energy-is-poised-to-prove-itself


----------



## Betzy

Pardon the ingnorance but trying to learn all this wonderful analysis lingo,
What does this Mean?
"1) Management says that hedging is in place for 2012-2014 at between 5600-8000 barrels/day and $77-$127."
thanks


----------



## andrewf

It means the company has pre-sold some of their production at those prices through 2014. This gives the company more certainty about its cashflows over that time frame.


----------



## al42

What Andrew said.
This means that aprox. 25% of their current production is hedged at aprox. $100. per barrel.






Betzy said:


> Pardon the ingnorance but trying to learn all this wonderful analysis lingo,
> What does this Mean?
> "1) Management says that hedging is in place for 2012-2014 at between 5600-8000 barrels/day and $77-$127."
> thanks


----------



## KaeJS

CPG Gettin' killed today. Down over 3%

I want to buy 50 more, but I have no $.


----------



## Betzy

And today it was PBN that got killed again!! Down 13% what the Hay is going on??
I know that the dividend hunters could have sold off today but really that much??


----------



## PMREdmonton

Betzy said:


> And today it was PBN that got killed again!! Down 13% what the Hay is going on??
> I know that the dividend hunters could have sold off today but really that much??


Their PB is only 0.5.

They still have a really solid P/E at < 7.

I do know getting their wells running has been tougher than they expected between a new technology that is being used that can increase extractable oil about 5-fold. They were also hurt by the wet spring in the Prairies.

I am really hoping they are having a bangout quarter with those issues resolved.

I am still bullish and bought 250 more shares today.

If they drop down to 6, I'll buy some 500 more. I am hurting a bit right now as I have a few energy stocks and they have been getting slaughtered lately. My overall portfolio is fairly defensive so many of stocks are holding up well.


----------



## dubmac

I'm no expert but I think it's just a matter of time before PBN announces a cut to it's dividend. What is it's payout ratio?...probably still not too good. be careful with that one. The news at this site below is old (may 2011) but still worth a look.
http://ca.validea.com/stocks/news/pbndaviddreman5122011.htm


----------



## PMREdmonton

dubmac said:


> I'm no expert but I think it's just a matter of time before PBN announces a cut to it's dividend. What is it's payout ratio?...probably still not too good. be careful with that one. The news at this site below is old (may 2011) but still worth a look.
> http://ca.validea.com/stocks/news/pbndaviddreman5122011.htm


Their net income in their last quarter was $0.56 so they easily covered the $0.24 in dividend they paid out.

Their income in the last year was $1.20 so they covered the $0.96 in dividends they paid out but with a high payout ratio.

Part of the problem for them is they took bought lots of land. They started to drill but drilling was held up for a new fracking technology using natural gas which has increased extractable reserves by a wide margin. Once they solved this issue they were held back by a wet spring but by the end of the last quarter oil production had markedly improved.

I do agree they may be squeezed for the next little while but I'm still very bullish on the Bakken region and the firm and management does have a history of success in the past.

I know it will be a bumpy ride. They are down around 75% from a couple of years ago but I still believe in the value in oil plays and this particular oil play. I do hope they can avoid share dilution and this may be possible if they really have things going now.

I do know lots of firms have been having success in the Dakota Bakken and I think PBN and CPG will have success here before all is said and done.

Anyhow, this is a speculative play and is only about 2% of my assets so I'm not that worried about it even if it goes belly up.


----------



## KaeJS

Some guy on BNN today during Market Call said he thinks PBN is finished.

Maybe something to take into consideration...


----------



## PMREdmonton

KaeJS said:


> Some guy on BNN today during Market Call said he thinks PBN is finished.
> 
> Maybe something to take into consideration...


OTOH, there is evidence that stocks beat the market after downgrades.

The current account ratio is a concern but seeing as how they are profitable and large ($2B market cap) I don't quite see how they could be finished.

I could see them having to do a dilution or sell part of their assets to raise funds (they bought a big lot in the Cardium play) but I don't see how they could be finished.

YLO is basically finished, PBN isn't yet.


----------



## Argonaut

Petrobakken constantly making 52 week lows. Why would one punish themselves by owning it? Grab a pipeline for stable yield, grab a Chevron for oil price exposure.


----------



## dubmac

PMR..why not wait until they release their next quarterly results (I don't know when it is - but it must be soon) - most folks who have responded here are suggesting - in a variety of ways - that your $ may be thrown into a value trap. why not spend a bit longer & do some additional DD. Cardium is the nice play - why not look at CPG or BTX - I'd buy CPG in the 37-39 range ...nice divvie, they do a much better job of hedging, better land....better company


----------



## al42

KaeJS said:


> Some guy on BNN today during Market Call said he thinks PBN is finished.
> 
> Maybe something to take into consideration...


Not exactly what he said...he said they will probably survive but will need to do something about their debt. Either cut the divy or sell some assets.

WAIT	8.190	John Stephenson	Will probably not survive in its current form. Will at last have to sell some assets. Eventually the dividend could get cut. He doesn’t see how it goes forward in its current form. 

Thing is that most of these guys don't really follow companies close enough to give comments like this. 

Good article from Seeking Alpha.

http://seekingalpha.com/article/286232-petrobakken-energy-is-poised-to-prove-itself


----------



## Argonaut

http://www.reuters.com/article/2011/09/29/petrobank-idUSL3E7KT2II20110929

Petrobakken might be the single worst energy stock in all of Canada. It now sports a 13.5% dividend yield, but don't worry, the stock drops by that much every day.


----------



## Ethan

dubmac said:


> PMR..why not wait until they release their next quarterly results (I don't know when it is - but it must be soon)


2nd quarter results were released August 8. 3rd quarter results should be released around November 8.

I said back in the spring that I was staying away from this stock until after Q2 results were released due to Saskatchewan's wet spring (particularly in the SE where PBN operates). As I predicted their share price was hammered, but I never thought it would get down to $6.50.

At current pricing and using their Q2 report, the price-book ratio is 0.36. The dividend yield is 14.37% and appears sustainable given Q2 net income of $116 million and dividends of $44M. Q3 results should be greatly improved given the hot and dry summer we've had in SE Saskatchewan.

Risks are a current ratio of 0.78, $85/barrel oil and the fact they are taking on debt. If they stopped expanding and focussed on their current wells they'd be very profitable and cashflow positive.

I think its a good value play.


----------



## Ethan

Update - purchased 100 shares this afternoon @ $6.67


----------



## PMREdmonton

dubmac said:


> PMR..why not wait until they release their next quarterly results (I don't know when it is - but it must be soon) - most folks who have responded here are suggesting - in a variety of ways - that your $ may be thrown into a value trap. why not spend a bit longer & do some additional DD. Cardium is the nice play - why not look at CPG or BTX - I'd buy CPG in the 37-39 range ...nice divvie, they do a much better job of hedging, better land....better company


I know it is risky but the company is generating tremendous cash. Risk assets which are highly leveraged are just getting pounded in the market right now.

They produced somewhere around 39 000 bpd in August and projections are 49 000 bpd by December. They have been hammered because they are highly leveraged and had hiccups with their new fracking technique and the miss on productions from getting the new technology running and the wet prairie. Since they are massively growing their output I know that they are not a value trap - their revenues and profits are rapidly increasing unlike most value traps which are dying industries with rapidly falling revenue and profits (see YLO and RIM).

I'm happy to double down on this one at 6.00 and we are almost there now. I just hope we don't have a rapid uptick in price before I get there.

This is a small part of my portfolio and I earn way more money than I need in my job so don't worry about me and my one speculative play. This is the first time I've been convinced that the market has mispriced an asset and I want to claim my first 3-bagger. Even if I miss it isn't a big amount of skin off my back but I think I'm right and the market is wrong right now. All the other companies down there have much higher PE and PB, the market has just grown overly pessimistic on this one but I think the tide has turned.


----------



## gibor365

Argonaut said:


> Petrobakken constantly making 52 week lows. Why would one punish themselves by owning it? Grab a pipeline for stable yield, grab a Chevron for oil price exposure.


and what do you think about BTE ? BTE got hit hard in last 6 months, but historically performs better than CPG and have not bad dividend 5.6%...


----------



## dubmac

PMREdmonton said:


> This is the first time I've been convinced that the market has mispriced an asset and I want to claim my first 3-bagger. Even if I miss it isn't a big amount of skin off my back but I think I'm right and the market is wrong right now
> 
> 
> 
> You may well be right PMR .. I'm more conservative. Maybe take us out for drinks with your winings in 6 months or so?
Click to expand...


----------



## PMREdmonton

gibor said:


> and what do you think about BTE ? BTE got hit hard in last 6 months, but historically performs better than CPG and have not bad dividend 5.6%...


To be honest with you I haven't looked at them before.

One quick thing that I see with them is their earnings don't even come close to covering their dividend. Their payout ratio looks to be close to 200% right now based on the summary info on Google. This is acceptable if they are rapidly increasing their output and investing heavily in capex. I think CPG is in the same camp: paying out high amounts of earnings as more production comes online.

The reason I like PBN is they are producing lots of cash - the market got pessimistic last year from failure to reach targets. This was due to the new fracking they were doing which delayed their drilling. They have it sorted out now and are drilling multiple new wells each month with about 2000 extra bpd coming online each month. Their Cardium land is more productive than originially thought when they bought their acreage. The problem they are having right now is with leverage and I think people are worried they will get caught in a liquidity trap like what happened to many resource plays back in 2008/9. This time even if Greece goes down we aren't highly involved in Europe as a country and Greece especially so I don't think we'll see as big of a falling out here. European banks could get seriously hit and the feeling on the street is that could spread contagion throughout Europe and Europe doesn't have a big enough fund right now set up to save themselves from a bank run.

So I do get the macroeconomic risk to some extent but I think my PBN play will be saved by their cash generation. The only thing that will kill it is a long period of $30 per barrel but I think this is highly unlikely. 

So I'm content to keep buying PBN while everyone wants to sell.

Remember what happened to Teck? I think this is the same story here but on a smaller scale.

I think this stock could be back at $30 by next year which is where it was before their misses in 2010. And that price was based on old perspectives on the Bakken but the Bakken has been more productive than anyone thought way back then.


----------



## avrex

This was one of my worst picks.
I bought back on June 20, when I thought it had bottomed. I have proceeded to lose 57% of my investment. 
I think .... I'm going to continue to hold.

