QIS Update #11 2014 - April 9th 2014
Included in this update:
- Blackbird Energy and Pennant Energy jointly announce shareholder approval of business combination
- Blackbird Energy buys more land in the Greater Karr area, files financial statements
- Dalmac Energy implementing electronic dispatching and invoicing system
- NTG Clarity Networks re-files annual 2012 and Q2 2013 financial statements
- Quattro Exploration and Production clarifies asset sale terms, issues options
- Virtutone Networks announces strong March 2014 sales
The next Small-Cap Conference is less than a month away on May 7th in Vancouver. We are in the process of finalizing the lineup of companies and speakers and more details should be available later this week. If you are able to attend this evening event next month, please pre-register ahead of time at www.smallcapconference.ca/register.
The Calgary Small-Cap Conference will now occur in Fall 2014 and we’ll keep you informed about the new date once it has been confirmed.
Please feel free to email us anytime at email@example.com or call us at (250) 377-1182. We look forward to your comments, questions, and feedback.
Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.11 (coverage commenced Aug 19/11 - $0.18)
Pennant Energy Inc. (PEN:TSX-V)
Current Price: $0.05 (coverage commenced Dec 7/12 - $0.075)
Blackbird Energy Inc. and Pennant Energy Inc. have announced that shareholders of Pennant have approved the proposed business combination of Blackbird and Pennant at the meeting of shareholders of Pennant held on April 4, 2014, with 98.5% of the Pennant shareholders appearing at the meeting voting in favour of the Transaction.
Blackbird has taken another significant step forward in completing this high quality acquisition which it expects to result in synergies and increased value by combining the Bigstone Montney and Mantario interests and the opportunity to participate in a growth-oriented emerging oil and liquids producer. With the closing of the Transaction, Blackbird will continue to focus its strategy of growth through acquisitions and the drill bit. Blackbird's growth model is to focus on originating high quality oil projects and identifying undervalued accretive assets, said Garth Braun, President and Chief Executive Officer of Blackbird.
As previously announced on February 18, 2014, Blackbird and Pennant have entered into an arrangement agreement dated February 17, 2014, whereby Blackbird will acquire all of the outstanding shares of Pennant from the shareholders of Pennant in exchange for shares of Blackbird on the basis of one Pennant share for 0.42857 corresponding shares of Blackbird. The Transaction is structured as a plan of arrangement pursuant to the Business Corporations Act (British Columbia), and is expected to result in Pennant becoming a wholly-owned subsidiary of Blackbird and Blackbird continuing to trade on the TSX Venture Exchange under the trading symbol BBI. The consolidated entity is expected to carry on business as an oil and liquids focused emerging producer.
The Transaction is intended to provide Pennant Shareholders with the synergies and increased value of combining the Bigstone Montney and Mantario interests and the opportunity to participate in a growth-oriented emerging oil and liquids producer. In addition, the Transaction is intended to advance Blackbird's stated business plan of growth through acquisitions, with a management team that has had success growing and selling emerging producers. Following the closing, Blackbird will continue to be led by its existing management team and board of directors. The Blackbird management team is led by Garth Braun as President and Chief Executive Officer, Darrell Denney as Chief Operating Officer, Ron Schmitz as Chief Financial Officer, Joshua Mann as Vice President, Business Development, and Ralph Allen as Vice President, Exploration.
The closing of the Transaction remains subject to final approval of the TSX Venture Exchange and of the Supreme Court of British Columbia. The final hearing with respect to the Transaction is scheduled to be heard by the Supreme Court of British Columbia at the courthouse at 800 Smith Street, Vancouver, British Columbia V6Z 2E1 on April 10, 2014 at 9:45 a.m. (Vancouver time).
Additional information regarding the Transaction and the backgrounds of the directors and officers of Blackbird is included in the Management Information Circular dated March 10, 2014 of Pennant, a copy of which is available on SEDAR at www.sedar.com under Pennant's profile.
Blackbird Energy Inc. has announced that it has increased its Elmworth (Greater Karr) Montney acreage to 31 sections of land (19,840 acres) including 27 sections of land (17,280 acres) that are contiguous (100% WI).
