Lightstream Resources Ltd. LSTMF

RE: Petrobakken:Eric Nuttall

[ltrabs]

I have to agree.
He researches the under600m cap stocks, his comments were those of someone he asked .. IMO
I have trouble with garbled text whenever I post,


The post you mentioin .. below.
I like the boywonder. He does not like Petrobakken.
https://www.bnn.ca/ (part 3 of June 8, 2011edition of market call)
Problem is itsounds like he is not terribly familiar with the company. His comments:
- Petrobakken hasbeen an absolute disaster, they are facing a huge decline in their Cardiumassets that he thinks they overpaid for
(No dispute on the share pricedisaster since being spun out, but what is different about the decline in theirCardium assets as compared to anyone else ? Every report that I've seenshows their production through 30 or 60 days to be in the top decile of theindustry. Further, they were the first to move to slick water which hashelped all the Cardium Players.
Now, the overpayingpart. From everything I've seen anywhere, property values in the Cardiumhave gone up and up since PBN acquired their properties. So if landvalues are higher now than the price they paid, how can he suggest theyoverpaid ?)
- They are paying adividend that is not supported by cash flow
(That all dependson their rate of capex doesn't it, the current dividend is about 25% of cashflow so it is well supported by cash flow, in the mean time they have beenspending pretty aggressively on both drilling and acquisitions in the Cardiumand another 120k acres that are in other plays. So cash flow supports thedividend easily, and they control their rate of capex)
- The CEO left andwent into the COO role
(Ok, so what? Sounds a bit like he just wants a list of things to say that arenegative)
Now he is not alonein thinking this company has fleas. The overpaying for the Cardium themecomes up again and again. The truth is that land prices are higher now inthe Cardium than when PBG made its acquisitions. That makes sense whenyou consider all of the derisking of the play that has gone on sense then byPBN, PWT, BXE etc. I think Petrobakken should include in their monthlypresentation details of the acquisition price paid for their Cardium drillinglocations. Then compare to recent land sales in the Cardium.
I've tried tocrunch the numbers and what I see is that they paid about $500k per drillinglocation and that current prices are more $2mil plus.
As John Wrightexplained recently to investors, when PBN got aggressive in the Bakken theywere repeatedly told they were overpaying. Fast forward a few years andthey couldn't buy similar properties for 10x what they originally paid.
I guess all one cando is wait as production results will be the only way that the market can beconvinced of this.