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Thursday, June 30, 2011

Canada Housing Bubble ?

http://www.vancouversun.com/business/Canada+bubble+about+burst+research+firm+argues/5028916/story.html

I'm in the middle of the country where I don't even want to live.  And things are even pretty damn expensive here.

List of Oil Sands Projects

http://www.oilsandsdevelopers.ca/index.php/test-project-table/

Caved to a Moment of Weakness - Doubled my PBG position

I don't know if I have done a good job or a bad job with this.

I entered 2011 with a plan to wait for a drop in oil prices and really load up.  I exited ATP after the first drilling permit and have been picking away at some Canadian juniors.

I had a big position in Petrobank which I started at $38 (pre PMG spin out) last fall.  I sold the PMG I received when it was $40 plus and put that back into PBG at $24.

Watching this thing walk down to $14 on basically no material news got the better of me.

I've doubled my position this morning at $13.70 to $13.80.  It now makes up 40% of my equity portfolio.

So I'm either thrilled I had the buying power for today.  Or terrified I've made a bad mistake.

Spotlight on Viking Oil

http://petroviking.com/pdf/CG-Sask-Viking-Resource-Q2_2011.pdf

Wednesday, June 29, 2011

Interesting Canadian Investor

http://www.theglobeandmail.com/globe-investor/investment-ideas/a-stellar-portfolio-with-a-simple-secret-dont-overpay/article2079136/

Who To Believe The New York Times or the Natural Gas Industry

http://seekingalpha.com/article/277306-who-should-an-investor-believe-the-natural-gas-industry-or-the-new-york-times

I was shocked at how little substantive info the Times article contained.

CIBC Oil Sands Watch

http://www.investorvillage.com/uploads/51958/files/ResearchOilSandsWatch.pdf

Petrobank Kerrobert: Petrobank Energy (PBG–SO) continues in its attempt to


demonstrate commerciality of its THAI technology on a conventional heavy oil

reservoir at Kerrobert, Saskatchewan. By July, the company should have all of

its 10 new wells (for a total of 12 wells) on-stream and it is anticipating a 12- to

18-month ramp-up to targeted rates of 500 Bbls/d per well (we note that

~200 Bbls/d sustainably is the break-even level). The initial two-well pilot

project has demonstrated better results than THAI in the oil sands but has still

struggled to deliver commercial rates. Petrobank’s stock price reflects only

$0.73/share (or $0.12/Bbl) for the oil sands/ heavy oil, which is only a fraction

of the SAGD monetization value of $5.00/share (at $1/Bbl) and reflects no value

for Kerrobert or the THAI technology. Any hint of success on the Kerrobert

expansion should have a meaningful impact on Petrobank’s share price.

Friday, June 24, 2011

Bob Rodriguez - Half His Equity Holdings in Energy Stocks

http://seekingalpha.com/article/276587-why-bob-rodriguez-has-more-than-half-his-equity-holdings-in-energy-stocks

You tell em Bob.

Dear Chris Bloomer - Head of Petrobank's HBU

How are you ?  Good, I'm glad.

Remember back to the 2010 Petrobank AGM.  You were asked what you thought Petrobank's HBU assets might be worth ?  You said something along the lines of:

1) The 600 million plus barrels of contingent resource in the ground - "worth something starting with a "B""
2) The value of the THAI technology - "worth something starting with a "B""

Now by "B" I think you meant billion.  So let us assume a billion for the oil and a billion for the THAI technology.  I think that equals $2 billion.

Now Petrobakken management started a share repurchase program when the stock price was $21, so let us assume they thought the company was worth at least $25 per share (why else buy at $21 unless it is undervalued).

Petrobank owns 59% of the 187 million shares of Petrobakken.  At $25 that means they would be worth about $2.7 billion.

Now let me tally that up.

