Investors Digest Article...Sept 30thJust finished typing it in, sorry for any sp mistakes typed it up as quick as I could...
Randy Oliver president and portfolio manager of Calgary's Hesperian Capital Management.
Petrobank Energy (PBG - TSX $9.80)
For starters he says the company has announced its intention to spin off it's Colombian subsidiary, Petrominerales Colombia Ltd. And since the subsidiary has never been fully factored into the value of Petrobank stock, the spinoff is likely to boos the stock by $2 to $3 a share, Mr Oliver believes.
Petrobank stock stands to rise even more - perhaps by as much as $15 a share - as investors increasingly realize the value of the company's tarsands holdings, says Mr. Oliver, who notes that the market has already started bidding up the stock.
Another plus? Petrobanks's coal-bed methane gas deposits. Although the deposits have yet to be exploited, they'd be the icing on the cake should coal-bed methane take off, the analyst believes. And in North America, coal-bed methane increasingly looks like a useful source of natural gas.
Mr. Oliver admits that Petrobank shares look pricey when compared with those of its peers, such as Prairie Schooner Petroleum or Progress Energy.
But because of Petrobank's undervalued assets, he actually considers its shares to be a bargain.
Meanwhile, he has high praise for the company's management, given that it bought into the tarsands and picked up coal-bed methane properties when prices for both were cheap.
For Mr. Oliver, Petrobank is also a best buy, his 12-month target price is $15 a share, his EPS call for 2005, $0.17.
Although the bulk of its oil and gas properties are in Alberta, Petrobank also has operations near Macklin on the Saskatchewan-Alberta border. Its coal-bed methane operations are located near Princeton in southern British Columbia.
For the three months ended June 30, Petrobank swung to net earnings of $4.7 million, or $0.08 a share, from a net loss of $1.8 million or $0.03 a share, for the similar period in 2004.
Cash flow from operations however was lower dropping 25.8% to $4.6 million or $0.08 a share, while oil and natural gas revenue tumbled 27.5 percent to $13.2 million.
For the six months ended June 30, Petrobank swung to net earnings of $4.5 million, or $0.08 a share, from a net loss of $4.1 million, or $0.07 a share, for the similar period in 2003.
Cash flow from operations was also lower, falling 37.5 per cent to $8 million, or $0.14 a share while oil and natural gas revenue tumbled 34.6 per cent to $24.6 million. Capital expenditures, meanwhile climbed to $27.6 million from $24.7 million.