Crown Point Energy Inc V.CWV

Cormark Writeup

[tony0911]

Nice Cormark writeup.  Couldn't get the charts to come in.


Garett Ursu, CFA, (403) [e-mail]
MORNING MEETING NOTESNOVEMBER 8, 2011
Recommendation: BuyTarget Price: $3.00

Crown Point Ventures Ltd. (CWV-TSXV)
Updated Drilling Plan Includes Multi-Well VacaMuerta Program At Cerro Los Leones
Current Price
52 Wk High
52 Wk Low
NAV - (1)
P/NAV 1.3xNet Debt - 11E (MM) -$26.8D/CF (2) NADPS
.00
T arget
Proj. ReturnBasic Sh. (O/S)FD Sh. (O/S)Mngt. & Dir.
- Pct. of basicMkt. Cap. (MM)Float (MM)
EV (MM)
F2010A F2011E
17 24318 2144 776 22511 189
0% 0%
NA 847%(
.01)
.01(
.02)
.00(
.01) (
.01)(
.01)
.00
(
.06)
.01(
.06)
.01$79.50 $90.25
$4.37 $4.10309.5x187.2x
$3.00178%54.759.8
4.48.0%$59.0$54.3$63.8F2012E
400
8001,3331,8501,100
5%356%

.01
.03
.06
.08

.18
.18$88.00
$4.505.9x4.5x
$41,078
Unless otherwise denoted, all figures shown in C$
Investment Thesis:
Crown Point provides investors with pure-play exposure to Argentina. TheCompany’s conventional properties represent low-risk, high-impact productionand reserve while Cerro Los Leones could materially change the profile andvalue of the Company in the near term.
Highlights:• Event
Crown Point provided an updated Argentine exploration and developmentprogram including Vaca Muerta and high impact conventional targets.
• Details
Progress continues at Crown Point’s El Valle block in Argentina, whereproduction is currently 600 B/d with an additional 400 B/d behind pipe. TheCompany expects to drill 10–24 wells at El Valle over the next 24 months witha portion of the program focusing on exploration leads. Following the initialprogram at El Valle, 2–3 development wells are planned at Canadon Ramirez.In the Neuquen basin, Crown Point will drill 1–2 high impact wells at Lagunade Piedra and 4–8 wells at Cerro Los Leones next year targeting bothconventional zones as well as the unconventional Vaca Muerta shales.Potential resources at Cerro Los Leones could reach 120 MMB in conventionalformations and 100–160 MMB in the Vaca Muerta.
• Recommendation
With increasing production and cash flow supporting an increasingly activeexploration and development program in Argentina, Crown Point remains oneof the most attractive names in our international universe. We are maintainingour $3.00 target price and Buy rating on Crown Point Ventures.
Source: BigCharts.com, November 7, 2011
$1.08$2.40
.97
.84

Dividend Yield
Fiscal YE Aug.
Production (BOE/d)
CFPS
NA
Q1
Q2
Q3
Q4
FY
% Gas
Growth (3)Q1
Q2Q3Q4
Basic
Diluted
AAA
AAA







NYMEX WTI (US$/Bbl)NYMEX Gas (US$/MMBtu)P/CF
EV/DACF

EV/BOE/d $336,876
(1) 10% DCF, AT
(2) Net debt to trailing cash flow(3) Per share production growth.
Company Description:







Crown Point Ventures is a Canadian based E&P companyoperating in the Neuquen and San Jorge Basins inArgentina. The Company has both low risk, high impactconventional opportunities as well as potential exposure toshale oil and shale gas.