Well at least it doesn't represent 40% of my portfolio like this guy.


----------



## al42

I'm happy to double down on this one at 6.00 and we are almost there now. I just hope we don't have a rapid uptick in price before I get there.

Looks like you might get your wish of below 6 bucks today. This is getting really ugly quick.


----------



## PMREdmonton

al42 said:


> I'm happy to double down on this one at 6.00 and we are almost there now. I just hope we don't have a rapid uptick in price before I get there.
> 
> Looks like you might get your wish of below 6 bucks today. This is getting really ugly quick.


Yep, I couldn't wait anymore and put in an order for 300 more today.


----------



## al42

PMREdmonton said:


> Yep, I couldn't wait anymore and put in an order for 300 more today.


Good luck...I've been caught too many times doubling down on this one.
Fortunately I had stops set for the most part but bought back in at lower levels.
Now I'm holding the bag as i took my stop off @ $13.5 a while ago and as many have been doing, riding this all the way down. Not much point in selling now.


----------



## PMREdmonton

al42 said:


> Good luck...I've been caught too many times doubling down on this one.
> Fortunately I had stops set for the most part but bought back in at lower levels.
> Now I'm holding the bag as i took my stop off @ $13.5 a while ago and as many have been doing, riding this all the way down. Not much point in selling now.


The market is really overreacting.

They are very profitable.

Oil demand is very inelastic and due to supply constraints the price cannot tank very much for very long. Emerging markets are expanding and they need more oil even if the US and Europe are contracting.

Their oil fields are very productive and they are growing output 2000 bpd every month so they will have 25% more production capacity between now and the end of the year.

I would take this as an opportunity now before their next quarterly report which should be a blowout, especially when combined with their guidance.

The Cardium resources will come online later and will also increase their production.

The market has not priced in the new extraction techniques CPG and PBN are using that should increase extractable resources 5-fold.

I can't see you losing any money investing in the stock now if you can hold.


----------



## Betzy

avrex said:


> This was one of my worst picks.
> I bought back on June 20, when I thought it had bottomed. I have proceeded to lose 57% of my investment.
> I think .... I'm going to continue to hold.
> 
> Well at least it doesn't represent 40% of my portfolio like this guy.


Hey Avrex,
I have lost quite a bit on this one too, bought in Mar for $22 road the hill down to $14 got out and then with my amazing ability to time market low's I got back in at $9.60!! Well when you see me at the grocery store in a line, pick any other line since mine WILL be the worst
I bought some Jan calls for $6 strike price so if it does rally i should be able to gain with out buying full shares. 
I cant see how this could tank to $0 but the dividend cut is possible...
At least were not alone on this roller coaster ride.


----------



## HaroldCrump

I haven't followed this company at all, but just reading the posts on this thread, I don't understand all the bullish expectations.
When a stock drops nearly 75% in a year, surely there must be a reason.
Surely, it can't simply be the "market over-reacting".
This sounds like another YLO in the making.

A quick look at their financial snapshot on Google shows sustained and substantial increases in debt and equity issues - maybe that is how they are financing the dividends.


----------



## al42

A quick look at their financial snapshot on Google shows sustained and substantial increases in debt and equity issues - maybe that is how they are financing the dividends. 

Really? As far as I know they haven't issued equity since the IPO. I know they purchased the following companies with a combination of shares and cash,Privateco,Berens Energy, Result Energy and Tri Star Oil & Gas. And also issued a $750 Million convertible note at the beginning of 2010 but that's all I remember. Unlike CPG who go to the market 2 - 3 times a year to raise money.
and this happend just last month again raising $400 Million @ $43.5 per share.

http://www.theglobeandmail.com/globe-investor/news-sources/?date=20110930&archive=cnw&slug=C8030


----------



## Ethan

HaroldCrump said:


> A quick look at their financial snapshot on Google shows sustained and substantial increases in debt and equity issues - maybe that is how they are financing the dividends.


Where did you see substantial increases in equity? They issued a normal course issuer bid on September 12 to buy back up to 5% of the shares over the next 12 months:

http://www.marketwire.com/press-rel...-normal-course-issuer-bid-tsx-pbn-1559967.htm

As for financing the dividend, they don't need debt or equity infusions to pay the dividends. In Q2 PBN had net income of $117M, operating cashflows of $191M and funds flow from operations of $153M. Dividends were $45M. Using any of the above 3 metrics they can comfortably pay their dividend.

The reason their debt is increasing is their investing activities. PBN is buying up more land and starting up more wells. They had $320M in investing activities in Q2 alone. They could easily stop exploring and milk their existing wells if they wanted to reduce their debt exposure. Take a look at the chart on page 22 of their Q2 MD&A, you'll see that assets are increasing at roughly double the pace of debt, if they were losing money the debt would be increasing faster than assets.


----------



## Ethan

al42 said:


> A quick look at their financial snapshot on Google shows sustained and substantial increases in debt and equity issues - maybe that is how they are financing the dividends.
> 
> Really? As far as I know they haven't issued equity since the IPO. I know they purchased the following companies with a combination of shares and cash,Privateco,Berens Energy, Result Energy and Tri Star Oil & Gas. And also issued a $750 Million convertible note at the beginning of 2010 but that's all I remember. Unlike CPG who go to the market 2 - 3 times a year to raise money.
> and this happend just last month again raising $400 Million @ $43.5 per share.
> 
> http://www.theglobeandmail.com/globe-investor/news-sources/?date=20110930&archive=cnw&slug=C8030


CPG is less liquid (current ratio of 0.55 vs. 0.78 for PBN) and their earnings are miniscule (EPS of 0.10 vs. 1.19 for PBN). Crescent point is 25% off its 52 week high, PBN is 73% off its 52 week high. I don’t understand why PBN is getting pummeled and CPG isn’t. CPG is less liquid, makes less money, and has a deficit in their retained earnings account. CPG’s dividends are greater than earnings so their dividends are essentially a return of capital. PBN’s dividends are less than earnings. I’m not sure why analysts are questioning PBN’s ability to maintain their dividend. The analysts should be questioning why CPG is paying dividends at all.


----------



## al42

*Calgary Heald Arlicle.*

http://www.calgaryherald.com/busine...Bakken+stock/5481424/story.html#ixzz1ZSuH1gSm


----------



## al42

Ethan said:


> CPG is less liquid (current ratio of 0.55 vs. 0.78 for PBN) and their earnings are miniscule (EPS of 0.10 vs. 1.19 for PBN). Crescent point is 25% off its 52 week high, PBN is 73% off its 52 week high. I don’t understand why PBN is getting pummeled and CPG isn’t. CPG is less liquid, makes less money, and has a deficit in their retained earnings account. CPG’s dividends are greater than earnings so their dividends are essentially a return of capital. PBN’s dividends are less than earnings. I’m not sure why analysts are questioning PBN’s ability to maintain their dividend. The analysts should be questioning why CPG is paying dividends at all.


I agree with you 100% ...problem is Mr. Market doesn't agree with us!!
Oh well, lets just hope Q3 numbers are better than expected for a change.


----------



## HaroldCrump

Ethan said:


> Where did you see substantial increases in equity?


A quick snapshot:










You could be right of course...I haven't done a deeper analysis.

I'm just saying that since so many folks on this thread are puzzled by why the market is punishing them, it is worthwhile to take a deeper look.
Never jump to the conclusion that the market is wrong for no apparent reason.


----------



## Ethan

HaroldCrump said:


> A quick snapshot:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> You could be right of course...I haven't done a deeper analysis.
> 
> I'm just saying that since so many folks on this thread are puzzled by why the market is punishing them, it is worthwhile to take a deeper look.
> Never jump to the conclusion that the market is wrong for no apparent reason.


PBN has increased their equity over the last two years, but they weren't through equity offerings on the market. PBN bought out several junior oil and gas companies in a combination of stock and cash. In 2010 alone they bought the following companies:

Result Energy Inc. - $141M cash and 11M common shares
Rondo Petroleum - $89M cash and 5.5M common shares
Berens Energy - $252M cash

In 2009 they acquired the following:

Tristar Oil and Gas - $584M cash and 62M common shares

The above accounts for more than the increase in comon shares over the past 2 years. The difference is due to 400K shares issued as incentive pay and in lieu of cash for acquisition costs, less 1.6 million shares retired through normal course issuer bids.

PBN received no cash for any of the shares they issued, therefore they are not issuing equity to pay the dividend.


----------



## al42

Ethan said:


> PBN has increased their equity over the last two years, but they weren't through equity offerings on the market. PBN bought out several junior oil and gas companies in a combination of stock and cash. In 2010 alone they bought the following companies:
> 
> Result Energy Inc. - $141M cash and 11M common shares
> Rondo Petroleum - $89M cash and 5.5M common shares
> Berens Energy - $252M cash
> 
> In 2009 they acquired the following:
> 
> Tristar Oil and Gas - $584M cash and 62M common shares
> 
> The above accounts for more than the increase in comon shares over the past 2 years. The difference is due to 400K shares issued as incentive pay and in lieu of cash for acquisition costs, less 1.6 million shares retired through normal course issuer bids.
> 
> PBN received no cash for any of the shares they issued, therefore they are not issuing equity to pay the dividend.



Just to add to this, they do not have a DRIP as CPG does.
Not yet anyways. Every month CPG dilutes shareholders with the DRIP along with issuing equity a couple times each year. I am really finding it hard to understand why every analyst you listen to has CPG as a top pick and PBN as a dog. If anything looks like a ponzi scheme it's CPG not PBN.


----------



## PMREdmonton

al42 said:


> Just to add to this, they do not have a DRIP as CPG does.
> Not yet anyways. Every month CPG dilutes shareholders with the DRIP along with issuing equity a couple times each year. I am really finding it hard to understand why every analyst you listen to has CPG as a top pick and PBN as a dog. If anything looks like a ponzi scheme it's CPG not PBN.


People have become negative on PBN due to prior estimate misses so in this fear market they have been strongly punished, IMO.

Anyhow, I just look at it as an opportunity to slowly buy shares at the bottom. I think this stock could easily be a five-bagger now. Once they get their production online and the economy stabilizes with oil at 90-110/barrrel this should be a $30 stock at the very least. It may be even worth more if the Cardium is as productive as initial estimates suggest. It is just a relatively young industry using new technology and the market is very fearful right now.


----------



## KaeJS

Wow. PBN has a 14.22% yield right now...


