QIS Update #28 2012 - November 27th 2012
Included in this update:
- Audiotech Healthcare shareholders approve going-private transaction and delisting
- Blackbird Energy provides operational update, files annual financial statements
- Dalmac Energy reports record second quarter financial results
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Audiotech Healthcare Corporation (AUD:TSX-V)
Current Price: $0.34 (coverage commenced Nov. 8/04 - $0.14)
Audiotech Healthcare Corporation has announced that, at the special meeting of shareholders held today (Nov. 27, 2012), shareholders voted in favour of the proposed going private transaction by way of statutory plan of arrangement and delisting of Audiotech’s shares from trading on the TSX Venture Exchange.
Further details in this regard are available in Audiotech’s prior news releases of July 24, September 10, September 28, and November 21, 2012, and the Management Information Circular prepared for the special shareholder meeting, all of which have been electronically filed with regulators and are available for viewing under Audiotech’s issuer profile on the SEDAR website (www.sedar.com).
Audiotech intends to make an application to the Supreme Court of British Columbia at 9:45 a.m. (Pacific time) on Friday, November 30, 2012 for a final order approving the Arrangement. The Court has ruled in an interim order dated October 25, 2012 that the issuance of this news release not less than 2 days prior to the date of the hearing will constitute service and notice of hearing of the application for the final order.
It is proposed that the TSX Venture Exchange will halt trading in the common shares of Audiotech pending Audiotech’s application to the Court on Friday November 30, 2012. Assuming Court approval and issuance of the final order, it is proposed that the Arrangement will be effected on Monday, December 3rd and the common shares of Audiotech will be delisted and no longer publicly traded after close of the market on Tuesday, December 4th. Audiotech will then apply under securities legislation to cease reporting in each jurisdiction where it is currently reporting.
QIS Capital Comments:
We’ve followed Audiotech Healthcare for 8 long years with many ups and downs. Management always seemed to be able to put a profit on the bottom line and the stock went up and down but the share s never really gained traction. The lackluster trading, particularly over the past few years, combined with the costs of being a public company, finally convinced management that it was time to go private. The going private price of $0.35 represents a gain of 150% since our original feature, which eventhough over a lengthy period of coverage, still results in a very attractive annual rate of return. We would like to take this opportunity to congratulate management on a company very well run and wish them the best of success in the future.
Audiotech now needs to gain Supreme Court approval and exchange approval and then cash payments should be on their way to shareholders. We are estimating that this will transpire in late December or early January.
Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.075 (coverage commenced Aug 19/11 - $0.18)
Blackbird Energy Inc. has provided an operational update on its Bigstone Montney formation, liquids rich natural gas resource play.
The tubing string has been installed in the DEI Bigstone Hz 13-33-60-22w5 well (BBI W.I. – 12.5%). After tubing installation the well was flowed back for a period of 32.25 hours and during the final 24 hour period it produced at an average rate of 2.87 Mmcf/day (BBI net - 0.360 Mmcf/d) and 510 bbls/day (BBI net - 64 bbls/day) of condensate and load fluid for a combined barrel of oil equivalent rate of 988 BOEPD (123 BOEPD net to BBI). Approximately 75% of the load fluid used during fracking operations has been recovered to date. The 13-33 well was drilled to a total measured depth of 5,336 meters and completed with a 20 stage frac.
The DEI Bigstone Hz 13-33-60-22w5 tie-in operations including construction of surface facilities and laying the pipeline connection to the Donnybrook operated Bigstone gathering system has been completed. Production from the 13-33-60-22w5 well commenced on November 25, 2012.
Blackbird is also pleased to announce that production revenues from the 15-32-60-22w5 and 14-29-60-22w5 wells are now being received from the operator.
The company's year-end independent reserve evaluation effective July 31, 2012, prepared by GLJ Petroleum Consultants Ltd. (GLJ), an independent engineering firm, has estimated that total Proved plus Probable reserves of 625,000 bbls of oil equivalent were recoverable from 2.25 sections of the company's interest in the 8 section block, based upon the drilling of the first three wells at Bigstone. The remaining undeveloped interest lands are offset by successfully completed Montney wells drilled by industry participants in the area, thereby substantially de-risking the Montney potential of the remaining acreage. The next phase of development work at Bigstone will focus on proving up the potential of the remaining 5.75 sections of undrilled lands.