Heavy oil resource in the ground - worth at least $1 billion (per Bloomer)
THAI technology - worth at least $1 billion (per Bloomer)
Petrobakken - worth at least $2.7 billion (per management decision to buy back shares)

Drum roll and total of $4.7 billion of value in Petrobank assets (no real net debt)

Current enterprise value of 106 million shares x $14.30 = About $1.5 billion

Now I'm a believer that Petrobank is worth a lot more than $14.30 per share.  But please, please explain to me how it is that when the value that you have laid out for us shareholders is 3X the current share price you can't be bothered to dig into your wallet and buy a few shares.

So there you go.   I know you own a lot of shares that have been given to.  But it would really mean a lot to us little fellows if you would see fit to spend a couple of the dollars we pay you on some Petrobank shares.

Don Coxe Conference Call

http://www.bellwebcasting.ca/audience/index.asp?eventid=70081727

Big picture folks.  Ignore the noise.

Jamie Dimon - Why So Serious Everybody ???

The great banker tells us not to be so down in the dumps:

http://www.theaustralian.com.au/business/mighty-us-can-shake-off-the-gloom-says-jpmorgan-chief/story-e6frg8zx-1226081613758

"I don't think it's going to freeze the capital markets of the world. We have had defaults around the world before -- Russia, Argentina and Mexico -- and they weren't good events for global economies but they didn't derail" global growth.

He likely has a point.  Now let me check my stocks to see how much I'm down today.....

Seeking Alpha Article on Chesapeake

I follow Chesapeake a little bit.  And I saw this article pop up on the company:

http://seekingalpha.com/article/276392-chesapeake-energy-is-a-bargain

So I had a read.  This nice gentleman has some 65,000 followers through Seeking Alpha so he must do some decent work.

Not a single thing in the article that mentions valuation, business prospects or anything to do with the business.

Sad thing for me, I have no doubt this guys investments are kicking my ass over the last 3 months.

But as always it does give me renewed hope that a great percentage of the buys and sells on a daily basis on any given stock are done by folks with no idea what the underlying business is worth.  So when the market goes against you, suck it up.  Make sure you know what you own.  And either buy more or wait for better days.

Joseph Schachter - Get Ready for a Natural Gas Boom

http://www.theenergyreport.com/pub/na/10014?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+theenergyreport%2FcaoK+%28The+Energy+Report+-+Exclusive+Articles%29

Tainted on the Schacht by my memories of him and Canadian Superior

Celebrity Hedge Fund Managers Having a Rough Go

http://www.economist.com/node/18866831

Thursday, June 23, 2011

Arcan Resources up 5% During Today's Ass Whippin

Over a million shares traded so far.

Takeover maybe ?  Finally got one right, in at about $4 a couple of months ago.

Minor position though.

Oil Reserve Release Supports Long Term Supply Challenges

http://gregor.us/policy/the-dark-side-of-the-oecd-oil-inventory-release/

Economies around the world still pretty weak and we are already resorting to drawing down strategic oil reserves.

Meanwhile even with weak economies demand set to increase 1.7 million barrels per day this year and a similar amount next year according to Goldman Sachs and the IEA.

Canadian juniors on sale.  Could get a lot cheaper, but very attractive right now.  Buying again today, trying to control the pace:

Skywest $.44
Novus $.88
Petrobank $14.56

Wednesday, June 15, 2011

Reasons to Focus on Unconventional Oil Producers

http://seekingalpha.com/article/275108-7-reasons-to-concentrate-on-unconventional-oil-producers

First Quarter Results from Novus

http://www.novusenergy.ca/en/investor/nvs-2011-06-14-pressreleaseq1.pdf

Didn't even see this come out.  So busy trying to decide what and how much to buy.

Small Banks, Big Banks, Giant Differences

http://www.bloomberg.com/news/2011-06-13/small-banks-big-banks-giant-differences-robert-g-wilmers.html

"Over the past generation, however, the financial services industry changed dramatically. In 1990, the six largest financial institutions accounted for 9 percent of all U.S. domestic deposits. As of Dec. 31, 2010, the six biggest banks accounted for 36 percent of deposits. "

Hydraulic Fracturing

In the past 10 years, natural gas producers of the Intermountain West have been able to increase supplies of the clean-burning natural gas that Americans rely on every day to light their offices, heat their homes, and power their factories.


