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Equity Analyst Danny Deadlock has 30 years of experience speculating on Canadian penny stocks and targets capital gain opportunities and diversification in metals and minerals exploration, energy, and technology.
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Petrobank Energy and Resources Ltd. (
TSX: T.PBG,
Stock Forum)
(40 cents) – Merger Pending
www.petrobank.com
Net Cash to the end of 2013 was
$50 Million or 51 cents per share
January 3rd I featured Petrobank in this weekend column at 36 cents. The company had been previously featured to Ticker Trax subscribers at 33 cents where we were within a couple pennies of catching the historical bottom.
Here is a link to the original weekend report:
https://stockhouse.com/opinion/ticker-trax/insights/2014/01/03/t-pbg-36-cents-with-$50m-cash-worth-54-cents
We were speculating on Petrobank’s giant (discounted) bank account which meant their underlying assets were valued at zero by the market.
Friday March 7th it was announced that PBG would merge with oil exploration company Touchstone Exploration Inc. (
TSX: V.TAB,
Stock Forum) (20 cents) with operations in Trinidad and Tobago.
https://www.touchstoneexploration.com/
Petrobank not only has the large war chest of cash but small existing production and a land base with proven reserves in Western Canada - valued at nothing by the market (plus large tax losses that can be utilized). TAB has some great oil and gas exploration property in Trinidad & Tobago (with solid production), plus they picked up a large offshore exploration block last month.
My main concern with Touchstone is that their cash-flow per barrel versus North America can be low due to high taxation and royalty rates. Those rates will be lower in 2014 but it will take a couple quarters to see what the impact will be on the bottom line
BOTH companies have very strong oil & gas expertise so when you add Petrobank’s cash into the equation, I think this will be a promising sector play in 2014 as exploration and production in Trinidad and Tobago can now be accelerated with a strong technical team.
The merger still needs shareholder and exchange approval.
Before month end I will be updating paid Ticker Trax subscribers on more of the specifics associated with this merger but others can go through their corporate presentations to better understand the fundamentals.
Petrobank:
https://www.petrobank.com/files/4721.PBG%20Corporate%20Presentation%20-%202014%2003%20March.pdf
Touchstone:
https://www.touchstoneexploration.com/index.php/2012-12-04-05-16-41/2013-01-28-05-13-01
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Disclosure: Danny Deadlock owns 50,000 shares of Petrobank
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