You have to Read this. LNG Co-op Offers Painted Pony A Door On Asia
Whatever dominates their agendas, few Canadian juniors are talking about liquefied natural gas (LNG) these days. An exception is Painted Pony Petroleum Ltd., which turned in a strong first quarter last month (DOB, May 28, 2012).
At the company's annual meeting in Calgary yesterday, chief executive Pat Ward described the company's Bakken crude oil and Montney natural gas plays as its "big ponies," while its Viking oil play is the "little" pony.
After the meeting, Ward was asked whether or not low gas prices have created bargains for juniors looking for discounted properties. His view was that such properties are out there, but not all would be bargains, even at low prices.
"There are a lot of companies looking to buy, but the first assets that are for sale are going to need a lot higher gas prices to make sense," Ward said. At the same time, he said Painted Pony is looking around.
"But [the asset] has got to fit and it's got to be a good deal. We've actually bought a couple of market assets right on our block. We've bought our partners out."
Ward acknowledged that, in recent months, the stock prices of many gas-weighted juniors have been in the tank, potentially making for some attractive takeover targets (this week, Painted Pony traded on the Toronto Stock Exchange at about $7.50 per share, well below the $14 it traded for in August 2011). The company is 77 per cent gas-weighted.
Asked if now might be a good time to acquire another gas-producer, Ward outlined the hurdles that would have to be overcome before Painted Pony would go down that road.
"They've got to have good assets: I mean the best stuff," he said. As well, he underscored the importance that LNG now has for Painted Pony, which is part of a co-operative that plans to sell Canadian LNG off the West Coast, mainly into Asian markets.
"The link to LNG is very important [for us]. We'd be looking at something in our [northeast British Columbia] corridor, rather than buy an asset that's out in ... Alberta. For us, that doesn't make any sense."
The rationale for exporting Canadian LNG has a lot to do with gas prices, he said. Markets in southeast Asia have seen consistently higher prices, not only in recent months, but for the past couple of years. With a door on Asian markets, the company would avoid many of the market limitations its North American competitors still have to face.
Painted Pony is part of the Douglas Channel LNG Partnership, a private co-operative whose members include both buyers and sellers of natural gas, as well as B.C. First Nations. The group plans to use barges to ship Canadian LNG to Asian markets, and in February 2012 obtained the necessary export permit from Canada's National Energy Board (NEB).