Our disclosure statements are located at the end of this report

Garett Ursu, CFA, (403) [e-mail]
MORNING MEETING NOTESNOVEMBER 8, 2011
Argentina Drilling Plans:

The Company’s drilling activities at El Valle in the San Jorge basin continue on track with 10–24 wellsplanned for the next two years, beginning in January. The first 3–4 development wells will targetmultiple conventional formations (Canadon Seco, Caleta Olivia and Mina el Carmen) while a portionof the larger program (two wells) will focus on exploration leads in the southwest area of the blockthat were developed with seismic and that could prove-up possible new play types.
Following the initial drilling at El Valle in March/April 2012, the rig will move to the 100% WI CanadonRamirez block (also in the San Jorge basin) and begin drilling a 2–3 development well program.These wells are targeting a western extension of the Mata Magallanes Oeste field (5.4 MMB to date)that has been identified on 3D seismic. Investors should note that there was a confirmatory welldrilled into the western extension in 2008.
Figure 1: Canadon Ramirez
Source: Company Reports
In the Neuquen basin, Crown Point will drill one or two high impact, seismically defined explorationwells at Laguna de Piedra beginning in Q2/12. Targeting the Punta Rosada and Quintuco sandstoneson a 3,100 acre feature, potential (unrisked) recoverable resource in the area could reach 34 MMB,with four additional smaller features identified on 3D seismic not included in this estimate.
At Cerro Los Leones in the north of the Neuquen basin (50% WI), environmental permits areexpected to be received in the near term with 3D seismic to be shot beginning in early 2012.Following seismic interpretation, drilling is expected to commence late in Q2/12.
A 2–4 well program at Cerro Los Leones will target the Neuquen group and the Vaca Muerta shalesin the western area of the block, with an additional 2–4 wells to follow in the northeast of the blocktargeting the Neuquen, Loncoche and Hutrin formations/groups.
The Company will fracture and perforate the Vaca Muerta in vertical wells initially, with the potential todrill additional vertical wells or horizontals into the Vaca Muerta as results dictate. Based onsurrounding fields (see below), potential recoverable resources at Cerro Los Leones could reach 120MMB in conventional formations and 100–160 MMB in the unconventional Vaca Muerta.









Our disclosure statements are located at the end of this report

Garett Ursu, CFA, (403) [e-mail]
MORNING MEETING NOTESNOVEMBER 8, 2011
Investors should recall that the Cerro Los Leones area is highly productive with surrounding fieldsincluding Llancanelo (2–3 billion barrels of heavy oil), Cerro Fortunoso (35 MMB to date), PuestoRojas/Cerro Mollar (52 MMB potential) and Cajon de los Caballos (currently 600 B/d).
Of importance for the Company’s unconventional program and potential, the nearby Valle de RioGrande field (to the south of Cerro Los Leones) has produced 89 MMB to date and is still producingapproximately 5,000 B/d from the igneous intrusives in the base of the Vaca Muerta.
Production Update:
• Current production is approximately 600 B/d (El Valle) with an additional 400 B/d behind pipe.Management expects 200 B/d of behind pipe volumes to be on-stream in Q1/12 with the remainderexpected to come on-stream following facility enhancements and field electrification. The expansionof oil processing facilities is expected to increase capacity from the current 600 B/d to an ultimate1,500 B/d.
Guidance / Estimates:
• Our estimates for F2011 and F2012 are unchanged with yesterday’s update.Financial Flexibility:
• At the end of Q3/F11 Crown Point had $32.7 MM in positive working capital. We expect the Companyto exit F2011 with $26.8 MM in positive working capital.
Valuation:
Based on a recent stock price of $1.08, Crown Point is trading at 1.3x its NAV.
Our risked NPV for Crown Point is unchanged at $2.95 per share and remains the basis for our $3.00
target price on the Company.
Conclusion:
With increasing production and cash flow out of the San Jorge basin supporting an increasingly activehigh impact conventional exploration program in the San Jorge and Neuquen basins and materialpotential upside in the emerging Vaca Muerta shales, Crown Point remains one of the most attractivenames in Argentina and our international universe.
We are reiterating our Buy rating on Crown Point.






I, Garett Ursu, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company(ies)and its (their) securities. I also certify that I have not been, and will not be receiving direct or indirect compensation in exchange for expressing thespecific recommendation(s) in this report.







Our disclosure statements are located at the end of this report

Garett Ursu, CFA, (403) [e-mail]
MORNING MEETING NOTESNOVEMBER 8, 2011


Our disclosure statements are located at the end of this report

MORNING MEETING NOTESNOVEMBER 8, 2011





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