----------



## al42

Operation Update.

http://www.benzinga.com/pressreleas...tional-update-highlighted-by-production-of-ov


----------



## Homerhomer

KaeJS said:


> Wow. PBN has a 14.22% yield right now...


Will be no more once they cut the dividends.


----------



## PMREdmonton

Homerhomer said:


> Will be no more once they cut the dividends.


At this point they could cut a lot and it'd still have a decent yield.

Part of the issue here is they have high capex with all the wells they are drilling. Many of these rigs are bilateral horizontal fracks which cost more upfront compared to a single horizontal frack but it results in significant savings compared to doing two single fracks but gets almost the same production.

I continue to be long PBN and picked up 200 more shares today for my TFSA.


----------



## Homerhomer

PMREdmonton said:


> At this point they could cut a lot and it'd still have a decent yield.
> 
> .


The yield is so high because it's a crappy investment, once the dividends are cut it will still be crappy investment and the yield on cost will decrease which will put more pressure on the stock price. 

Hope for your sake they can turn it around ;-)


----------



## PMREdmonton

Homerhomer said:


> The yield is so high because it's a crappy investment, once the dividends are cut it will still be crappy investment and the yield on cost will decrease which will put more pressure on the stock price.
> 
> Hope for your sake they can turn it around ;-)


I'll be fine either way but thanks for your concern.


----------



## Ethan

PBN up 24% from last weeks low of $6.05. I ended up picking up 400 shares and 1 call option contract last week, I'm feeling pretty good about that investment now 

I also have no plans of selling, I truly expect this stock to be in the high teens within 12 months.


----------



## Betzy

Same boat as Ethan, bought 650 shares at $9.60 sept 23rd, bought some call options for Jan21 12 $6.00 strike and sold some call options to rent out my existing shares while they are low.
Me likes options!


----------



## Ethan

Petrobakken up another 6.8% today to close at $8.01. Up over 30% from last weeks low of $6.05. My options are up 48%


----------



## Argonaut

Congrats to those who have made gains on PBN. But remember, no one ever went broke by following the Steve Miller rule of investing, which is to take the money and run. It seems to me that the company is paying about 3x its earnings in dividends. I wouldn't want to be invited to the beach party when they announce the dividend cut.


----------



## Ethan

Argonaut said:


> Congrats to those who have made gains on PBN. But remember, no one ever went broke by following the Steve Miller rule of investing, which is to take the money and run. It seems to me that the company is paying about 3x its earnings in dividends. I wouldn't want to be invited to the beach party when they announce the dividend cut.


Why does it seem to you that the company paying 3x its earnings in dividends? Look at their Q2 report:

http://www.petrobakken.com/wp-content/uploads/2011/08/PBN-2011-08-09-Q2report-web.pdf

Net income - $116,940k
FFO - $153,353
Operating cashflows - $190,713k
Dividends paid - $(44,947)

Their dividends paid are ~1/3 of any of the above meaures.


----------



## Argonaut

Earnings per share 0.34, annual dividend 0.96.

Also: http://www.theglobeandmail.com/globe-investor/petrobakken-considering-asset-sales/article2189173/


----------



## Ethan

Argonaut said:


> Earnings per share 0.34, annual dividend 0.96.
> 
> Also: http://www.theglobeandmail.com/globe-investor/petrobakken-considering-asset-sales/article2189173/


Where are you getting EPS of $0.34? You keep saying PBN's earnings are 1/3 of dividends but you can't provide any proof of this. Look at page 28 of their Q2 report.

http://www.canadianmoneyforum.com/newreply.php?do=newreply&p=89477

You'll see that for the 3 months ended June 30, 2011 basic and diluted EPS are $0.62. For the 6 months ended June 30, 2011, basic EPS is $0.91 and diluted EPS is $0.91.

The only place I can find EPS of $0.34 is their 2010 annual report. 

http://www.petrobakken.com/wp-content/uploads/2011/04/Petrobakken-AR-2010-SEDar-V4f.pdf

The income statement on page 53 shows 2009 diluted EPS of $0.34. Is that what you're looking at? Are you comparing 2009 diluted EPS to the 2011 dividend?


----------



## Homerhomer

Ethan said:


> Where are you getting EPS of $0.34? You keep saying PBN's earnings are 1/3 of dividends but you can't provide any proof of this. ?


2010 earnings 0.26, dividends paid 0.96, that's bad no matter how you slice it.

One quarter of good dividend ratio doesn't make a good investment and when company tells you that they are short on cash then they are short on cash.


----------



## Argonaut

Globe & Mail and Google give EPS of 0.34, and Yahoo gives EPS of 0.26. I can't really be bothered to pour over quarterly results of a company I have no interest in. But straight from the horses mouth, the CEO has said that they need to sell assets or cut the dividend.


----------



## doctrine

They have some red flags in their earnings report. Such as $1.5 billion in goodwill on their assets, or 25% of total assets and equal to their entire market cap.


----------



## KaeJS

The only reason PBN.TO is increasing in value is because its ridiculously cheap and people are chasing yield.

It is not sustainable.

I repeat; it is not sustainable.


----------



## Ethan

KaeJS said:


> The only reason PBN.TO is increasing in value is because its ridiculously cheap and people are chasing yield.
> 
> It is not sustainable.
> 
> I repeat; it is not sustainable.


Why is it not sustainable?


----------



## Ethan

doctrine said:


> They have some red flags in their earnings report. Such as $1.5 billion in goodwill on their assets, or 25% of total assets and equal to their entire market cap.


The goodwill is a result of their numerous acquisitions, most notably Tristar oil and gas. The goodwill is tested for impairment quarterly by management. Management has determined the $1.5 billion in goodwill is not impaired and the auditors have agreed with managements conclusion. I don't see why having goodwill on the balance sheet would be an issue?


----------



## HaroldCrump

Goodwill is perhaps the most manipulated of all balance sheet items.
YLO wrote off nearly $1.5B off its goodwill overnight...here today, gone tomorrow.
If your valuation is highly predicated on goodwill, watch out.


----------



## Ethan

Let's say the dividend is cut to $0. Would the share price drop much further than it already has? Look at their balance sheet. Property, plant and equipment alone are worth 1.33 times as much as the liabilities. That's not even including the $946 million of exploration and evaluation assets (which is land purchased but not proved to be technically or commercially feasible). It is also excluding the $1.5 billion in goodwill.

Also see:

http://www.petrobakken.com/wp-content/uploads/2011/10/PBN-2011-10-03-Operational-Update.pdf

Debt remains unchanged after Q3. Exit production of 43,000 boepd compared to 35,000 in Q2. Over 1 million acres of land, less than half of which has been developed.

What is there not to like? A dividend that might or might not get cut?


----------



## Ethan

I should add I didn't buy PBN for the dividend. I bought PBN because it is a severely undervalued company.


----------



## Abha

If the dividend is cut, there will be a steep loss as there are many investors in that stock solely for the dividend.

This seems to be a case of Yellow Media repeating itself (although PBN is not as shitty a company)


----------



## KaeJS

Ethan said:


> Would the share price drop much further than it already has?


Is that a serious question?

We saw it at $6 without the dividend being cut. It is now at $8. Of course it would drop significantly if the dividend was cut to 0.

People are buying for the yield. They sure as hell aren't buying it for the debt and declining share price.

The yield is not sustainable because the company has a lot of debt and they are not earning much more than they are dishing out. Look at the link in the globeandmail that Argo has posted up.

Their Q1 for 2011 was 0.28 EPS. Q2 was better, but not great. Especially looking at past results.

*Q3 last year was 0.05 EPS..*.


----------



## Ethan

KaeJS said:


> Is that a serious question?
> 
> We saw it at $6 without the dividend being cut. It is now at $8. Of course it would drop significantly if the dividend was cut to 0.
> 
> People are buying for the yield. They sure as hell aren't buying it for the debt and declining share price.
> 
> The yield is not sustainable because the company has a lot of debt and they are earning less than they are dishing out. Look at the link in the globeandmail that Argo has posted up.
> 
> Do you think the company is returning $1.00 EPS?


http://www.petrobakken.com/wp-conten...report-web.pdf

Net income - $116,940k
FFO - $153,353
Operating cashflows - $190,713k
Dividends paid - $(44,947)

So no, they are not "dishing out" more than they are earning.

I do think the company has EPS greater than $1.00. See page 28 of the above link, their EPS for the 6 months ended June 30, 2011 is $0.91. Full year earnings will be well over $1.00.


----------



## KaeJS

Yes, you are correct. I had edited my initial post.

They are covering what they are paying. For now.


----------



## Ethan

KaeJS said:


> Yes, you are correct. I had edited my initial post.
> 
> They are covering what they are paying. For now.


What do you mean "for now." What has given you any indication their dividend is less stable than in the past? Earnings are increasing, production is increasing, debt did not increase during Q3, what would lead you to say that?

http://www.petrobakken.com/wp-content/uploads/2011/10/PBN-2011-10-03-Operational-Update.pdf


----------



## Homerhomer

Ethan said:


> What do you mean "for now." What has given you any indication their dividend is less stable than in the past? ]


From the link already posted in this thread.

*PetroBakken said it hired TD Securities Inc. as a financial advisor early in the second quarter, and is considering cutting its budget; lowering its 96-cent annual dividend or creating a dividend reinvestment program; taking on more debt; renegotiating the terms of its convertible debt; and asset sales. All of these are mentioned and expanded upon in Mr. Wright’s letter, which was written in response to a BMO analyst report that outlined a variety of scenarios for the company, including a possible dividend.*
You are in love in this stock and are refusing to see the flaws of your new girlfriend, hopefully she will be good for you ;-)


----------



## Ethan

Homerhomer said:


> From the link already posted in this thread.
> 
> *PetroBakken said it hired TD Securities Inc. as a financial advisor early in the second quarter, and is considering cutting its budget; lowering its 96-cent annual dividend or creating a dividend reinvestment program; taking on more debt; renegotiating the terms of its convertible debt; and asset sales. All of these are mentioned and expanded upon in Mr. Wright’s letter, which was written in response to a BMO analyst report that outlined a variety of scenarios for the company, including a possible dividend.*
> You are in love in this stock and are refusing to see the flaws of your new girlfriend, hopefully she will be good for you ;-)


KaeJS said PBN could cover their dividend, for now. Their financials indicate they are more capable of covering their dividend now than they ever have been before. I don't see why the market is turning on a company that is improving its financials. Why wasn't the stock priced this low last year?

