Novus Energy Inc NOVUF

RE: RE: RE: Nvs deleted

[eebler]

I've traded in/out of Novus in the past but just bought in again recently and now plan to hold for the longer term.  Biggest thing that I see is the production growth and trend towards a higher oil weighting by exit-2012.  If my calcs are right, they are planning year-over-year production growth of 65%.  That is top-shelf type of growth, and while I recognize it is easier to do the smaller you are, it still is a notable growth rate.   Their oil weighting will also go from 76% during 2011 to 84% for 2012, which means that in order to do that you actually need an year-end exit point higher than 84%.  They have done an almost 180 in terms of going from primarily gas to primarily oil in the last few years.  With their netbacks continuing to improve with the oil-weighting and expected to move into the low $50's, and the capex projecting an increase of only $15m in net debt, I would say that should produce some good cashflow.  As long as they don't float more shares out in the belief that they have to grow too much quicker, they should continue to re-rate as the market wakes up to solid production growth with top-end netbacks.  WIth natgas pricing taking it in the chops these days, there are probably also some natgas-focused companies that are going to look to get some higher weightings in oil, so this could be a big year for acquisitions and consolidation. 

 

eebler