The 31 sections of land at Elmworth acquired to date followed a detailed technical assessment of the region that included a petrophysical evaluation of pre-existing wells and the mapping of oil and gas in place across what Blackbird believes to be an area characterized by superior liquids-rich gas potential. The results from a recently drilled competitor well, located less than 8 kilometres (5 miles) from the Blackbird lands, demonstrated exceptional deliverability from the Upper Montney. Over its first six weeks of production, the nearby competitor’s well yielded 25,000 bbls of 54 API condensate and 138 mmcf of natural gas (595 bbls/d and 3.3 mmcf/d). Blackbird currently believes the exploration risk for the play to have been significantly reduced through the operations of competitors active in the area who have continued to acquire petroleum and natural gas rights on lands in proximity to Blackbird’s acreage at prices in excess of $2.18 million per section.
Based on a petrophysical evaluation, mapping and technical review of producing wells in the area, Blackbird has identified what it considers to be a thick hydrocarbon-charged zone throughout the upper 40 metres of the Upper Montney interval. Blackbird believes that this Upper Montney zone will be conducive for development using horizontal wells and which Blackbird intends to target with its first well. Based on current industry practices, development of the entire acreage with one horizontal well spaced every quarter mile could require a total of 100 gross wells each one mile in length. Given the existence of productive Middle and Lower Montney in the area, additional laterals per well could be required to access the entire hydrocarbon-bearing section.
The Elmworth property is accessible for field operations year-round and is located within 1 mile of a major, midstream operated natural gas pipeline with capacity for new hydrocarbons.
Blackbird has begun to establish surface locations for the placement of its drilling pads as part of the overall development of the Elmworth property.
Blackbird intends to license its first Elmworth well in the third quarter of 2014 and is currently in active conversations to find a strong industry partner to help expedite this large drilling program.
Blackbird will continue to enhance its land position at Elmworth going forward and has already begun assembling its next Montney land package.
Blackbird Energy Inc. has filed its financial statements and related management's discussion and analysis for the three and six months ended January 31, 2014 on SEDAR at www.sedar.com.
Dalmac Energy Inc. (DAL:TSX-V)
Current Price: $0.42 (coverage commenced Nov 15/11 - $0.37)
John Babic, President and CEO of Dalmac Energy Inc. has announced that the company has began the implementation of an electronic dispatching and invoicing system that is expected to improve productivity and significantly reduce operating costs and expenses.
The new system will provide Dalmac with real-time visibility of its equipment, trucks, and workforce. Notable advantages include:
- electronic workorder and invoicing
- real time fleet monitoring via cell and satellite
- real time equipment warning alerts for equipment malfunctions which will reduce extensive repair costs and improve fleet life
- improved fuel tracking, insurance savings, reduced overhead labour costs
Once the system is fully implemented management will know precisely where each piece of equipment is, how long it has been operating, speed at which equipment is traveling, and the appropriate billable time. Apart from real time monitoring of the fleet the new software will also be used to book equipment, generate field tickets and invoices, and also schedule repairs and track maintenance history.
The full benefit of this automation initiative will be felt over the course of the 2015 fiscal year but immediate savings will commence this summer with the goal of achieving $1 million in annual savings. It is management's expectations that this system will not only reduce operating costs and expenses but will also help boost revenue and drive gross profit margins back into the 30's percentile.
February and March activity levels have been robust pre-Spring break-up. The Company is making a concerted effort to improve the penetration of its newly acquired equipment while continuing to focus on cost control and efficiencies to boost margins.
NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.375 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Inc. has announced that, following a review by staff of the Ontario Securities Commission in connection with the filing of the company’s annual consolidated financial statements, notes and related Management’s Discussion and Analysis for the year ended December 31, 2012 and the interim consolidated financial statements, notes and related Management’s Discussion and Analysis, the OSC has determined that the company is in default of its continuous disclosure requirements under the Securities Act (Ontario).
1. For NTG’s Audited 2012 financial statements, the following have been corrected:
- Expand/enhance the Company’s revenue recognition policy
- Correct the label in Trade and Other Receivables, Note 12, now on page 56 to read “Trade receivables after impairment” instead of Related Party.