Natural gas production in our region will become even more important as President-elect Barack Obama and the 111th Congress seek to fulfill their campaign promises of making our nation less dependent on foreign sources of energy and reducing greenhouse gas emissions.

Ninety-seven percent of the natural gas consumed in the U.S. is produced in North America (27 percent of it in the West), and since it emits just over half the CO2 of coal, we will need even more natural gas in order to reduce our carbon footprint in coming years.

Western producers have increased natural gas supplies by 69 percent since 1997 while further reducing the small and temporary environmental impacts of development through advanced technologies such as horizontal drilling and hydraulic fracturing, or fracing.

Fracing is a safe, well-tested technology that has been used to develop energy for over 60 years. This technology is used thousands of times each year with an exemplary safety record, and has enabled us to increase our natural gas reserves by 13 percent in 2007 alone.

Since nearly every well drilled in the Intermountain West requires the use of fracing, it's important that the public understand how this technology works. Fracing occurs many thousands of feet below freshwater aquifers, and protective metal piping surround wells at the depths where freshwater is found. Like all procedures surrounding the development of energy, fracing is already regulated by literally hundreds of local, state, and federal laws.

Westerners should not take to heart alarmist claims that fracing is dangerous. Studies have shown that fracing is safe and effective. In fact, since fracing was first used in 1948, there has not been a single documented case of contamination of drinking water, and studies conducted by the Environmental Protection Agency under both the Clinton and Bush administrations have found that fracing is a safe method for extracting vital domestic energy resources.

Ninety-nine percent of fracing fluids consist simply of water and sand, and the 1 percent of chemicals they contain are already strictly regulated. These fluids are being injected into rocks that contain oil and natural gas, and not near aquifers. There are no documented cases of those fluids migrating into drinking water wells.

Because fracing has just recently come on the radar of environmental groups, there is much misinformation currently circulating on this technology. Unfortunately, due to lack of industry knowledge, some have incorrectly assumed that fracing has the ability to interface with underground drinking water sources, when in reality, it cannot. All surface water spills are already regulated by the EPA as well as state and local governments. Oil and natural gas operators must report spills of any fluids, even very small spills that result in no contamination.

Blaming such incidents on fracing and mischaracterizing the cases as hazardous to public health is an unfair attempt to frighten the public into thinking a well-regulated process is somehow dangerous. There is a much greater environmental and security risk from transporting energy resources from overseas than producing them here in the U.S. under our current strict environmental regime.

As Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, stated in 2002, "hydraulic fracturing . . . is a valuable tool in reducing our dependence on foreign energy supplies."

At a time when our nation needs more natural gas in order to address the dual challenges of climate change and energy security, hydraulic fracturing is a vital technology for meeting that demand. Attempts to add to the extensive layers of regulation will result in higher costs to consumers and hinder our nation's goals of increasing energy security and controlling greenhouse gas emissions.

Link to article

http://www.denverpost.com/opinion/ci_11109618

Buying Opportunity in Canadian Producers

This is starting to feel a little like the opportunity last year at this time in the GOM.  Everything looks cheap.

This time it is basically everything in Canada.  Scary part is oil is still $97 so there is potential for a lot better prices with a real selloff.

Today bought PWT at $22.45 which I didn't think I'd see again.  Added more Westfire at $6.73 and Petrobank at $15.83.  Oh and some more Skywest at $.48.

Lots of cash left, I want to be holding some when this bottoms so that my regret is not buying enough rather than buying too much too soon.

