BEN
BELLATRIX EXPLORATION (T-BXE) $3.55 +0.38
BERENS ENERGY (T-BEN) $2.69 +0.02
Nothing like a takeover to create a little excitement in
the oil and gas patch right? While some people might have
doubts about paying $140,000 a flowing barrel or the fact
that the Cardium is located in Alberta where Ed Stelmach
might be increasing royalty rates...if he is not lowering roy-
alty rates.
But the takeover for $330 million by PetroBakken of tiny
Berens Energy has definitely attracted attention to the car-
dium play and those companies that own land in the area,
such as Vero Energy and Bellatrix Exploration, have certainly
benefitted from being in the right place at the right time.
Ironically we had looked at Bellatrix back on December
11th because one of the best of the oil and gas analysts out
there—Kevin Shaw of Wellington West, had picked it at the
time as one his top three and also Keith Schaefer, editor of
The Oil and Gas Investments Bulletin, also was recom-
mending it as a buy for his model portfolio. Good timing
again to both of you and I’m glad we listened anyway!
The irony is that we had interviewed Ray Smith, the
leader of Bellatrix Exploration just before Christmas and it
was definitely timely today to go back to our notes. Smith,
an industry veteran has retaken over the company he
played a role in founding, putting himself in the hot seat,
changing management, selling $102 million in assets in
three transactions, hedging gas production (we should add
at an incredibly rich level some time ago...just lucky or
some skill there?) Meanwhile, their debt is down to just
over $200 million.
Smith told us several days ago that they’ve got some-
thing like 57 cardium horizontals in their inventory, but it
could be as much as 200. They have roughly 81 net sec-
tions of land that’s in this area and they already have an
inventory of almost 320 locations, so they have years or
work planned ahead of them.
For the next 12 months, they have 20 net wells planned
for their inventory, some of which they have high expecta-
tions for (and in the last few days there has been some
really fine drilling results). Smith had to leave what had
been a comfortable retirement down in Palm Springs to
resume work in Calgary and left a red Lamborghini and
(from what we hear) a decent golf game down south in re-
suming his role with Bellatrix.
While we had him, we wanted to know what his crystal
ball is suggesting for oil and gas prices. As far as oil, he is
predicting $80 a barrel for July 1st of next year as well as
for Christmas down the road, which is truly a rather tasty
price for both consumers and producers alike.
Bellatrix Exploration
Berens Energy