She has been good for me so far, since I first bought in at $6.67 and later at $7.11. My options are up 50%. I could cash out right now for a huge gain, but I'm not because I still think she's undervalued.

Also look back at my posts. I've been calling this for a long time. This is from May 12:

_"My expectations are for a dissapointing Q2 (results released early August), at which point the shares will pull back further and I'll consider establishing a position. "_

Tha'ts exactly what happened, and I bought exactly when I said I would. Q2 results were hampered by drastically reduced production. The market overreacted and the share price plumetted. Perfect time to get in.


----------



## Ethan

PBN up another $0.60 to $8.40


----------



## canadianbanks

Ethan said:


> PBN up another $0.60 to $8.40


I'm still way down from where I bought it a few months ago.


----------



## al42

canadianbanks said:


> I'm still way down from where I bought it a few months ago.



Yup,me too. But still hopeful it will recover after they report the 3rd qtr.


----------



## humble_pie

there are cogent, well-reasoned arguments on both sides here. Thanks to all the parties who took the trouble to elucidate their views. And best of luck to all.


----------



## KaeJS

Ethan, I think the question that really needs to be asked here is;

If you owned a company, would you take on more debt to give the other owners more money?

The company should be keeping part of these dividends. I am not saying cut it altogether, necessarily, but there is no reason why they need to pay out $0.96/year, when they have debt to pay and more on the way.

Its not a smart way to run a business.

The company probably made the dividend too high in the beginning and does not want to cut it for fear of being known as the company that cut their dividend back in xx...

So now, they are just going to take on more debt. Likely scenario, if you ask me.


----------



## al42

KaeJS said:


> Ethan, I think the question that really needs to be asked here is;
> 
> If you owned a company, would you take on more debt to give the other owners more money?
> 
> The company should be keeping part of these dividends. I am not saying cut it altogether, necessarily, but there is no reason why they need to pay out $0.96/year, when they have debt to pay and more on the way.
> 
> Its not a smart way to run a business.
> 
> The company probably made the dividend too high in the beginning and does not want to cut it for fear of being known as the company that cut their dividend back in xx...
> 
> So now, they are just going to take on more debt. Likely scenario, if you ask me.


Sorry but i don't agree...the dividend when PBN IPO'ed was around 3%.
The biggest problem right now is the $750 Million debentures that come due in 2014 but have a put option in Feb. 2013. This is why the market is very nervous. They either have to issue equity , save cash by implementing a DRIP,adjusting the dividend ,going to the high yield market,renegotiating the debentures or INCREASE PRODUCTION to pay these debentures if they are put back to them in Feb. 2013.


----------



## KaeJS

^ They will probably do a combination of the above mentioned.


----------



## Ethan

KaeJS said:


> Ethan, I think the question that really needs to be asked here is;
> 
> If you owned a company, would you take on more debt to give the other owners more money?
> 
> The company should be keeping part of these dividends. I am not saying cut it altogether, necessarily, but there is no reason why they need to pay out $0.96/year, when they have debt to pay and more on the way.
> 
> Its not a smart way to run a business.
> 
> The company probably made the dividend too high in the beginning and does not want to cut it for fear of being known as the company that cut their dividend back in xx...
> 
> So now, they are just going to take on more debt. Likely scenario, if you ask me.


First off, while debt has increased over the past several quarters, it did not increase during Q3 which is a good sign:

http://www.petrobakken.com/wp-content/uploads/2011/10/PBN-2011-10-03-Operational-Update.pdf

Second off, they have room to borrow $200 million more on their credit line.

Third, given their sizeable 2p (proved and probable) reserves, they shouldn't have any problem obtaining financing to buy out the convertible debentures that come due in ~16 months.

Fourth, I agree that the dividend is too high. If they want to spend as much as they have been on exploration it is silly to be paying out such a high dividend. As I have stated in the past, I did not buy this company for the dividend, I bought it because it is severly undervalued based on production, cashflow, reserves and book value. If they cut the dividend and the share price plummets I can wait it out until the price rebounds. I think the stock has been battered enough and still has solid long-term fundamentals that justify a valuation of at least $15.

Lastly, if I owned a controling share of a public company, I would not pay a fixed dividend on the common shares. Fixed dividend payments often act like debt for a company because they are so afraid of cutting the dividend, or raising the dividend only to have it later become unsustainable. If said company had stable and consistent enough earnings to warrant a dividend, I would pay a "special dividend," similar to Diamond Offshore Drilling (NYSEO) that is based on future expected cashflow. The dividend would not be set, it would vary based on quarterly results and future cash requirements.

http://www.diamondoffshore.com/investors/investors_dividend.php

Edit: Diamond Offshore's ticker is DO on the NYSE. If you type in NYSE - colon - DO it puts a smiley face.


----------



## Ethan

KaeJS said:


> If you owned a company, would you take on more debt to give the other owners more money?


I should add, PBN is not taking on debt to pay out the shareholders. As I have previously stated, their earnings, FFO and cashflow are all near triple the dividend payment. They are taking on more debt because earnings can't sustain PBN's capital program. PBN could easily stop exploration and work on developing their ~700,000 undeveloped acres.

Think about their debt this way. In Q2, interest and other was $23 million on debt of $1,731 million (bank debt + convertible debentures). This works out to an annualized interest rate of 5.31%.

Now lets look at their returns. Google finance lists the PE ratio as 7.10. The inverse of 7.10 is 14.08%.

Put the above two paragraphs together, and you'll see that an interest rate of 5.31% (which is tax deductible) is being used to finance returns of 14.08%. Would you borrow money at 5.31% if you could earn 14.08% on that money? I would.


----------



## humble_pie

ethan you are close, terribly close, to this company.

you defend its righteousness with a passion so strong that it makes me think of a mama tiger defending her cubs ...

so the question becomes, Who are you ?


----------



## doctrine

You may be right, however it is a gamble. Wouldn't risk the bank on it... usually value investors risk their money on companies with low debt. If you take away their $1.5B of "goodwill" intangibles, you're left with half of the calculated shareholder equity. 

Then again, maybe oil rockets to $120/B and you make a fortune, or you get a lucky buyout like Daylight. 

Anyway, I wouldn't get too concerned on a forum like this. Either you're right, or you're wrong. Only time will tell. Wouldn't risk my money though.


----------



## badgerwins

*Misunderstood*

Some have commented that something must be wrong fundamentally with the company to have such a price drop, beyond what was expected even with the general market downturn. Well, I believe that it is an overreaction and that PBN is tremendously undervalued. Why?

Firstly, BMO's report kicked PBN when it was down, and it was full of unfounded assumptions. Basically, they implied 40% dilution to cover the bond being put back in 2013. This is assuming no share price appreciation from these levels, and that management would just sit and wait for 16 months, not planning to handle the situation. Simply absurd.

PBN management was then forced to respond to this criticism of the company, and highlighted all the strategies they could employ. From reducing dividend, initiating a DRIP, reducing CAPEX, restructuring convertible debt, selling assets, etc. I think people are misconstruing that management is actually planning to cut the dividend, not recognizing that management wanted to tell the market they have many options. And, if they get the right price they are willing to sell some or all of the assets. The BMO report was fear mongering and management had to respond. Many didn't "get it"

As for the constant decline of share price over the last extended period of time. This is certainly due to their balance sheet. Yes, PBN has a lot of debt, and needs to get it under control. Unfortunately, the costs of developing such a large resource play like the Cardium land takes substantial upfront investment to build production to a point where it free cash flows. Bakken is already free cash flow, and so is the conventional production in Saskatchewan. Cardium likely by 2013. PBN will be able to reduce CAPEX without hurting production growth too significantly. Also, the initial Bakken wells from a couple of years ago, particuraly on the northern parts, were unfortunately, money losers. They reached cumulative production of about 20,000 barrels and watered out - a significant amount of capital was lost here. However, with cleantech, this is no longer a problem at all, and the EOR could potentially make Bakken have renewed growth. Look at the presentation comparing wells before and after cleantech. What this tells you, is some balance sheet problems relate to some sunk costs also, and going forward, this will be reversed.

As for Cardium, it keeps getting BETTER and BETTER. Look at most recent presentation and how productivity is improving on Cardium wells. This also means the reserves booked per well will be higher also.

PBN has among the best netbacks of all intermediates, and for third quarter it appears they didn't draw anymore on their line, meaning they are reaching a point where all dividends and CAPEX can be funded through operating cash flow, and as, Cardium barrels toward free cash flow, this company will be a cash pig. And PBN has solid prospective land to start investing into a new resource play, but debt won't be needed as much, as they will have conventional, Bakken, and Cardium free cash flowing. It is the companies business model, and they have been clear about this from the beginning.

Of course, the flooding set back PBN and it's share price badly - and they have mostly recovered from this. In fact, with the amount of drilling done in the third quarter, and what they have planned for the 4th, I feel that 50k per day is very doable. No guarantees, but exit guidance is assured, unless of course, some external calamity surprises them.

Frankly, people just don't do enough due diligence to understand the productivity improvements in the various resource plays, to understand the land values, to understand the financial risks of the company. Many analysts, including Mr. BMO are just as guilty of this. PBN has never been a darling - that title has been held by CPG. But, as noted, CPG has used DRIP to free up cash flow, and it is dilutive. PBN has opted to not have a DRIP, although that may change.

The tie into Petrobank has not helped either. And unfortunately, this could impact the prospects of a high premium buy out in the near future, unless, Petrobank decides to unload the 60% holding of PBN to fund future development or perhaps just to try sell everything outright. The THAI experiment has hit a very bumpy road.

Nonetheless, when PBN sank below $7, I loaded up on April options from strike prices of $7 to $12, and believe third quarter results will be solid. Exit guidance will be met, and there will be clarity on precisely how the convertible debt will be handled. And who knows, someone might come in an offer $20/share....


----------



## Ethan

doctrine said:


> You may be right, however it is a gamble. Wouldn't risk the bank on it... usually value investors risk their money on companies with low debt. If you take away their $1.5B of "goodwill" intangibles, you're left with half of the calculated shareholder equity.
> 
> Then again, maybe oil rockets to $120/B and you make a fortune, or you get a lucky buyout like Daylight.
> 
> Anyway, I wouldn't get too concerned on a forum like this. Either you're right, or you're wrong. Only time will tell. Wouldn't risk my money though.