CAPP Presentations

http://a4.g.akamai.net/f/4/79195/30s/smb2.download.akamai.com/79195/4000/5469/5478/9119/Portal/default.htm

Tuesday, June 14, 2011

Monday, June 13, 2011

RBC panels

Some easy listening.  I don't know how far these Canadian producers are going to fall.  Some of these prices are pretty interesting given oil at $97 still.

Novus at $.95 today, tapped it again a little.
Westfire at $7.04
Bankers Petroleum at $7.01

Maybe oil is headed for $60 over the summer, I dunno.  Glad to be sitting on a lot of cash and will keep averaging down slowly

1) Junior Oil Sands


2) Canadian Unconventional Gas: Growth in the Great White North

3)Eagle Ford Shale: It is Really Hot in South Texas

4) Senior Oil Sands Panel

5) Established and Emerging Oil Plays - U.S

6)

7) Seismic Panel

8) International Unconventional Outlook

9)Williston Basin: Expanding Opportunities

10) Midwest Refining Margin Advantage: How Long Will It Last?

11) Navigating the Political
Regulatory Minefield: Offshore Post-Macondo and Onshore Fracing

12) Appalachian Shale: Established and Emerging Plays

13) Equipment/Services: Changing Landscape Onshore & Offshore

14) Cardium Oil: Understanding a Massive Light Oil Opportunity

15) Power Generation Panel

Just change the panel number in the url line:

http://www.wsw.com/webcast/rbc132/panel15/

so three would be:

http://www.wsw.com/webcast/rbc132/panel3/

ATP President Interviewed On Israel

http://www.globes.co.il/serveen/globes/docview.asp?did=1000653258&fid=1724

Sunday, June 12, 2011

Petrobakken new 120k acres - Maybe Beaverhill and Duvernay

I got the impression that the new Petrobakken land was mainly "stacked" in two areas.  I think this might mean two different plays on the same land.

See Anglocanadian presentation page 24 which shows both Beaverhill Lake and Duvernay formations in the same leaseholdings.

http://www.anglocanadianoil.com/pdf/ACG-2011-05-13-Maypresentation.pdf

That must be what stacked means

Friday, June 10, 2011

Pabrai Walks Us Through His Ternium Investment

Learn from the experience of others. 

http://www.gurufocus.com/news/136096/monish-pabrai-does-a-post-mortem-on-his-ternium-tx-investment

Info On Penn West Acquisition of Spartan

Need to get a better handle on this.  PWT acquired Spartan in April of this year because of their Cardium assets.

Obviously they aren't buying because the Cardium is disappointing.

http://www.leaderpost.com/business/Unnamed+buyer+acquire+Spartan/4552878/story.html

Good Day To Buy Some Canadian Light Oil Producers

Been sitting on my hands most of the time.  Broke down a bit today and bought some of the following.

Skywest Energy ($.50)

http://www.completegrowth.com/cvi/blogs/devonshire/?p=72

Novus Energy ($1.01)

Westfire Energy ($7.24)

PBG ($16.05)

Penn West getting very close to where I'd start in.

All these companies focused on light oil.  Will try and write about Novus and Westfire.  Like them both a lot.

Also saw Sprott Resource Corp down under $4.40.  I'd bought at $4 and sold at $5.40 previously.  Hopefully it keeps coming back and I can start in on it again.

Shame on me for buying more PBG.  Hard not to average down.

Dick Bove Thinks A Wrong May Have Been Done to Goldman Sachs

http://dealbook.nytimes.com/2011/06/09/richard-bove-does-an-about-face-on-goldman/?nl=business&emc=dlbka23

Anti-fracking Movement Not Based On Real Concerns

http://seekingalpha.com/article/274316-anti-hydraulic-fracturing-movement-not-based-on-rational-thought

When you see people light water on fire it isn't caused by fracking.  It is caused by the quality of the well.

That issue is just as present in conventional wells as unconventional.

