Big Banc Split Corp T.BNK

TD upgrades..

[cashtango00]

pay attention to the last 2 paragraphs.  They no longer feel it is likely an equity issue is required and feel that any reworking of their agreement with the government will have minimal financial implications... upgraded the stock.

Source:
TD Canada Trust:

Details & Outlook Although the overall reserves were down, EOR reserve volumes doubled in the Patos-Marinza field (4.6mmBOE PDP, 14.7mmBOE 1P up 71%, 21.1mmBOE 2P up 86%, 27.3mmBOE 3P up 104%). Management believes that in a low oil price environment, a high-graded portfolio of EOR locations (which continues to grow; the company has identified over 240 additional contingent patterns) will allow for production maintenance with better economics than new wells. At year-end 2015, the company had implemented 53 polymer and waterflood locations, and had another 100 future locations booked. 1P and 2P volumes remain unchanged, but the company experienced an after-tax NPV10 down 12% and 21%, respectively. Management highlighted on the call that the lower F&D costs being realized on EOR efforts relative to new wells were not being materially accounted for in the reserve auditor valuation. Management continues to combine cost-cutting initiatives, an effective hedging strategy, capital discipline, and development program flexibility to weather the current difficult oil price environment. As a result, non-core drilling has been deferred until further notice, with the primary focus being on core drilling and EOR conversions (16 possible wells, 16 conversions planned for 2016). On the conference call, management reiterated that it believes that a conclusion to the 2011 cost recovery review can be expected in Q2/16, thanks to it now being a binding process. It should set a good precedent for the 2012 cost recovery review. Renegotiations for existing contracts with the government were also mentioned on the call as being expected to have a minimal impact on the long-run economic viability of the company’s projects. As a result of these disclosures, we have eliminated our previous expectation of a dilutive equity issuance this year as we believe that the flexible 2016 work program and reduced likelihood of significant cash outflows related to the disputes with the government have allowed the company a direct route to maintaining cash levels longer than we had previously anticipated.

[wallop13]

Although the reserve evaluator’s 2P NPV10 has been reduced by 21% to US$1.4bln, at C$7.49/share, this remains significantly above the current share price. In fact, the company continues to trade below the evaluator’s 1P NPV10 per share of C$3.42. RLI for 1P is 18 years and 2P is 29 years, once again reiterating the impressive scale of the company’s resource base at Patos-Marinza oil field

[wallop13]

I'm thinking TD will raise their target after earnings Thursday. Maybe Friday morning.

[dubsbs]

Just for the record. TD has never ever been close on anything I've ever owned....... nice to see upgrade but don't pay any attention to the #......

[braincloud]

I don't know any research house got their call right on energy and mining names. Pretty hard to stay on top of targets when the underlying commodity prices are changing weekly.

[sevushka]

I'll be happy if we are not in a tax loss situation come October.  Seems to be the theme with commodity stocks in the last few years.  At the same time, I have been agressively buying, because, in my view, 2016 is a set up year for return of commodity bull in 2017 and 18.  We've had our capitulation in pretty much all the commodities, but oil and uranium, are my favourites.

[wallop13]

That's true. But I'd rather have a raise then a reduction on the target. These targets give investors insight to set their own target. My target is higher then TD's, but I'm factoring in developments I think are likely to materialize.

[braincloud]

I'm in the same camp as Whallop. I think there's going to be some positive news regarding the dispute with the ALBS. It should clear the air nicely IMO. If oil holds we could see a test of the 200 day MA.

[good40]

Depends on your description of " good news ". Any chance that a portion of 2011's $57 million discrepancy could be awarded to the government... and also be used to revise the next 4 years following 2011 ? If they agree to continue payment of $57 million in 2016, regardless of what it is allocated towards, it is not good news. 

[braincloud]

Judging by your comment, THAT has to be the most misunderstood issue out there about BNK. You will see. If you believe any part of what you said to be a possible outcome, then the news will be fantastic!!

[braincloud]

I will go over it just one more time. The profit tax dispute surrounds the capex and opex BNK submitted for audit. The opex/capex number in 2011 was $253 million. In order for the profit tax to be applicable they would have to disallow the entire capex plus have a profit of $106 million. The petroleum Agreement suggests that profit tax is only applicable after cost recovery ( the whole schedule of

[Flowwiththego]

Around what time is the audit set to release?

[good40]

Can you expand your estimation of " a few items that won't amount to anything " ?  A few items from 2011 might also be extended to 2012 and beyond. Braincloud, since you seem to be quite knowledgeable about the PSC, I have a question that you might be able to answer. If there is no revenue, of course there would be no tax payable and money spent is accumulated for future tax

[braincloud]

To answer the first part. Have you read the Petroleum Agreement yet? You'll answer your own question if you have. When I say a few items, I literally mean a few mill more or less, as was done in prior audits that the ALB tax department did. There have been prior challenges to the items that were put into the Cost Recovery Pool over the years. How is there no revenue? They are still selling oil