- Update Financial Risk Management Objectives and Policies, Note 21, under Liquidity Risk, now on page 65 to remove reference to “operating losses in the current year” and “…to reach profitable levels of operation”.
- Update the MD&A to enhance analysis and comparisons and other requirements of 51-102F1.
These changes have no effect on figures previously reported in the 2012 financial statements (the Audited Consolidated Statement of Financial Position, the Audited Consolidated Statements of Changes in Shareholders’ Equity, the Audited Statement of Comprehensive Income, or the Audited Consolidated Statement of Cash Flows).
2. For NTG’s Interim Q2 2013 financial statements, the following have been corrected:
- revenue recognition policy should be consistent with that of the revised annual financial statements for the year ended December 31, 2012 (above)
- Condensed Consolidated Interim Statement of Cash Flow – remove long term debt from Operation Activities and correct decrease in long term debt under Financing for three and six months.
- Under Operating Segments, Note 6, now on page 44, for the Six Months ended June 30, 2013, replace the table with the correct 6 month figures. Three months was mistakenly duplicated.
- Under Related Party Disclosures, Note 19, Key Management Compensation, now on page 58 – correct June 30, 2013 and June30, 2012 figures that were mistakenly reversed.
- Update the MD&A to enhance analysis and comparisons and other requirements of 51-102F1.
These changes have no effect on figures previously reported in the Interim Q2 2013 (the Condensed Consolidated Interim Statement of Financial Position, the Condensed Consolidated Interim Statement of Comprehensive Income, or the Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity). For Cash Flow; Net Cash From Operations changes to $202,578 from $85,911 (3 months and $615,558 from $474,892 (for 6 months); Cash From Financing changes to $12,667 from $129,334 (3 months and ($71,031) from ($69,634) (for 6 months); Cash From Investing changes to ($453,227) from ($69,634) (for 6 months).
The company has made the necessary updates and the revised Financial Statements were filed on April 2, 2014 to remedy the Default. These re-filed statements can be viewed on SEDAR at www.sedar.com .
QUATTRO Exploration and Production Ltd. (QXP:TSX-V)
Current Price: $0.46 (coverage commenced Mar. 24/14 - $0.32)
Quattro Exploration and Production Ltd. has announced the grant of 1,100,000 stock options to certain directors, officers, employees and consultants issued pursuant to the company's stock option plan. The options vest over a 2 year period, are exercisable at a price of $0.40 per share and expire on April 3, 2019. The shares issuable upon exercise of the options may not be traded for 4 months and one day from the date of grant.
Quattro also announces a correction to the terms of its previously announced disposition of its Noel, B.C. assets to Nordic Oil & Gas Inc. As a portion of the purchase price, Quattro received 4,000,000 common shares of Nordic and 1,000,000 purchase warrants (rather than 4,000,000 purchase warrants as previously announced). Each Nordic warrant is exercisable into one Nordic share at a purchase price of $0.05 per share prior to March 16th, 2016.
Virtutone Networks Inc. (VFX:TSX-V)
Current Price: $0.41 (coverage commenced Sep. 9/11 - $0.10)
Virtutone Networks Inc. has announced that the company has generated over $9.12 million in revenue for the month of March.
As I said last month, we returned our focus to increasing revenues, while maintaining our increased margins said Jason Allen President and Chief Executive Officer. This has been the best month we have ever had for margins and look forward to continued growth in April.
Disclaimer: This article is for informational purposes only. The information contained within this article should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The company profiled assumes no liability for the information presented. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author(s) owns directly or indirectly 276,778 shares and 650,000 options of Blackbird Energy Inc., 88,000 shares and 200,000 options of Dalmac Energy Inc., 1,312,500 shares of NTG Clarity Networks Inc., 18,000 shares and 200,000 options of Pennant Energy Inc., 67,500 shares of Quattro Exploration and Production Ltd., and 598,000 shares and 212,500 warrants of Virtutone Networks Inc. QIS Capital may have a financial relationship with these companies and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2014 QIS Capital Corporation.