Saudi Electricity Company Worries Oil Will Run Out by 2030

http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=auto&tl=en&u=http://www.eleconomista.es/mercados-cotizaciones/noticias/3137131/06/11/Arabia-Saudi-teme-que-se-agote-su-crudo-en-2030-si-se-mantiene-el-consumo-actual.html&act=url

Seems a bit far fetched.  Of course we have no idea how much oil they actually have because they don't open up to the world.

Thursday, June 9, 2011

Swan Hills - Petrobakken

Umm, ok.

Was just reading this presentation from Midway (june presentation).

http://www.midwayenergy.com/index.php?option=com_docman&task=cat_view&gid=54&Itemid=206

In it on page 19 they indicate 23,000 acres that they have acquired in Swan Hills will create 144 drilling locations.

On page 23 they indicate that the NPV10 of those locations is $7.0mil or $950mil in total.

Now Petrobakken has indicated that they have amassed 120k acres in 3 new resource plays including Swan Hills.  If Midway has 140 locations in 23,000 acres, then what does Petrobakken have ?

If half of this new acreage is in Swan Hills then maybe they have 60,000 acres which given the Midway numbers could mean 420 locations and an NPV of almost 3 x $950mil ?  That would be $2.8 billion and not include the other 60,000 acres that are not yet known.

Interestingly the current mkt cap of PBN is all of $2.8 billion which suggests this new 120k acres might be worth a signficant percentage of that market cap.

This is all speculation, with the point being that 120k acres that they have acquired over the past couple of years quietly might be a very unappreciated asset that we can look forward to.

Jim Rogers - World facing staggering agriculture and energy problems

http://www.gurufocus.com/news/136000/the-world-is-facing-staggering-energy-and-agricultural-problems--jim-rogers

UK Report Supports Hydraulic Fracturing

We hope Congress, the EPA and the Obama hydraulic fracturing panel pay attention to the key conclusions from the UK Parliament study. The House of Commons report stated:


"113. We conclude that hydraulic fracturing itself does not pose a direct risk to water aquifers, provided that the well-casing is intact before this commences. Rather, any risks that do arise are related to the integrity of the well, and are no different to issues encountered when exploring for hydrocarbons in conventional geological formations. We recommend that the Health and Safety Executive test the integrity of wells before allowing the licensing of drilling activity.

http://www.rigzone.com/news/article.asp?a_id=107885&hmpn=1

Eric Nuttal - Petrobakken Has Fleas

I like the boy wonder.  He does not like Petrobakken.

http://www.bnn.ca/ (part 3 of June 8, 2011 edition of market call)

Problem is it sounds like he is not terribly familiar with the company.  His comments:

- Petrobakken has been an absolute disaster, they are facing a huge decline in their Cardium assets that he thinks they overpaid for

(No dispute on the share price disaster since being spun out, but what is different about the decline in their Cardium assets as compared to anyone else ?  Every report that I've seen shows their production through 30 or 60 days to be in the top decile of the industry.  Further, they were the first to move to slick water which has helped all the Cardium Players.

Now, the overpaying part.  From everything I've seen anywhere, property values in the Cardium have gone up and up since PBN acquired their properties.  So if land values are higher now than the price they paid, how can he suggest they overpaid ?)

- They are paying a dividend that is not supported by cash flow

(That all depends on their rate of capex doesn't it, the current dividend is about 25% of cash flow so it is well supported by cash flow, in the mean time they have been spending pretty aggressively on both drilling and acquisitions in the Cardium and another 120k acres that are in other plays.  So cash flow supports the dividend easily, and they control their rate of capex)

- The CEO left and went into the COO role

(Ok, so what ?  Sounds a bit like he just wants a list of things to say that are negative)

Now he is not alone in thinking this company has fleas.  The overpaying for the Cardium theme comes up again and again.  The truth is that land prices are higher now in the Cardium than when PBG made its acquisitions.  That makes sense when you consider all of the derisking of the play that has gone on sense then by PBN, PWT, BXE etc.  I think Petrobakken should include in their monthly presentation details of the acquisition price paid for their Cardium drilling locations.  Then compare to recent land sales in the Cardium.

