Tar Sands Stocks
Posted: Saturday Sep 8 6:02:12PM 2007
SOUTHERN PACIFIC RESOURCE CORP. Initiating Coverage Report Making Waves in the Oil Sands September 7, 2007 Energy Canadian Oil Sands STP, TSX-V C$2.87 12-Month Target: C$7.00 Rating: Overweight Potential Return: 144% Market Cap.: C$216 million We believe that Southern Pacific represents an excellent opportunity to participate in an early-stage oil sands company employing an aggressive growth strategy, focused on creating value by assembling and proving up the viability of multiple oil sands projects. Within its first year of operation, the company has made tremendous progress in accumulating a significant land position and developing a critical mass. It holds an 80% operated interest in 217 gross sections of land in five prospective oil sands areas: Leismer South, Hangingstone West, Kirby, Mackay River and Long Lake. Its longer-term strategy is to have each area generate its own, stand-alone project, at which time Southern Pacific may consider a value maximization strategy, including a farm-out or a sale of all or part of its interest. Last winter, Southern Pacific completed a successful delineation drilling and seismic program, which resulted in it recording reserves and resources. DeGolyer and MacNaughton, the companys independent resource evaluator, assigned 198 MMBbls of probable and possible reserves and 689 MMBbls of best-estimate contingent resources, net to Southern Pacific. It is rare for an oil sands company in such an early stage of growth to have reserves booked. Southern Pacific is definitely ahead of the curve. With its aggressive growth approach, strong presence in an established oil sands fairway and a solid management team and board, we believe that Southern Pacific can provide excellent shareholder value going forward. Valuation Southern Pacific has an attractive valuation, trading at 35% of our 2007E FDNAVPS of $8.20, or at $0.23 per barrel of recoverable bitumen resource. Catalysts The company has a very active fall and winter 2007/2008 program planned. Southern Pacific is currently acquiring approximately 640 kilometres of 2D seismic, which will allow it to process and interpret the data in the fall and use it to assist in identifying prospective drilling locations for the upcoming winter drilling season. The company is in the process of licensing over 300 well locations on its lands, of which about 115 will be drilled this winter. Conclusion We are initiating coverage of Southern Pacific Resource Corp. with an Overweight rating and a 12-month target price of $7.00. Our target represents 85% of our 2007E FDNAVPS of $8.20 and suggests a potential return of 144% over the next 12 months
Posted: Thursday Jul 19 8:08:17AM 2007
Big day for tarsands stocks AOS.v +.20 to C$2.35 STP.v +.24 to C$4.20 PBG.to +1.05 to C$30.11 These represent big reserves in a politically safe country. Barrels in the ground for the next century. Bobwins Buy and Mold!