Thanks for the concern. When I bought PBN 2 weeks ago it represented ~10% of my stock portfolio, so I'm not betting too much on it. Although with the recent run-up in share price PBN now represents closer to 14% of my portfolio 

I do want address your buyout comment. Petrobakken will not get bought out. It's 59% owned by Petrobank. Any takeover bid that went hostile would get shut down by Petrobank. Petrobank has no interest in selling, in fact management has been buying back shares as recently as September 12. A company buys back shares when they feel the current share price undervalues the company.

http://www.petrobakken.com/wp-content/uploads/2011/09/PBN-2011-09-12-PressRelease-NCIB.pdf


----------



## Ethan

humble_pie said:


> ethan you are close, terribly close, to this company.
> 
> you defend its righteousness with a passion so strong that it makes me think of a mama tiger defending her cubs ...
> 
> so the question becomes, Who are you ?


A value investor that has been following this company since inception.

I'm not an insider if that's what you're wondering. I have linked my posts to numerous public documents.


----------



## Ethan

doctrine said:


> usually value investors risk their money on companies with low debt.


From wikipedia:



> Although value investing has taken many forms since its inception, it generally involves buying securities whose shares appear underpriced by some form(s) of fundamental analysis.[1] As examples, such securities may be stock in public companies that trade at discounts to book value or tangible book value, have high dividend yields, have low price-to-earning multiples or have low price-to-book ratios.


http://en.wikipedia.org/wiki/Value_investing

PBN meets all of the above criteria.

By any measure I feel that I have a sufficient margin of safety.


----------



## humble_pie

thanks ethan. By "very close" i didn't mean improper revelation of insider information. I meant the sense of profound emotional attachment that reads between your lines. Exactly what homer picked up when he referred, above, to your love for your girlfriend which is blinding you to her defects ...

overall, this thread contains some excellent discussion of petrobakken from several points of view & it demonstrates the kind of in-depth analysis that's necessary when examining energy stocks, or any stocks for that matter. Some of the points being brought out in this thead - for example the hidden put in the 2014 debenture - are exactly the kind of point one would normally expect to see only from a senior investment banker (yay cmf forum.)

i for one have never held this stock, although i did own shares in tristar, one of its predecessors. I'm a longtime cpg holder, so probably would not switch at this late date. Nevertheless, the tristar bakken properties were reasonably valuable. Tristar's former chairman paul colborne remains a director of crescent point to this day. There is no reason to believe that petrobakken was as worthless as its recent share price low of 6.05 was indicting.

so i'm hoping that the long-term value investors in PBN, the ones who have done their homework so carefully, will be handsomely rewarded.


----------



## Ethan

humble_pie said:


> thanks ethan. By "very close" i didn't mean improper revelation of insider information. I meant the sense of profound emotional attachment that reads between your lines. Exactly what homer picked up when he referred, above, to your love for your girlfriend which is blinding you to her defects ...


Believe me, I see PBN's defects. I'm just trying to defend PBN from accusations based on unsound analysis. Most posters that are bearish on PBN seem to have the following 2 arguments:

1. PBN's share price has dropped a lot recently and their dividend yield is high so they must be the next yellow media - this is very amateur analysis, the recent share price movement and the dividend yield have nothing to do with the underlying fundamentals of the company. The market is not always correct.

2. PBN earns less than their dividend payment - this is very amateur as well given posters were looking at old or inaccurate information. I don't know if they are too lazy or do not have the knowledge to read the statements, but that is simply not the case.

If one were to expose any defects in PBN, they could start by looking at how beneficial the changes to IFRS have been to PBN. The 2010 statements were prepared under Part V Canadian GAAP. Under Part V GAAP, depletion is based on units of production using proven reserves as the denominator. Under IFRS, depletion is calculated based on units of production using proven + probable reserves as the denominator. As such, the depletion is much less under IFRS. Take a look at the 3 months ended June 30, 2010.

In the Q2 2010 statements it lists depletion for the period as $135 million
In the Q2 2011 statements it lists depletion for that same period as $98 million

Changing to IFRS allowed PBN to restate PY depletion for a benefit of $37 million. This directly affects EPS which several posters are using to value PBN. PBN's current earnings are strong, however to the naked eye they appear much stronger than prior years due to the changes in accounting framework. If one were to straight up compare last years earnings (as stated last year) to this years earnings, PBN would look much better but the comparison would be between unrelated balances.

PBN's earnings are increasing, but not to the extent an amateur analysis would suggest. I laugh that some posters are bashing PBN with posts such as "yeah but, EPS was a lot lower last year!" without realising earnings are only marginally better than last year.

I'm merely responding to analysis that paints PBN in a negative light that is based on unsound arguments. I'm attempting to expose that analysis as poor because I don't appreciate my stocks being unjustly bashed on a public forum. If one were to actually make a valid point against PBN I wouldn't argue it, however I have yet to see that.

Weanesses aside, the market has unjustly punished PBN. It is worth more than $15 at a minimum in its present state. If future production targets are met and current netbacks are maintained, it will be worth much more than $15/share. The risk is that management will not deliver on their future guidance.


----------



## KaeJS

Ethan said:


> I don't appreciate my stocks being unjustly bashed on a public forum.


It hasn't been "unjustly _bashed_" on a public forum.

There are buyer's and seller's in a marketplace, as you know.

You happen to be a buyer of PBN. I happen to be a seller of PBN.

No reason to take it personally.

I hope it works out for you, because not buying works out for me. That way, we both win.


----------



## Ethan

KaeJS said:


> It hasn't been "unjustly _bashed_" on a public forum.
> 
> There are buyer's and seller's in a marketplace, as you know.
> 
> You happen to be a buyer of PBN. I happen to be a seller of PBN.
> 
> No reason to take it personally.
> 
> I hope it works out for you, because not buying works out for me. That way, we both win.


I'm not taking it personally, but when posters are saying earnings are less than dividends, I feel like posting the correct information.


----------



## al42

Ethan said:


> I'm not taking it personally, but when posters are saying earnings are less than dividends, I feel like posting the correct information.


 Ethan, I think you and I are on the same page on PBN. I have been in and out of this stock since the IPO. I am down a fair bit of money but for some reason I still have faith that management will be able to execute and show their true value. I don't think anything that is posted on boards like this affect the stock price very much. It's mostly institutional investors and larger hedge funds that are pushing it down. Management have given these large players every reason to do so with their constant missis on guidance, debt concerns and so on.
But in the end of the day they are still going to produce close to 50,000. BOE per day and most of it being Light Oil. Some day the market will regain confidence in this company and apply the same multiple as they do to others in their industry. Until then I'm holding and hoping that the Q3 numbers will be as good or better than they have been guiding recently.


----------



## Homerhomer

Ethan said:


> I don't appreciate *my stocks* being unjustly bashed on a public forum.


You are clearly emotionally attached to this stock, bad idea. I usually hear that about my boys, my team mates, my lady, never heard anythink like this about my stocks.



Ethan said:


> If one were to actually make a valid point against PBN I wouldn't argue it, however I have yet to see that.
> 
> Weanesses aside, the *market has unjustly punished PBN*.


That's because you are blinded by your emotional attachment, there are many valid points showing weaknesses of this company posted in this thread, links, quotes, history of earnings and dividends and on and on you just refuse to hear any of that.

And now not only few lazy, with no knowledge amateurs on this forum are wrong but so is the whole market ;-)

If there is one thing that you or anyone else could learn in this thread is not to get emotionally attached to any investments.


----------



## Ethan

Homerhomer said:


> And now not only few lazy, with no knowledge amateurs on this forum are wrong but so is the whole market ;-)


In May I said the stock was overvalued and that I would look at establishing a position after Q2 results.

After Q2 results were posted, I bought 400 shares at an average cost of $7.00. The share price is now $8.47. I also bought 04/21/2012 $6 calls at $1.75 that most recently traded at $3.10.

My thoughts and purchases have been well documented in this thread over the past 5 months.

When have I been wrong?


----------



## Ethan

al42 said:


> I don't think anything that is posted on boards like this affect the stock price very much. It's mostly institutional investors and larger hedge funds that are pushing it down. Management have given these large players every reason to do so with their constant missis on guidance, debt concerns and so on.


You're absolutely correct on all of the above.


----------



## Ethan

I'm going to stop posting on this. I've said my piece. Valuation is an estimate at best, PBN could could go in either direction. I will continue to evaluate PBN based on future events. As of now, you know where I stand on this stock.


----------



## al42

Just picked this of another site.

Statoil (STO) just paid $36.50 per share for Brigham Exploration. That equates to an enterprise value of $4.7 billion.

Petrobakken currently has an enterprise value of just under $3.5 billion.

Price Per Flowing Barrel

Brigham Exploration is currently producing 21,000 boe/day. With a $4.7 billion enterprise valuation that equates to $223,000 per flowing barrel.
Petrobakken with a $3.5 billion enterprise value and 43,000 boe/day of production is being valued at $81,000 per flowing barrel. By year end Petrobakken is expected to be at 47,500 per day which will be $73,000 per flowing barrel.

Petrobakken is trading at one third of the Brigham deal on a flowing
barrel basis.

Multiple of EBITA

For the six months ended June 30, 2011 Brigham had an EBITA of $137 million. On an annual basis that would be roughly $280 million. That would be an EBITA multiple of $4.7 billion / $280 million = 16.79 times
At $85 oil and the year end exit rate of 47,500 barrels per day of production Petrobakken is going to have EBITA of $850 million. With a $3.5 billion enterprise value Petrobakken is trading at a $3.5 billion / $850 million = 4.11 times

Petrobakken is trading at one quarter of the Brigham deal on a multiple of EBITA basis

Multiple of Proved Reserves

Brigham (as of the December 2010 reserve report) has 67 million barrels of proved reserves. A $4.7 billion valuation suggests Statoil is paying $4.7 billion / 67 million = $70 per barrel of proved reserves
Petrobakken (as of the December 2010 reserve report) has 103 million barrels of proved reserves. With a $3.5 billion enterprise value Petrobakken is being valued at $34 per barrel of proved reserves.
Petrobakken is trading at one half the valuation of proved reserves and is also subject to more conservative Canadian reserve booking requirements.
Multiple of PV 10 Value of Proved Reserves
The PV10 value of Brigham's 67 million barrels of proved reserves is $1.1 billion. The $4.7 billion purchase prices suggests that Statoil is paying $4.7 billion / $1.1 billion = 4.27 times the PV10 value of proved reserves.
The PV10 value of Petrobakken's 103 million barrels of proved reserves is $2.8 billion. With an enterprise value of $3.5 billion Petrobakken is being valued at 1.25 times the PV10 value of proved reserves.
Petrobakken is trading at less than one third of the valuation being applied to the PV10 value of Brigham's proved reserves.