I've tried to crunch the numbers and what I see is that they paid about $500k per drilling location and that current prices are more $2mil plus.

As John Wright explained recently to investors, when PBN got aggressive in the Bakken they were repeatedly told they were overpaying.  Fast forward a few years and they couldn't buy similar properties for 10x what they originally paid.

I guess all one can do is wait as production results will be the only way that the market can be convinced of this.

John Burbank - Large Position in Saudi stocks

I find Burbank a lot of fun to follow as he has some original ideas, and is a good source for being long resources

http://www.gurufocus.com/news/135901/john-burbank-invests-11-of-passports-main-fund-in-saudi-stocks

Cracks in OPEC

http://online.wsj.com/article/SB10001424052702304259304576373150163060100.html

They really might as well shut it down and just let Saudi, Kuwait, UAE and Qatar start their own club.  Everybody else produces at full capacity all the time anyway.

Wednesday, June 8, 2011

OPEC Unable to Reach Agreement

http://seekingalpha.com/news-article/1236515-oil-surges-as-opec-maintains-production-level

Will be interesting to see what the Saudis do.  Seems that the oil market is likely undersupplied by about 1.5 million barrels per day with existing production rates (IEA, EIA and OPEC all pretty close on this).

I'm heavily invested in oil, but oil going higher quickly makes me nervous.  I'd much rather it stay at $100 and let Petrobakken crank away at all of those drilling locations for a while.

Longleaf Partners and Brazilian Oil Explorer HRT

http://www.gurufocus.com/news/135838/longleaf-partners-believe-hrt-could-be-their-most-exciting-investment-ever

HRT bought a Canadian company (UNX) early this year.  I had written about UNX at about $2 per share, I bought a little but sold quickly when it popped.  HRT bought them for a lot more than that.

Another of my "taken pitches" that worked out well.  Realistically I never would have been interested in a sizable position in a pure explorer though.

Find Longleaf being interested in HRT very, well....interesting

Per Dundee - Muddy Waters Report is a Pile of Crap

http://www.gurufocus.com/news/135800/muddy-waters-report-on-sinoforest-is-a-pile-of---per-dundee-securities

Glad I don't have to have a position one way or the other.

OPEC confirms output increase

http://finance.yahoo.com/news/OPEC-to-hike-output-Iran-rb-3639573786.html?x=0&sec=topStories&pos=main&asset=&ccode=

Hopefully the Saudis can actually do it and we can hold oil in the $90s for an extended period.  With a couple of additional years of demand growth (which according to the IEA is about 1.7mil per day for each of 2011 and 2012) there will be no spare capacity left and things could really get ugly.

Until then I'd prefer something in the current range so we don't trigger another recession and oil collapse.  If we get a sharp spike up in oil I think a person has to lighten their exposure to oil investments.

Tuesday, June 7, 2011

How is your appetite for Political Risk ?

http://www.gurufocus.com/news/135751/how-is-your-appetite-for-political-risk-part-two

I think this could be trading for under 1X cash flow next year.

Big Money Being Spent For Alberta Drilling Rights

http://www.calgaryherald.com/business/energy-resources/Drilling+rights+fetch+record+842M+Alberta/4876800/story.html

While the stock price doesn't say so, the big move into the Cardium by PBN is going to pay off.  The land they locked up has tripled and more in value since they got it in early 2010.

Now I'm very excited to get more details of the additional 120k acres they have assembled in another Alberta play over the last couple of years that we just learned about last month.

