Crown Point Energy Inc V.CWV

Casimir Writeup

[tony0911]

November 8, 2011


CROWN POINT VENTURES LTD. (CWV-V, $1.00)
Recommendation: Strong Buy; Target: $3.00
Analyst: Kevin Shaw, P.Eng. MBA (403) [e-mail]
Associate: Ryan Galloway, CMA (403) [e-mail]



Turning Up the Heat in ’12 as One of the Most Active South American Small-cap E&PDrillers: Min. 20 Wells on 4 Key Blocks including Vaca Muerta Shale Tests at Neuquén






Projected Total Return
Market Data
52-Week Trading Range
Median Weekly V olume
Shares Outstanding, Basic (mm)
Shares Outstanding, Diluted In-the-Money (mm)Market Capitalization ($mm)
Estimated Net Debt (Cash) Q4/11 ($mm)Enterprise Value ($mm)
Forecasts
Fiscal Year End: Aug 31
Average Gas Production (mcf/d)Average Oil & Liquids (bbls/d)Average Total Production (boe/d)Percentage Oil
Realized Gas Price ($/mcf)
Realized Oil & Liquids Price ($/bbl)Modeled Revenues ($mm)
CF From Operations ($mm)Year-End Net Debt (Net Cash) ($mm)Capex (ex A&D) ($mm)
Net Debt / Cashflow (x)
Per Share ($)
EPS ($, FDTSM)
CF From Operations (FDTSM)
DACF/sh (FDTSM)
P/E(x)
EV/DACF(x) n/m
177.8% Perfect Batting Avg. at El Valle (San Jorge) to dateRamping Light Oil Prod’n; Rig to run steady in ‘12
$1.01 - $2.36
319,500 Focused on building light oil cashflows with high netbacks,


CWV plans to drill 10-24 wells over the next 24 months at El
Valle, at an average cost of $1.5mm each, with EURs of up to$(21.3) 240 mboe. CWV has a 100% success rate on 11 wells at El
60.8$65.6

F2010A
-11
11100%
-50.49
0.2(2.6)0.25.9
n/m
Valle thus far, with current production of 600 bbls/d andanother 400 bbls/d behind pipe coming online in H1/12. Thecompany has a min. of ~30 locations in inventory & a portionof the ‘12 drilling program will aim to add inventory viaexplor’n success based key seismic leads in the southwest.
Cañadon Ramirez (San Jorge Basin): Proving up anExtension to the Magallanes Oeste Oil Field
Following the El Valle program, the company plans tomobilize its rig to do a 2-3 well development program in aregion with existing 3D seismic, as an extension of the MataMagallanes Oeste field, which has produced 5.4mmbbls inthe past. We estimate a minimum
.42/sh risked value tothis play, with 50 mmbbls gross recoverables. Crown Pointmay accelerate this drilling alongside El Valle.
Game-changer Cerro de los Leones (Neuquén): HighImpact Conv’l & Vaca Muerta Shale Drilling in H1/12
Post environmental permits, CWV plans to commence 2Dand 3D programs in Q1, followed by the start of a multi-wellexplor’n program in Q2, drilling several conventional oilexploration wells with 8 key play types in focus. Whiledrilling the conventional plays, CWV will get a ‘free look’ atthe Vaca Muerta unconventional shale. With +3 Billion bblsOOIP potential in Vaca Muerta, initial testing ofcommerciality alone is a company-maker for CWV. We viewLos Leones is worth a minimum of $2.50/sh risked and anadditional $1.36/sh (minimum) on Vaca Muerta success.
54.6
$44.3
F2011E F2012E
- 2,137216 1,000216 1,356100% 74%
- -66.81 60.004.3 22.0(2.0) 9.6
(27.7) (11.8)10.0 27.0
n/m n/m
$(0.06) $(0.09)$(0.04)
.17$(0.04)
.17