Sum These Various Metrics Up

Price per flowing barrel - Petrobakken is trading at one third of the Brigham valuation
Multiple of EBITA - Petrobakken is trading at one quarter of the Brigham valuation
Multiple of Proved Reserves - Petrobakken is trading at one half of the Brigham valuation
Multiple of PV10 Value - Petrobakken is trading at less than one third of the

Brigham valuation

I don't know exactly what Petrobakken is worth. But common sense tells me that an acquirer would be willing to pay a lot more than the current share price.

Petrobakken is just like Brigham. They are both companies that have years and years of drilling locations ahead of them and both companies sit on vast amounts of oil. That is why the multiples of flowing barrel of production and EBITA being paid for Brigham are so high.

You can't value these companies using the same approach as you do for a conventional oil and gas producer. Much of the value is in the huge land positions that these companies have in unconventional resource plays. And much of that doesn't show up in proved reserves because most of the undeveloped acreage isn't booked as proved reserves.

It isn't just Petrobakken that is massively undervalued right now. The entire sector in Canada is. Pick an unconventional producer and I almost guarantee it is trading at 50% or less than what an acquirer would pay.

All it takes is some common sense to see it. And some patience to wait for Mr. Market to figure it out.

http://seekingalpha.com/article/299...ave-300-upside-based-on-brigham-s-acquisition


----------



## Betzy

PBN is still paying me my sweet dividend! Picking up more shares at bargain prices.


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## al42

December 13, 2011 07:30 ET
PetroBakken Announces W. Brett Wilson as a New Director, Provides Operational Update, 2012 Guidance, and Implementation of a Dividend Reinvestment Plan

CALGARY, ALBERTA--(Marketwire - Dec. 13, 2011) - PetroBakken Energy Ltd. ("PetroBakken" or the "Company") (TSXBN), a 59% owned subsidiary of Petrobank Energy and Resources Ltd. (TSXBG), is pleased to announce a new director, provide an update on our current operating activities and our initial 2012 capital plan. We are also pleased to announce that we are implementing a Dividend Reinvestment Plan ("DRIP").

Appointment of New Director

We are very pleased to announce the appointment of W. Brett Wilson to the Board or Directors of PetroBakken. We are confident Mr. Wilson's 25 plus years of investment banking experience, primarily as co-founder of FirstEnergy Capital Corp., will be a valuable addition to our ongoing strategic direction and governance team at PetroBakken.

Operational Update

Production in early December has reached over 48,000 barrels of oil equivalent per day ("boepd") (87% light oil and NGLs), a 23% increase over third quarter 2011 production levels, based on field estimates. Our Bakken business unit production is over 23,000 boepd and our Cardium business unit production now exceeds 14,750 boepd (with over 1,450 boepd currently shut-in awaiting tie-in to gas conservation systems), with the remainder of the production generated by our Saskatchewan conventional and AB/BC business units. We continue to forecast a 2011 exit production rate of over 49,000 boepd.

Initial 2012 Capital Plan

We are also pleased to announce our initial capital plan for 2012, which allow us to build on our 2011 operational success. We anticipate capital development expenditures of approximately $700 million, primarily focused on horizontal drilling and completions, predominantly in the Bakken and Cardium light oil plays. We expect that this drilling-focused activity will generate a 2012 exit production rate of between 50,000 and 54,000 boepd. Our estimated year-over-year average production growth will exceed 15%, on an absolute and per-share basis. We expect this initial 2012 program to be executed entirely from funds from operations, with surplus cash flow available to fund dividends and debt repayment.

For 2012 we estimate that our corporate base decline rate will be in the range of 30-35%. In 2010, our base production declined approximately 40%, while the 2011 base decline rate is now forecast at approximately 35%. We have been encouraged by the results of our recently completed wells, and we are also beginning to see the benefit of the continued maturation of our producing assets with a significant proportion of our production now coming from older, shallower decline, horizontal wells.

Capital plans for 2012 will focus primarily on our light oil resource plays in southeast Saskatchewan for the Bakken and central Alberta for the Cardium, as well as our Mississippian conventional light oil play in southeast Saskatchewan. The majority of our 2012 capital spending is expected to be used to drill, complete and equip ("DC&E") over 183 net wells (due to bilateral wells this represents over 240 net horizontal well bores) for approximately $545 million. The plan also includes investments of approximately $155 million in facilities, land, seismic, recompletions and direct administration capital.

In southeast Saskatchewan, we expect to drill 96 net Bakken wells (including approximately 58 net bilateral wells) and 35 net conventional wells. Overall, we plan on spending $290 million of DC&E capital in southeast Saskatchewan, comprised of $225 million in the Bakken (including EOR spending) and $65 million in our conventional Mississippian plays. We will also continue to invest in our EOR pilots to evaluate several injection configurations, primarily using natural gas. Currently, we have five pilot projects underway that are in various stages of implementation. It is expected that we will have our second pilot on injection in Q1 2012, with three others being added by the end of Q3 2012.

In Alberta and British Columbia we plan to drill 49 net wells for DC&E capital of $225 million in our Cardium business unit and three wells in our AB/BC business unit for $30 million. The majority of our Cardium drilling will be focused on West Pembina. In our AB/BC business unit, activity will further delineate and evaluate our new oil resource plays building on our 2011 drilling program where we have drilled three wells and are currently drilling one additional well. At this time, we estimate we have identified over 100 drilling locations in the new oil resource play areas.

As part of our ongoing balance sheet management, and to reward continuing support from existing shareholders, we are pleased to announce the implementation of a DRIP. The DRIP provides eligible holders of common shares resident in Canada the opportunity to reinvest their monthly cash dividends in PetroBakken shares at a 5% discount to the then current market prices. Petrobank (59% shareholder of the Company) has indicated an intention to participate in the DRIP with respect to 50% of their PetroBakken shares, which will amount to $53 million in additional liquidity to the Company on an annual basis. Subject to the receipt of approval of the Toronto Stock Exchange, the DRIP will be implemented for the January 2012 dividend, which is payable in mid-February 2012. Additional information regarding the DRIP can be found below.

We are expanding our hedging program to hedge up to 20,000 bopd of our net production in the first half of 2012 in order to provide further cash flow security. This is an increase to our past practices in which we hedged approximately 25% of our production. To-date, we have 12,750 bopd hedged for the first half of 2012 at an average floor of $80.49 and a ceiling of $113.92. For the second half of 2012 we have 8,500 bopd hedged at an average floor of $76.62 and a ceiling of $119.77. This increased hedging program has been adopted to allow us to lock in strong oil prices as we move into 2012.

Dividend Reinvestment Plan

The DRIP provides eligible shareholders with the opportunity to reinvest their monthly cash dividends in new shares at a 5% discount to the then current market price. Only shareholders who are resident in Canada may participate in the DRIP. Shareholders not resident in Canada are not eligible to participate.

No commissions, service charges or brokerage fees will be payable by DRIP participants in connection with the reinvestment of their dividends in PetroBakken shares. However, beneficial shareholders who wish to participate in the DRIP through their broker, investment dealer, financial institution or other nominee who holds their shares should consult that nominee to confirm what fees, if any, the nominee may charge to enroll in the DRIP on their behalf or whether the nominee's policies might result in any costs otherwise becoming payable by the beneficial shareholder.

Participation in the DRIP will not relieve shareholders of any liability for taxes that may be payable on dividends. Shareholders should consult their own tax advisors concerning the tax implementations of their participation in the DRIP having regard to their own particular circumstances.

Shareholders who hold a physical share certificate to evidence their ownership of common shares (commonly referred to as registered shareholders) can enroll in the DRIP by delivering a completed enrolment and authorization form to Olympia Trust Company ("Olympia"). The enrolment and authorization form will be available on our website at www.petrobakken.com, or by contacting Olympia at 403-668-8887 or via email at [email protected]. Enrolment and authorization forms must be received by Olympia by no later than 3:00 p.m. (Calgary time) on the business day prior to the record date in respect of a dividend in order to participate in the DRIP for the corresponding dividend. The first record date for which shares will be eligible for participation in the DRIP is anticipated to be January 31, 2012.

Shareholders who hold their common shares through a broker, investment dealer, financial institution or other nominee (commonly referred to as beneficial shareholders) can contact the party holding their common shares to request that their shares be enrolled in the DRIP. Beneficial shareholders should be aware that (i) certain brokers, investment dealers, financial institutions or other nominees may not allow participation in the DRIP and (ii) certain brokers and investment dealers may reinvest dividends received by their clients by purchasing additional shares in the open market at prevailing market prices (in which case such clients would not receive the discount offered under the DRIP for common shares acquired from treasury). Neither PetroBakken nor Olympia is responsible for monitoring or advising which brokers, investment dealers, financial institutions or other nominees allow participation in the DRIP.

Shareholders are not required to participate in the DRIP. Shareholders who do not participate will continue to receive monthly cash dividends on their PetroBakken shares.


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## w0nger

yay for a drip... this is a thought that i might use now... i've been selling covered calls to increase my income from my PBN holdings, but if this company really is on the up and up, maybe my covered call selling is getting a bit risky as i'm not actually looking to let go of my shares... maybe i'll just setup a drip and reap the dividends...


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## Betzy

Well I got Exercised early today on Some Jan calls, now i have to decide if i get back in for another ride?


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## Ethan

Petrobakken closed today at $14.93, up 147% from its late September low of $6.05. What are the boards thoughts on Petrobakken now?

My thoughts are I still like the company and think it has room to grow. I like the changes PBN made to address its cashflow issues (lower capex, implementation of a DRIP, private placement of $750 million in 2020 notes). I'm also encouraged by current production of over 50,000 boepd (up from 35,000 boepd in Q2). That being said, I have sold a couple call options against my position to reduce my exposure. Petrobakken has been taking up a consistenly larger position in my portfolio as the shares keep rising so I wanted to rebalance slightly.


