GMP mid day commentMid-day Comment: BNK
Bankers Petroleum Ltd.7 (BNK-T/L); BUY, C$11.00
BNK finalizes Block F acquisition and announces the arrival of a 3rd rig in June
PSC for Block F had been finalized
This morning before market open Bankers Petroleum Ltd. (BNK-T/AIM) announced that it had finalized the acquisition of Block F and the arrival of a 3rd rig in June. Block F is located immediately west of the company’s Patos Marinza oilfield and covers ~185,000 acres but excludes three gas fields operated by Albpetrol Sh.a. BNK believes that the area is the western boundary of the Patos Marinza oilfield and the discovery of gas could significantly enhance the economics of future thermal recovery projects at Patos Marinza.
3rd drilling rig expected in June
BNK announced that it had signed a one year contract (with an option for a 2nd year) for the addition of a third drilling rig. The 1,000 hp rig is depth-rated for wells in excess of 3000 meters. The rig should be mobilized in May, arriving in Albania in June, with drilling commencement in July. The rig should give BNK the capacity to drill additional vertical delineation wells in the western extension of the field (up to 7 wells), the thermal pilot wells, and contribute to the horizontal program during 2010.
No changes to our estimates
We have made no changes to estimates at this time.
Valuation
Based on BNK’s recent closing price of $9.18, the company is trading at 0.57x P/NAV, versus its peer group average of 0.56x.
No change to our BUY recommendation or to our $11.00 target price
The Block F acquisition was widely expected, however the arrival of the third rig a full quarter earlier than expected should allow BNK to accelerate their upcoming drilling program. The company continues to deliver results in line or exceeding expectations in the market place strengthening our thesis that it remains one of our six international focus names.