QIS Update #21 2014 - July 15th 2014
Included in this update:
- Blackbird Energy farmout of Mantario project, files Q3 financial statements
- Virtutone Networks reports June 2014 revenues of $14.3 million
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Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.21 (coverage commenced Aug 19/11 - $0.18)
Blackbird Energy Inc. Announces Farmout Agreement at its Mantario Oil Project and Operational Update for its Elmworth Montney Acreage
Blackbird Energy Inc. is very pleased to announce that is has entered into a Farmout Agreement (the Agreement) with a private oil and gas investment company (“PrivateCo”) to drill the first two horizontal wells at Blackbird’s Mantario Oil Project (the Project). Blackbird also is pleased to give an update on its operations pertaining to its Elmworth Montney Acreage.
Mantario Farm Out Agreement
Under the terms of the Agreement, PrivateCo will pay an aggregate of approximately $1,600,000, or 100% of the costs to drill, complete and equip two horizontal wells with a minimum of 600 metres of horizontal length, in order to earn a 50.0% working interest in the Project. There is no payout being offered with respect to this agreement.
In addition to the capital commitments noted above, the Agreement also provides for the cash payment by PrivateCo of an aggregate of approximately $200,000 for land acquisition costs and data incurred by Blackbird in respect of the subject lands. Blackbird will be the operator for the project.
Blackbird and PrivateCo expect to commence drilling operations at the beginning of Q4 2014 subject to rig availability. Garth Braun, CEO of Blackbird noted “We are very pleased to be bringing in a financial partner to our Mantario Oil Project that will not only accelerate the development of our oil discovery in Saskatchewan but will also allow Blackbird to add further focus to the development of its Montney acreage at Elmworth.”
Elmworth Montney Update
In the Elmworth area Blackbird has a total of 31 sections (19,840 acres) of Montney rights (27 contiguous sections). Blackbird has surveyed its first surface location that will be used to target the upper and middle Montney formation. Blackbird is currently in the process of licensing its first well targeting the upper Montney.
Blackbird Energy Inc. has filed its financial statements and related management's discussion and analysis for the three and nine months ended April 30, 2014 on SEDAR at www.sedar.com.
Excerpts from MD&A
Petroleum and natural gas revenues totaling $823,468 (2013 - $506,341) were generated from the Alsask, Bigstone, Ferrier, Flaxcombe, Mantario and Watts properties during the nine months ended April 30, 2014. Recent oil and gas prices have increased and the company has more wells in production than in the comparative period. During the latest quarter, Bigstone petroleum and natural gas production increased significantly as a result of being able to utilize available capacity of a third party’s pipeline to transport the company’s commodities. On April 17, 2014, pursuant to the completed Plan of Arrangement with Pennant, Blackbird acquired the Ferrier, Watts, an additional 25% of Bigstone (total 50% interest) and the remaining 30% interest of Mantario (total 100% interest) properties; all of which contributed to increased production revenues. During April 2014 there was no production from the Alsask and Mantario properties as a result of road use restrictions for spring break-up.
Corresponding 9-month production and transportation expenses of $978,992 (2013 - $444,836) and royalties of $83,080 (2013 - $67,380) are attributed to the producing wells. The increase in current period production and transportation expenses is attributed to workovers conducted on the Alsask and Flaxcombe properties, costs associated with optimizing production on Mantario Well A15-6, higher property taxes and surface lease costs. Furthermore, an unusually cold winter in Saskatchewan increased fuel and electricity costs associated with production. During December 2013, a third party consultant accidentally damaged a water disposal tank on the Alsask property. As a result, the company temporarily had to truck water offsite to a disposal facility rather than disposing onsite which increased transportation costs. Production, transportation and royalty expenditures also increased as a result of acquiring more properties.
Blackbird Energy’s management team is focused on pursuing the development of the Elmworth property which has seen successful development in the area surrounding the company’s land package. Blackbird is striving to establish a solid base of economical oil production.
QIS Capital: The Mantario farmout is an important step for Blackbird Energy as it will allow the company to drill its first two horizontal wells at Mantario without having to finance the drilling. This will conserve capital for development at Elmworth as well as allow the company to test its horizontal drilling plans at Mantario where Blackbird had some initial success with a vertical oil well. Blackbird is looking to prove up the fact that its Mantario land package has similar characteristics to the neighboring Mantario project area developed by Rock Energy.
Virtutone Networks Inc. (VFX:TSX-V)
Current Price: $0.24 (coverage commenced Sep. 9/11 - $0.10)
Virtutone Networks Inc. has announced that the company generated over $14.3 million in revenue for the month of June.
We are down slightly this month due to the rise in the Canadian dollar, as our sales are all in USD and only 30 days in the month said Jason Allen, Chief Executive Officer of Virtutone. We continue to deliver strong results each and every month.
QIS Capital: Another very solid revenue month for Virtutone Networks. Since its financials were reported a few weeks ago, Virtutone has been hit hard by significant selling pressure. Part of this likely came from a newsletter writer who wrote a scathing report of the company and its management. Over the last few days, we have spoken with a number of investors who are now looking at this as a buying opportunity due to the significant price drop. Management has further indicated that expenses were high in Q1 due to some large trade show expenses . We should also see up to a 30% increase in revenues for Q2 so the keys are for management to keep expenses under control and increase margins which have been languishing between 3% and 3.5%. It also appears that the company needs to gain access to additional capital to finance its growth. This is another key component that many investors are watching for. The second quarter ends July 31 with results expected to be released by the end of September.
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 387,500 shares, 277,778 warrants, and 350,000 options of Blackbird Energy Inc. and 482,000 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.