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## dubmac

Well done Ethan..if you bought at 6.05 then you must have almost tripled your investment...nice work


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## Ethan

dubmac said:


> Well done Eder..if you bought at 6.05 then you must have almost tripled your investment...nice work


Thanks. I didn't quite get in that low. My buys were at $6.67 and $7.11. My options would have quintupled, had I not sold them long ago for a gain of 106%. Live and learn I guess.


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## al42

Should be positive for Share Price again today.

PetroBakken Announces Sale of Non-Core Southeast Saskatchewan Assets


January 19, 2012
PetroBakken Announces Sale of Non-Core Southeast Saskatchewan Assets
CALGARY, ALBERTA--(Marketwire - Jan. 19, 2012) - PetroBakken Energy Ltd. ("PetroBakken" or the "Company") (TSXBN), is pleased to announce that we have entered into an agreement to sell our entire working interest in the southeast Saskatchewan Weyburn unit (approximately a 2.2% interest) (the "Assets") for gross proceeds of $105 million, subject to adjustments. The Assets include 580 boepd of production (based on field estimates from December 2011). The transaction will have an effective date of January 1, 2012 and, subject to satisfaction of all conditions and receipt of required regulatory approvals, is expected to close by the end of February 2012. Approximate transaction metrics in respect of this sale of these non-core Assets are $180,000 per flowing boe (based on field estimated December 2011 average production), 9 times 12 month trailing cash flow (October 2010 to October 2011) and $23 per boe of gross proved plus probable reserves.

PetroBakken Energy Ltd. is an oil and gas exploration and production company combining light oil Bakken and Cardium resource plays with conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. PetroBakken is applying leading edge technology to a multi-year inventory of Bakken and Cardium light oil development locations, along with a significant inventory of opportunities in the Horn River and Montney gas resource plays in northeast BC. Our strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield.

BOEs. Natural gas volumes have been converted to barrels of oil equivalent ("boe"). Six thousand cubic feet ("Mcf") of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.

Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to our proposed sale of the Assets and the timing thereof. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the ability of the parties to the sale to satisfy the conditions to the transaction and complete the sale. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; risks associated with application for and receipt of required regulatory approvals; risks that the proposed sale of the assets is not completed as a result of a failure to satisfy one of the conditions to the offering; and general economic conditions. Certain of these risks are set out in more detail in our Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com. Except as may be required by applicable securities laws, PetroBakken assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.


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## Ethan

Major transaction between Petrobakken and Crescent Point today:

http://www.petrobakken.com/wp-content/uploads/2012/02/PBN-2012-02-16.pdf


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## dave2012

dubmac said:


> Well done Ethan..if you bought at 6.05 then you must have almost tripled your investment...nice work


I bought at $10.74 about 10 days before it dived down to $6. That was crazy! It was a new stock for me so I wasn't prepared to buy more at $6, but wish I had (woulda coulda shuda as my wife would say).

Still I'm up 43% since late September and that dividend is pretty sweet!


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## dave2012

Another great week for PBN after latest guidance.
It was up over 11% this past week and 38.35% YTD.
I'm now up 65% since buying in September (not including dividends which now sits at 5.41%).


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## PMREdmonton

Looks like insiders are still buying at these prices.

Looking at Canadian Insider, about 200 000 shares were bought by insiders in the past couple of weeks at present prices.

This stock's future looks very bright.


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## webber22

After close Crescent Point Energy announced a $550 million share issue at $41 - a great deal at your broker considering it closed today at $42.34, up close to 5% after stellar earnings. Hopefully it won't go down to $41 :love-struck:


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## webber22

CPG was added to the TSX 60. A nice 4% rise today to close near $44


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## thenegotiator

PMREdmonton said:


> Looks like insiders are still buying at these prices.
> 
> Looking at Canadian Insider, about 200 000 shares were bought by insiders in the past couple of weeks at present prices.
> 
> This stock's future looks very bright.



since this was ur last post and an old one , all i can tell ya about this stock living in purgatory is that from thr action that i saw today it told me it did not like the 10 bux mark.
on the date of ur post this stock was trading at 16.92 area.
it can go to 6 bux by all means.
if i ever touched this thing would be for a daytrade but i will Follow the STORY


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## Jon_Snow

PBN is by FAR, the biggest dog of my portfolio...


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## thenegotiator

for PMR
interestingly ...
there is a story behind PBN...
I am following the trail.


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## PMREdmonton

It's a very polarizing stock. I haven't bought any in a long while now.

It is interesting around $10 again.

They will be reporting their quarterly earnings and giving an operational update. I'm expecting a beat and about 56K BOE/day exit rate. It is trading for only $30,000 per flowing barrel which is a pretty big discount compared to most producers and most acquisitions. They also have lots of low risk wells to drill and decent net backs because they sell oil at better rates than many other Cdn producers.

At some point the chill in Cdn oil will settle down and the stocks will advance. Right now the upside is being seen mostly by those outside of this country but 50-60% premium buyouts have been common in the past year.

By all means trade this one. There is a ton of volatility to take advantage of.


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## thenegotiator

It is a dangerous play for novices though.
anyone reading this should be careful.


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## thenegotiator

http://www.theglobeandmail.com/glob...20130109&archive=ccnm&slug=201301090845792001
whoever is interested in PMR pick


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## PMREdmonton

thenegotiator said:


> http://www.theglobeandmail.com/glob...20130109&archive=ccnm&slug=201301090845792001
> whoever is interested in PMR pick


If you believe in the investing thesis (they get bumps in the early part of the year by beating in the 4th quarter after disappointing in the second quarter due to inherent aspects of their business - they get late spring breakups causing earnings miss in the Spring and they spend a lot of their capital in the fourth quarter which gives a big boost to production at the end of the year.

These guys have a lot of land to drill for a long time and I believe oil will be more expensive in the near future than it is now as people come to realize how quickly the Bakken oil shale wells dry up and how expensive it is to drill in deep ocean water. The thesis that suggests future oil prices will be higher due to lack of available cheap supply is intact and these guys have enough land to drill for quite a few years at fairly cheap rates in risk-free Alberta and Saskatchewan.

What was a big loser at 30 can be a decent winner at $6-10. I don't think we see $6 again and I'm not sure it'll break much below $10 so now would seem to be a decent entry point for those who want to trade or even those who want to buy and hold and collect the 8% divy with available 5% discount DRIP through the company.

They report tomorrow shortly after the bell for any who are interested. I haven't bought any in a long time but prices near $10 intrigue me quite a bit. I still haven't decided if I'll buy some more here.


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## thenegotiator

PMREdmonton said:


> If you believe in the investing thesis (they get bumps in the early part of the year by beating in the 4th quarter after disappointing in the second quarter due to inherent aspects of their business - they get late spring breakups causing earnings miss in the Spring and they spend a lot of their capital in the fourth quarter which gives a big boost to production at the end of the year.
> 
> These guys have a lot of land to drill for a long time and I believe oil will be more expensive in the near future than it is now as people come to realize how quickly the Bakken oil shale wells dry up and how expensive it is to drill in deep ocean water. The thesis that suggests future oil prices will be higher due to lack of available cheap supply is intact and these guys have enough land to drill for quite a few years at fairly cheap rates in risk-free Alberta and Saskatchewan.
> 
> What was a big loser at 30 can be a decent winner at $6-10. I don't think we see $6 again and I'm not sure it'll break much below $10 so now would seem to be a decent entry point for those who want to trade or even those who want to buy and hold and collect the 8% divy with available 5% discount DRIP through the company.
> 
> They report tomorrow shortly after the bell for any who are interested. I haven't bought any in a long time but prices near $10 intrigue me quite a bit. I still haven't decided if I'll buy some more here.



PMR.
going to sleep but i will briefly tell ya my Thesis.
oil is a geopolitical weapon IMo.
THE USA has increased their oil production by a substantial amount.
I do not buy stocks pre report to hold them.
i buy after the report.
also what is low can and will go lower providing the elements are there.
i do not predict price direction.
i trade it.
just like today .
i trade natural gas.
this is where my money is.
70% of my money is in natural gas (commodity)
buying pre report is absolutely insane , specially dealing with a highly volatile commodity.
I do not care to pay a premium after if the STORY is good.
i think that their divvy s are way too high for an investor to buy and hold.
i will wait for the news release.
where is the penny stock thread?
u and hawk are the interested ones by the way.
i opened a thread on BTO.
nothing that the public does not know


----------



## al42

Update is out.

http://www.petrobakken.com/news/vie...date-and-2013-capital-and-production-guidance


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## thenegotiator

update is out and the mkt is answering right?


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## PMREdmonton

Yes and they are rightly getting hammered.

Will need to find out why production will fall next year and sustanability of the dividend.

I'm not selling just yet but I would certainly not buy either. I don't know if they are getting squeezed now by the oil price differential (they hadn't been in the past) and thus have falling netbacks. We do know that the wells in these areas tend to decay fairly well so failure to drill adequately will lead to declines in production but it is disappointing their exit rate will be less next year even if their average production will be higher.

They probably need higher oil prices to be competitive and the market is expecting an eventual divy cut or unacceptable dilution of earnings from the DRIP.


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## thenegotiator

it is coming back.
it seems to feel comfotable at 10 bux.
good to daytrade for now


----------



## Ethan

I cannot figure out why Petrobakken is still paying a dividend. For the 9 months ended 09/31/2012, PBN had free cash flows of $(152) million. Despite this, they decided to pay cash dividends of $59 million, bought back $51 million in shares and had to liquidate some property to Crescent Point in order to stay afloat.

Petrobakken's strengths are its strong land position and their high netbacks. Their capital allocations are simply bizarre. A company struggling to finance their expansion should not be paying dividends, let alone a dividend as high as Petrobakkens.

Petrobakken was a great opportunity 16 months ago when oil was at $100, they had a PE of 4 and a 13% dividend yield. I've realized gains well in excess of 100% on this stock, and have only 22% of my shares remaining. I am not excited about their future and have sold calls to get rid of my remaining shares.


----------



## thenegotiator

PMREdmonton said:


> Yes and they are rightly getting hammered.
> 
> Will need to find out why production will fall next year and sustanability of the dividend.
> 
> I'm not selling just yet but I would certainly not buy either. I don't know if they are getting squeezed now by the oil price differential (they hadn't been in the past) and thus have falling netbacks. We do know that the wells in these areas tend to decay fairly well so failure to drill adequately will lead to declines in production but it is disappointing their exit rate will be less next year even if their average production will be higher.
> 
> They probably need higher oil prices to be competitive and the market is expecting an eventual divy cut or unacceptable dilution of earnings from the DRIP.


like i said .
it is a great daytrader.
not holding it though.
as u could see the news are not charming at all.