$(0.07)$(0.11)$(0.10)
n/m n/m n/mn/m 4.4x
EV/(Avg Boe/d)
Asset Values
Working Capital at 2011FYEProceeds from Dilutive SecuritiesOther
EMV of Exploration & Development ProjectsGross Unrisked Recoverable Resource (mmboe)Net Unrisked Recoverable Resource (mmboe)Net Risked Recoverable Resource (mmboe)
n/m
$205,297 $32,646


EMV ($mm) SuccessEMV ($mm) Risked
Price$2.50
$2.00$1.50$1.00
.50
.00
08-Nov-10
$$$
$$
(mm) /sh27.68 $ 0.467.61 $ 0.13- $ -
54626467
955 $ 15.72239 $ 3.93
Volume (000s)2,000
1,5001,000

Laguna de Piedra (Neuquén): High Impact Multi-Zone500 Light Oil Exploration
08-Mar-11
08-Jul-11
Source: ThomsonOne, Company Reports, Casimir Capital Ltd.
0
CWV is targeting Punta Rosado & Quintuco Sandstones on3,100 acres, w/ 3D-seismic. Success in this S.E. flank ofNeuquén has a gross recoverable estimate of 34 mmboe.
© Casimir Capital Ltd., Member of IIROC and the CIPFToronto, Ontario M5H 4E5, Canada145 Adelaide St. W, Suite 200



CROWN POINT VENTURES LTD.
Valuation
We value Crown Point at $3.00/sh based on current working capital of
.58/sh plus the risk-adjusted EMV of upside in the 4 key plays of $3.93/sh, blended with estimated 2012 DACFwith a 5.0x multiple, at $1.29/sh.
Figure1: RiskAdjustedEMVofIncrementalUpside

Region / Project
El Valle
Canadon Seco (Oil)Canadon Seco (Gas)Caletra Olivia
Mina el Carmen
Laguna de Piedra
Punta Rosa and PrecuyanoQuintuco
Cerro de los Leones
Fold Belt Oil (West)
Shelf Oil (East)
Vaca Muerta Shale (Oil & Gas)
Canadon RamirezMultiple oil plays
Total
Initial Capital /ExplorationCost ($mm)

.00
.00
.00
.00
$8.00$8.00
$8.00$8.00$30.00
$8.00
$70.00
COS(%)
88%88%88%88%
15%15%
25%40%15%
15%
WorkingInterest(%)
50.0%50.0%50.0%50.0%
25.0%25.0%
50.0%50.0%50.0%
100.0%
ParticipatingInterest(%)
50.0%50.0%50.0%50.0%
50.0%50.0%
50.0%50.0%50.0%
100.0%
Gross UnriskedRecoverableResource
9.62.86.61.6
112.824.8
128.0110.0100.0
50.0
546.2
SuccessNPV/boe
$5.00$3.50$5.00$5.00
$5.00$5.00
$5.00$5.00$4.30
$5.00
NPV TimeValueAdjustment
0.910.910.910.83
0.750.75
0.830.830.39
0.83
SuccessEMV($mm)
$21.8$4.5$15.0$3.3
$105.9$23.3
$264.5$227.3$82.8
$206.6
$954.9
RiskedEMV($mm)
EMV/sh($) Success
EMV/sh($) Risked

.31
.06
.22
.05

.22
.02
$1.05$1.46
.12

.42
$3.93


$19.1
.36$3.9
.07$13.1
.25$2.9
.05
$13.3 $1.74
.9
.38
$63.6 $4.35$88.9 $3.74$7.5 $1.36
$25.4 $3.40
$238.7 $15.72




Source: Company Reports, Casimir Capital Ltd.Figure2: TargetDerivation

Valuation Method: Net Asset Value & EMV of Risked Upside


Working Capital Per Share (Incl Dilution Proceeds)
EMV of Risk-Adjusted Incremental UpsideValuation
Valuation Method: Cash Flow Multiple
Value Inclusion

