QIS Update #2 2012 - January 11th 2012
Included in this update:
- Blackbird Energy provides update on Montney horizontal well drilling and completion progress
- Cobra Venture Special Meeting and Voting
As many of you have noticed, the QIS Capital Trading Summary is now active again in 2012. We’ll be posting a regularly updated virtual portfolio to track its success throughout the year. Check it out on the website at: www.qiscapital.com/trade_summary.php .
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Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.21 (coverage commenced Aug 19/11 - $0.18)
Blackbird Energy Inc. has announced that that further to its recent news releases, it has been informed by the operator, Donnybrook Energy Inc., that the DEI Bigstone Hz 15-32-60-22 W5M well (25% working interest to Blackbird) has been drilled to total depth (TD) and the completion string has been installed in preparation for fracing operations, scheduled for January 15, 2012. The well was drilled directionally to a total measured depth of 5,512 meters from the 3-29-60-2W5 surface location and included an extended reach lateral through the Montney Formation measuring 2,744 meters at the 15-32-60-22W5 bottom-hole terminus. The completion string is configured to conduct a continuous, multi stage fracture stimulation consisting of up to 24 stages over the length of the horizontal lateral. The completion operations including the frac procedure, production test and preparing the well in readiness for tie-in to sales are estimated to be accomplished by early to mid February 2012.
The 15-32 well horizontal section is over twice as long (close to 1,500 meters longer) than the first successfully tested Montney horizontal well, DEI Bigstone Hz 14-29-60-22W5. The 14-29, (37.5% BPO/25% APO working interest) which parallels part of and directly offsets the 15-32 well, flowed at a rate of approximately 4.3 million cubic feet per day of natural gas (mmcf/d) and 295 barrels per day (bbl/d) of condensate from a 1,254 meter lateral (1,011 barrels of oil equivalent per day (boe/d)) during the last 24 hours of a 4 day production test. The 15-32 well will be frac'd with the same, synthetic oil-based multi-stage system utilized in the completion of the 14-29 well.
The long lateral or "extended reach" horizontal wells, in suitable areas, have the potential of reducing well density by up to 50% over the shorter 1200 meter laterals, improving project economics and substantially reducing the surface environmental footprint. To date, 11 of the 15 Montney horizontal wells currently drilled in the Bigstone/Fir area are "extended reach" with laterals ranging in length from 2,200 to 2,800 meters, while the remaining four wells have laterals of 1,200 to 1,300 meters. Each of these shorter laterals were drilled by local operators, to assess the development potential of the Montney formation, liquids rich natural gas resource in this area by employing current, state of the art horizontal drilling and fracture stimulation techniques prior to moving to the extended reach longer laterals for development purposes.
Planning for drilling a third well and construction of gas gathering and production facilities are currently underway with a targeted start-up and on stream to sales commencing in Q2 2012. Blackbird holds a 25% working interest in 7 gross sections (1.75 net) sections at Bigstone.
The company and its partners continue to work toward having 3 wells drilled completed and tied in by the end of the winter drilling season. Bill Macdonald, President of Blackbird stated, We are very excited about the progress of the Bigstone wells and the prospect that they will be on stream in the near future, and the added value that this will bring to the Bigstone prospect.
In addition, Blackbird announces that Cheng-Guan Loo has resigned as a director of the company. The company would like to thank Mr. Loo for his contribution to the board of directors.
QIS Capital Comments:
All indications at this point are very encouraging for Blackbird’s Bigstone Montney well (25% working interest). The well was originally scheduled to be drilled to a depth of 5,150m with a lateral length of approximately 2,500m. The latest release states that total depth reached 5,512m with a lateral length of 2,744m. The drilling operator was obviously encouraged enough with drilling that the decision was made to increase the length and depth by about 10%. Now we wait for test results sometime in the next 3 to 4 weeks.
The closest comparison we can find is a well drilled by Celtic Exploration (CLT:TSX) approximately 4 miles to the south which had a 2,538m lateral section which tested at 15mmcf/d of natural gas and 600-900 bbl/d of condensates (3,100 to 3,400 boe/d).
Cobra Venture Corporation (CBV:TSX-V)
Current Price: $0.26 (coverage commenced May 22/07 - $0.205)
Today we received our Notice for Special Meeting of Shareholders regarding the sale of Cobra’s Saskatchewan assets. The Special Meeting will be held at 11:00am on January 30, 2012 in Calgary. Internet and phone voting must be completed prior to January 26, 2012. If you are a Cobra shareholder, please take the time to vote on the transaction in the next few weeks. In December, Cobra Venture announced that, subject to regulatory body and shareholder approval, the Corporation has agreed to sell all of its freehold mineral and royalty interests in the Province of Saskatchewan for an amount of $5,250,000, subject to usual industry adjustments, effective as of January 1, 2012.
Following this sale, assuming it is approved, Cobra Venture will have pre-tax over $7.75 million in cash ($0.44 per share), 3.625 million shares of Zodiac Exploration ($0.06 per share) and additional working capital and minor property assets. There will be some consideration for tax on capital gain of the property.
Looking at it another way, the deal alone is worth $0.30/share in cash (a premium to the current share price) plus Cobra has positive working capital of $0.16 per share (mainly cash) and investments worth another $0.06 per share for a total of $0.52 per share.
For the 9 months ended August 31, 2011, Cobra had net income of $511,654 ($0.03) per share. The company will have another 4 months of royalty income prior to the sale of assets which will further increase the cash value calculations above.
It remains to be released what the company plans to do with the cash from this transaction. In this market "cash is king" and management is discussing a number of opportunities that are currently available.
Cobra is presenting trading at 50% of its future cash and investment value.
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. 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 101,500 shares and 450,000 options of Blackbird Energy Inc. and 403,000 shares of Cobra Venture Corporation. QIS Capital has 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 - 2012 QIS Capital Corporation.