----------



## thenegotiator

Ethan said:


> I cannot figure out why Petrobakken is still paying a dividend. For the 9 months ended 09/31/2012, PBN had free cash flows of $(152) million. Despite this, they decided to pay cash dividends of $59 million, bought back $51 million in shares and had to liquidate some property to Crescent Point in order to stay afloat.
> 
> Petrobakken's strengths are its strong land position and their high netbacks. Their capital allocations are simply bizarre. A company struggling to finance their expansion should not be paying dividends, let alone a dividend as high as Petrobakkens.
> 
> Petrobakken was a great opportunity 16 months ago when oil was at $100, they had a PE of 4 and a 13% dividend yield. I've realized gains well in excess of 100% on this stock, and have only 22% of my shares remaining. I am not excited about their future and have sold calls to get rid of my remaining shares.


that was a very good insight.
i was finding a little more about the STORY.
as for strong land position .... u are damn right.
it all comes down to management right?


----------



## doctrine

There's not much good news in any high dividend paying oil stocks. They're all just paying out massive dividends. I'm sticking with oil companies that pay less dividends than net earnings (and not cash flow). Unfortunately, there are not a lot of them, and even less in the small-cap space.


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## thenegotiator

:hopelessness:


PMREdmonton said:


> Yes and they are rightly getting hammered.
> 
> Will need to find out why production will fall next year and sustanability of the dividend.
> 
> I'm not selling just yet but I would certainly not buy either. I don't know if they are getting squeezed now by the oil price differential (they hadn't been in the past) and thus have falling netbacks. We do know that the wells in these areas tend to decay fairly well so failure to drill adequately will lead to declines in production but it is disappointing their exit rate will be less next year even if their average production will be higher.
> 
> They probably need higher oil prices to be competitive and the market is expecting an eventual divy cut or unacceptable dilution of earnings from the DRIP.



:hopelessness::biggrin::rolleyes2:


----------



## thenegotiator

time to think about a trade here.
problem is that all indexes are overbought.
risky trade.
what do ya say PMR?
i always like to hear ya.


----------



## PMREdmonton

IDK - long-term this is a great stock with strong buyout potential due to their massive and low risk drilling inventory of light oil plays in oil friendly Saskatchewan and Alberta. The big problem is getting proper prices for their crude output which will depend on either getting enough rail capacity or getting Keystone done or developing some of the other potential solutions (pipeline twin to BC on existing pipeline space or pipelines to Eastern Canada where there is more refining capacity.

Those things will eventually happen as such a pricing differential cannot exist in perpetuity. Refiners are making huge margins presently if they are in the right location. I do know drilling has slowed down and development has slowed down and this may help a bit. PBN is trying to conserve cash and will decrease cap-ex this year so they are taking appropriate reaction to the issue IMO.

The thing about this stock is it is reviled right now being cut in half within a year. There can definitely more downside but they do have decent EBITDA. I think a divy cut has already been priced in and their cash situation is benefitted by about 60% participation in their DRIP. Nevertheless, I do see more potential downside although I don't think they touch their lows of 2010.

So for the long-term investor I think you can buy in tranches starting now if you can stand the volatility. They will eventually be bought out probably around $20 based on their reserves and oil production but I don't know when. You could buy some now and buy more on further dips which will likely present themselves if you are an averaging down type.

They are technically oversold with now news pending for awhile so you could probably try and day trade them off of troughs.

I haven't added to my position yet.

Right now I still like Birchcliff more but if PBN dropped some more I might add around 7.50-8.00 or so.


----------



## Ethan

Although I am not happy with the operations and capital allocations of this company, the current valuation is simply too low.

As at 09/30/2012, Petrobakken had a book value of $3.362 billion against shares outstanding of 190 million shares.  The book value per share is $17.66.

As at 12/31/2012, using a 10% discount rate, Petrobakken had total proven + probable reserves of $4.720 billion, or $24.79/share.

I don't want to own shares in this company, but there is no way the share price can continue to plummet, so I sold naked puts. 01/17/2015 $7 puts for $1.35. If I get exercised, my cost base would essentially be $5.65. $5.65 is 32% of PBN's book value, and 23% of PBN's estimated reserves. There is no way Petrobakken could erode 68% of their book value, or 77% of their estimated reserve value, in a 2 year period.

Selling puts against PBN's light oil assets at a strike price discounted 68%-77% is a risk I'm willing to take.


----------



## thenegotiator

Ethan said:


> Although I am not happy with the operations and capital allocations of this company, the current valuation is simply too low.
> 
> As at 09/30/2012, Petrobakken had a book value of $3.362 billion against shares outstanding of 190 million shares. The book value per share is $17.66.
> 
> As at 12/31/2012, using a 10% discount rate, Petrobakken had total proven + probable reserves of $4.720 billion, or $24.79/share.
> 
> I don't want to own shares in this company, but there is no way the share price can continue to plummet, so I sold naked puts. 01/17/2015 $7 puts for $1.35. If I get exercised, my cost base would essentially be $5.65. $5.65 is 32% of PBN's book value, and 23% of PBN's estimated reserves. There is no way Petrobakken could erode 68% of their book value, or 77% of their estimated reserve value, in a 2 year period.
> 
> Selling puts against PBN's light oil assets at a strike price discounted 68%-77% is a risk I'm willing to take.





PMREdmonton said:


> IDK - long-term this is a great stock with strong buyout potential due to their massive and low risk drilling inventory of light oil plays in oil friendly Saskatchewan and Alberta. The big problem is getting proper prices for their crude output which will depend on either getting enough rail capacity or getting Keystone done or developing some of the other potential solutions (pipeline twin to BC on existing pipeline space or pipelines to Eastern Canada where there is more refining capacity.
> 
> Those things will eventually happen as such a pricing differential cannot exist in perpetuity. Refiners are making huge margins presently if they are in the right location. I do know drilling has slowed down and development has slowed down and this may help a bit. PBN is trying to conserve cash and will decrease cap-ex this year so they are taking appropriate reaction to the issue IMO.
> 
> The thing about this stock is it is reviled right now being cut in half within a year. There can definitely more downside but they do have decent EBITDA. I think a divy cut has already been priced in and their cash situation is benefitted by about 60% participation in their DRIP. Nevertheless, I do see more potential downside although I don't think they touch their lows of 2010.
> 
> So for the long-term investor I think you can buy in tranches starting now if you can stand the volatility. They will eventually be bought out probably around $20 based on their reserves and oil production but I don't know when. You could buy some now and buy more on further dips which will likely present themselves if you are an averaging down type.
> 
> They are technically oversold with now news pending for awhile so you could probably try and day trade them off of troughs.
> 
> I haven't added to my position yet.
> 
> Right now I still like Birchcliff more but if PBN dropped some more I might add around 7.50-8.00 or so.



ethan
i like ur strategy.
good risk reward.
pmr... i am not a long term stockholder.
u know that by now.
i am eying this puppy.
it still is a great daytrader.
i am patient though... but lets see the next few weeks how this funny mkt behaves.

i have not had a chance to look deep inside their assets.
their divvys are ridiculous IMO.
thks for the input.


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## PMREdmonton

Ethan, how or where did you trade options on PBN? I can't find any info on options for them. Was it an American exchange or Canadian and where do you find info on the option values? 

Thanks.


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## Ethan

I use Scotia iTrade, PBN options show up on there the same way as any other options on Canadian listed equities. Does your platform not show options for PBN?


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## thenegotiator

i guess not?:rolleyes2:
that is really really odd.
very iliquid though


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## PMREdmonton

I use interactive brokers and not much came up when I was trying to sell a put for PBN. It may have been a glitch and I may try again on Monday.

TN, I realize that the put is illiquid but this is a stock that I don't mind owning at all at the exercise price so it doesn't matter to me if I can't avoid getting assigned in the end.


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## HaroldCrump

I can see PBN options on Canadian exchange as well

I don't believe PBN is listed in NY, at least not on the main board.


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## thenegotiator

Ethan and PMR
we are almost there for a good entry.
now now do not blame me if u do lose on this trade.
it will be purely a trade, not a buy and hold.
before u both bash me.

PMR what are u looking at the Ng arena in terms of companies?
just curious here.
i promise i will have a proper conversation with ya.
by the way how in heaven u do not have the options chain on this stock?
i just do not undersatnd it.
specially with IB.


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## PMREdmonton

For natty I like Birchcliff, Peyto (around 18-20), Range Resources and Encana.

Natty gas hugely undervalued and will go up at some point as more consumers come online and more coal electric power gets decommissioned in Canada and the USA. I also think another source of consumption will be truck fleets and buses which can use the high efficient engines produced by Cummins-Westport. I know some auto manufacturers are looking for nat gas engines for their consumer fleets.


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## thenegotiator

PMREdmonton said:


> For natty I like Birchcliff, Peyto (around 18-20), Range Resources and Encana.
> 
> Natty gas hugely undervalued and will go up at some point as more consumers come online and more coal electric power gets decommissioned in Canada and the USA. I also think another source of consumption will be truck fleets and buses which can use the high efficient engines produced by Cummins-Westport. I know some auto manufacturers are looking for nat gas engines for their consumer fleets.


man
do we finally agree to agree to a certain extent?
whew.
forget about hugely undervalued.
that is an absolute irrational answer.
natty is not undervalued at all .
u mentioned certain things in ur answer that points to the right direction but not the auto industry nor more consumers coming online.
specially the part about buses and trucks and whatever. that is noise.
dunno range resources.
hint.... keep an eye on ECa.
that is all i will share with ya.


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## Ethan

PBN is up 8.5% today, anyone know whats going on?


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## Jon_Snow

Ethan said:


> PBN is up 8.5% today, anyone know whats going on?


Yeeeehaaaaahhhh!

About bloody time, this stock has not been kind to yours truly. $80 monthly dividend is nice though.


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## PuckiTwo

*Petrobakken changes name+trading symbol*

Source: Questrade Client Services

Effective today, May 28th, 2013, Canadian-listed shares of Petrobakken Energy Ltd (PBN.TO) have undergone a name, symbol, and security identifier change. The new trading symbol will be LTS.TO.

U.S.-listed shares of Petrobakken Energy Ltd (PBKEF) have undergone a name and security identifier change. The trading symbol is not expected to change.


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