.58 100%
$3.93 100%
Target Price Weighting
$1.29 100%
100%
Value Weight
$4.51 50%$1.29 50%
100%
ValuationBuild-Up

.58
$3.93
$4.51
Valuation
$1.29
$1.29
Impact
$2.26
.64
$2.90







Forecast PerShare
F2012E DACF
.17Valuation
Target Derivation
Method
TargetMultiple5.0x
Target EV/sh

.83
Net Debt(Cash) / sh-
.46





Estimated Risked NAV and Incremental EMV of Risked UpsideCash Flow Multiple
Target Price
Source: Company Reports, Casimir Capital Ltd.



Analyst: Kevin Shaw, P.Eng. MBA (403) [e-mail]
Associate: Ryan Galloway, CMA (403) [e-mail]
© Casimir Capital Ltd., Member of IIROC and the CIPFToronto, Ontario M5H 4E5, Canada145 Adelaide St. W, Suite 200

2

CROWN POINT VENTURES LTD.



Company Name

Disclosures

Crown Point Ventures Ltd.


3

Disclosure List
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Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. Theinformation contained herein is for information purposes only and this report is not, and is not to be construed as, and offer to sell or asolicitation of an offer to buy any securities. The information and opinions contained herein have been compiled or derived from the sourcesbelieved reliable, but no representation or warranty, expressed or implied, is made to their accuracy or completeness. Neither Casimir nor itsaffiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents.
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Affiliate Related Disclosures: Crown Point Ventures Ltd. (the “subject company”) is not a client of Casimir Capital L.P. and its affiliate CasimirCapital Ltd. and has not been a client during the 12-month period preceding the date of distribution of this research report. Duringaforementioned period, Casimir Capital L.P. and its affiliate Casimir Capital Ltd. have not provided investment banking services to the subjectcompany and have not received investment banking or non-investment banking related fee or compensation from the subject company. CasimirCapital L.P. and its affiliate Casimir Capital Ltd. intend to seek compensation for investment banking services from the subject company duringthe next 3 months. This report has been prepared by Casimir Capital Ltd., not Casimir Capital L.P. and is therefore deemed by Casimir Capital L.P.to be a Third-Party Research Report as per FINRA rules and regulations.
Analyst: Kevin Shaw, P.Eng. MBA (403) [e-mail]
Associate: Ryan Galloway, CMA (403) [e-mail]
© Casimir Capital Ltd., Member of IIROC and the CIPFToronto, Ontario M5H 4E5, Canada145 Adelaide St. W, Suite 200

3

CROWN POINT VENTURES LTD.
Investment Ratings System
Casimir’s system for rating oil & gas investment opportunities assumes that these securities have higher levels of risk than the broader stockmarket. As a result, our oil and gas research evaluates securities primarily on a return basis. In addition, due to a variety of factors including butnot limited to market conditions, political risk, and news flow, we may at our discretion adjust our investment ratings to reflect short-termtrading conditions that are different than our long-term view of the returns on specific securities.
Below is a summary example of these investment ratings:


Investment Rating

Rating Description
Speculative Buy

A security, which at the time the rating is instituted and or reiterated, indicates an expectation of exceptionallystrong returns but the risk of a significant loss is materially higher than other oil and gas companies.

Strong Buy
A security, which at the time the rating is instituted and/or reiterated, indicates that we expect it to significantlyoutperform the broader market.

Buy

A security, which at the time the rating is instituted and/or reiterated, indicates that we expect it to modestlyoutperform the broader market.

Hold

A security which at the time the rating is instituted and/or reiterated, indicates that we expect the security toperform at levels comparable to the broader market.

Sell

A security which at the time the rating is instituted and/or reiterated, indicates that the security is likely tounderperform the broader market.

Not Rated



Casimir Capital Ltd. does not have an opinion or expectation as to the price of the security.