Salmans six reasons for PXX.. Here are six reasons why BlackPearl is our Top Pick among growth oriented oil and gas producers:
1. Consistent quarter-over-quarter growth in production
2. Heavily oil-weighted (99%)
3. Pristine balance sheet
4. Management?s previous track record of surfacing value
5. Massive contingent resources still to be booked
6. Trading below 2P net asset value
Later this year, BlackPearl is set to file another commercial development application for a SAGD project at Onion Lake, and could once again be able to move contingent resources into the reserves column, although in a less dramatic fashion.
There will, of course, be enormous capital costs associated with these two projects, and while the company has significant cash flow and borrowing capacity, the prospect of future equity issues may be looming over the stock. Mind you, some company other than BlackPearl may be incurring those costs, since Blackrod alone is sufficiently large to appeal to any number of prospective buyers. Apart from being able to book the big reserves, the significance of the development application for Blackrod is that the project is now „real?. Our guess is that BlackPearl will monetize either Blackrod or Onion Lake, using the proceeds of one sale to fund the other, or that somebody else will monetize all of BlackPearl. We have a TOP PICK recommendation on the shares of BlackPearl.
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Mvh / K