Cheapest Oil Sands Stock?
Hunter posted the following tip in response to my search for possible stocks undergoing accumulation:
Bronco Energy(BCF) has a flat chart with low volume. It will begin drilling its 55,000 acre Joint Venture (75% working interest) this quarter; so there will be opportunities for news releases to spark the share price. Fundamentally, an independent estimate determined 1/2 billion barrels of original oil in place. There are about 20mm shares out. And they own a drilling company.
This really interested me so I first checked out the stock chart. Oh what a beauty!
If that isn't a perfect example of professional accumulation activity I don't know what is.
For the past few days I have been doing some research on this company and what it's all about. To the best of my knowledge, here is what the company is about:
1. Receiving cash flow (still small) from several conventional source wells.
2. Reel Drilling Company
3. Major oil sands JV project right on the door step of the athabasca basin.
4. $30 million cash position
5. Only $75 million market cap. Only a baby. Connacher is $750 million. Do you see the possible potential?
Once again, this is my short summary on limited research and on limited available information. You see, the company's current website is a joke and the link to the presentation doesn't even work. However, they do have a sign that says that a new website is being developed so this may be the sign of a promotional drive.
I tried phoning the company but they only have voice mail boxes. I have also fired off an email to their generic info email on the website. I will probably soon try to have a conversation with their CEO to get more insight into what this company is all about.
However, right now the technical aspect of the stock interests me most. Like I said the chart seems to be a perfect example of professional accumulation. Who's the one doing all the buying? Well I think Sprott was the one who did a lot. Why? Probably because they just had to disclose that they own more than 10% of the company as of June 9, as in one month ago. That was even before we locked into a nearly perfect flat trading pattern so they may even own more by now.
Today I established a small test position in the stock at $4.00. I have a stop loss at $3.00 just in case I am totally wrong about the stock. However, if the stock breaks out of its sideways trading I will continue to buy more until we start hitting peaks on high volume. I will try to sell part of my position there and the rest if we break the trend (30 day Moving Average).
If all goes as well as it can, I strongly believe this has the potential to be bought out by one of the majors for a huge premium. The oilsands are so hot right now and the majors have tons of cash laying around while at the same time losing reserves every second. Acquisitions are the best way to increase reserves and use cash for them.
Plus, the CEO Brian Alford seems to be a pro at building up oil companies from scratch and selling them for huge profits. Here is his profile along with the rest of management:
President of the Corporation since May 31, 2004. Appointed Chief Executive Officer on July 5, 2005. Mr. Alford has 12 years experience as a petroleum engineer. He holds a Bachelor of Science Engineering from Queen’s University and has been designated a professional engineer by APEGGA since 1995. He has started, managed and sold two private producing oil and gas companies from 1999 to 2004. As a part-time consultant for various oil and gas companies, including Murphy Oil Co. Ltd. and Sproule Associates Ltd., he was a key evaluator in connection with oil and gas corporate and asset acquisitions. Mr. Alford has been involved in the successful drilling, completions, equipping, tie in and production operations, of several hundred new oil and gas wells throughout Western Canada.
Bryce C. Tingle
Mr. Tingle is a partner of TingleMerrett LLP, a Calgary corporate commercial boutique law firm focused on start-up and growth companies and the institutions that finance them. He has law degrees from the University of Alberta (LLB), Duke University (LLM) and Osgoode (LLM – ebusiness). He is an instructor in the Faculty of Law at the University of Alberta and the Faculty of Law at the University of Calgary. He currently serves on the Securities Advisory Committee of the Alberta Securities Commission.
Neil Denis Dore
Mr. Dore is the General Manager of Operations, Western Canada at Canadian Superior Energy Inc. Mr. Dore is currently on the board of directors for Kingsmere Exploration Ltd., a private oil and gas producer. Mr. Dore was previously involved as an owner and on the board of directors of a private gas compressor rental company. Mr. Dore has over 15 years of diversified engineering experience with senior, intermediate and junior oil and gas producers. Mr. Dore possesses a P.Eng., Bachelor of Science Degree with Honor's, Petroleum Engineering from the University of Montana and has been designated a professional engineer by APEGGA.
Daniel Toews
Mr. Toews is the Vice President, Finance and Chief Financial Officer at Peerless Energy Inc. Mr. Toews has held a number of management positions with Canadian exploration, production and energy trust companies. Mr. Toews’ most recent position was Treasurer and Controller with Crescent Point Energy Trust and its predecessor, Crescent Point Energy Ltd. Mr. Toews was a founder of Crescent Point Energy Ltd. Crescent Point Energy Trust is a Calgary based energy trust whose units are listed on the TSX. Prior to founding Crescent Point, Mr. Toews was the Controller of APF Energy Trust and Millennium Energy Inc., both Calgary based public energy companies listed on the TSX and TSX-V exchanges respectively. Mr. Toews possesses a Bachelor of Science degree in Biology and a Bachelor of Commerce degree with an accounting major, both from the University of Calgary. He received designation as Chartered Accountant in 1990 and has over 16 years of industry experience.
G. Lawrence SpackmanMr. Spackman is the President of Spackman Enterprises Ltd. Prior to founding Spackman Enterprises Ltd., Mr. Spackman was a Senior Vice President for TransCanada Pipelines Ltd., a TSX listed company. Mr. Spackman possesses a bachelor of Science degree in Mechanical Engineering from Provo, Utah, as well as a Masters in Business Administration from the University of Calgary. Mr. Spackman received his P.Eng and has been designated a professional engineer by APEGGA.
It looks like a nice lineup to me and so there you have it, my introduction to what I see so far as the best (and cheapest) Oil Sands play right now. Of course somebody might suggest something better and I am all ears to that but for the moment this looks like a very good potential situation.