EIA Short Term Energy Outlook

I notice frequently comments about Chinese growth slowing which will cause a drop in oil prices.  But they are still growing so that means they are continuing to increase oil consumption.  How does that lead to a price drop ????

http://www.eia.gov/emeu/steo/pub/

Global Crude Oil and Liquid Fuels Consumption.  EIA expects that world liquid fuels consumption, which reached a record level of 86.7 million barrels per day in 2010, will grow by 1.7 million bbl/d in 2011 and by an additional 1.6 million bbl/d in 2012, resulting in total world consumption of 90.0 million bbl/d in 2012.  Countries outside the Organization for Economic Cooperation and Development (OECD) will make up almost all of the growth in consumption over the next two years, with the largest increases coming from China, Brazil, and the Middle East.  Forecasts of 2011 consumption in China, Japan, and the Middle East were raised by 120 thousand bbl/d, 80 thousand bbl/d, and 110 thousand bbl/d, respectively,from last month's Outlook because of higher expected demand for petroleum-fueled electric power generation.  EIA now expects consumption in China to increase by 700 thousand bbl/d in 2011.

Monday, June 6, 2011

Some Notes on Bellatrix

Bellatrix Exploration (BXE : TSX : C$4.97) - Buy - Target:C$9.50


Table-pounding BUY! Q1/11 in line

Bellatrixreported its Q1/11 financial and operating results with averageproduction of 10,084 BOE/d weighted 39% to crude oil and liquids (thiswas previously released April 27, 2011 in an operational update) withassociated CFPS, f.d. of

.16, which was ahead of our

.14 and in linewith consensus of

.16. The primary cash flow difference in this casewas lower realized royalties. The company continues to post excellentCardium rates, with a now 19-well water-based frac IP30 average of 515BOE/d, or 55% better than our forecast type-curve. Production in thequarter was also marginally gassier than forecast, due to high-ratesuccess in the Notikewin. Six wells (2.4 net) each tested over 10 Mmcf/dwith 35 Bbls per Mmcf of associated liquids, with four of them (1.85net) on production at rates between 7 and 10 Mmcf/d (also plus 35 Bblsper Mmcf). We were previously restricted from publishing on Bellatrixwhen the company increased its 2011 capital program to $170 million from$100

million; as such our estimates have increased materially. Theimpact of the capex increase is primarily impacting our 2012 volumes,as the new drilling comes later in 2011. Management is now guiding to a12,000 to 12,500 BOE/d production average in 2011 and an exit rate of15,000 BOE/d. Our newly recast estimates imply production per sharegrowth of 31% and 26%, respectively, in 2011 and 2012. With researchrestrictions lifted, we are reiterating our BUY recommendation andC$9.50 target price, which remains based on a 5.5x EV/DACF multiplesupplemented by $1.48 of risked Cardium upside. Bellatrix currentlytrades at a low-priced $40,049 per BOE/d and 3.6x EV/DACF multiple basedon our 2012 estimates, which is less than half the average metric ofour Intermediate coverage universe.

From CIBC








Bellatrix Exploration Ltd.

Q1 Results In Line - Cardium And Notikewin Results Continue To Impress



Reported Q1/11 production of ~10,084 Boe/d was pre-announced on April 27.

Reported Q1/11 CFPS of

.16 was in-line with our estimate of

.16 and slightly

below consensus at

.17. In our view, the highlights in the quarter were the

encouraging Cardium and Notikewin results.



In Q1/11, BXE has put 9 gross hz Cardium wells on production that utilized

water based fracs. The IP7 day average rate for 9 wells is ~671 Boe/d. The IP30

for 7 wells is ~484 Boe/d. This is above our IP30 est. of 292 Boe/d and avg.

industry hz Cardium IP30 results in 2010 and 2011 of ~201 Boe/d.



Another noteworthy point is that field production in April was ~12,134 Boe/d,

about 2,050 Boe/d higher than Q1/11 at 10,084 Boe/d. We estimate Q2/11

production to be 12,000 Boe/d. This implies Q/Q production growth of 19% vs.

the junior group average of 3% over the same period.



We view BXE's valuation to be very compelling. BXE trades at a Price to

Risked NAV ratio of 68% and a 2012 EV/DACF multiple of 3.2x (versus the group

averages of 77% and 5.0x, respectively).

Thursday, June 2, 2011