Garth Braun, CEO of Blackbird stated, The tie-in of the third well at Bigstone is a continued enhancement of Blackbird's production revenue. The recently announced acquisition of Celtic Exploration Inc. by Exxon Mobile Corporation further highlights the interest in companies that are participating in development of the Montney Formation. Blackbird is focused on increasing its position in the development of the Montney Formation and identifying new opportunities to grow shareholder value.
Blackbird today also announced that it has filed its audited financial statements and related management's discussion and analysis for the year ended July 31, 2012 with the Canadian securities regulatory authorities on SEDAR at www.sedar.com. In addition, the company has filed its statement of reserves data and other oil and gas information for the year ended July 31, 2012 as mandated by National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (NI 51-101) of the Canadian Securities Administrators.
Blackbird's reserves were evaluated as at July 31, 2012 by GLJ. GLJ's evaluation was conducted in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook and is compliant with NI 51-101.
QIS Capital Comments:
A few things we gained from Blackbird’s press releases over the last few days. One, the third well commenced production on November 25, 2012. While production tests were lower than many investors had hoped for, actual production rates are in line with neighboring wells and continue to prove the viability of the Bigstone play. Secondly, the company issued its annual results as at July 31, 2012. Blackbird showed its first production revenue of $170,244 which represented production from its first well since June 15, 2012 and from its second well starting July 16, 2012. We will obviously see much higher production numbers in the first quarter with a full period of production and then we will start to see production from the third well in the second quarter as it was only recently tied in. Finally, Pennant Energy (PEN) has announced the resignation of directors and the appointment of Garth Braun and James Harris to the board of directors of the company. Ron Schmitz is also expected to be appointed to the position of CFO. Garth Braun and Ron Schmitz are currently on the Board of Directors for Blackbird Energy and are expected to play an important role in the future development of Pennant Energy.
Dalmac Energy Inc. (DAL:TSX-V)
Current Price: $0.50 (coverage commenced Nov 15/11 - $0.37)
Dalmac Energy Inc. has announced its second quarter financial results for the three and six month periods ended October 31, 2012.
|LATEST FINANCIAL RESULTS|
|3 Mos. Ended Oct. 31||6 Mos. Ended Oct. 31|
(as at Oct. 31, 2012)
|Current Assets||$ 11,128,824|
Activity levels in Q2'13 continued on the same trajectory as noted in Q1 and resulted in record performance for the quarter as well as the year to date. Revenues for Q2'13 increased by 24% to $10.2 million as compared to the same period in the previous year while YTD'13 revenues increased by 33% to $18.3 million as compared to the same period last year.
The gross margin percentage remained constant at 30% for Q2'13 and 29% YTD'13. This was in comparison with 32% in Q2'12 and 29% YTD'12.
Net income before tax for Q2'13 increased to $959K, up 12% from Q2'12, while the YTD'13 net income before tax doubled to $1.3 million as compared to YTD'12. In the current quarter, the company recorded a future tax accrual of $241K (no such accrual was exercised in Q2'12). As a result of the tax accrual taken in Q2'13 the net income for the quarter was $719K as compared to $859K reported in Q2'12 while the net income for YTD'13 increased by 50% to $958K ($0.04/share) from the $638K ($0.03 per share) reported in the previous year.
With the completion in September of the previously announced $17 million senior secured financing, Dalmac's working capital ratio substantially improved going from 1:1 to 2.32:1. As at October 31, 2012, the company had positive working capital of $6.3 million and long-term debt, excluding finance lease obligations, of $8.7 million.
In both Q1 and Q2 of this fiscal year, Dalmac reported record revenues. Focusing on it’s the company’s strengths and stressing the importance of its customer's needs has been the touchstone of Dalmac’s operating philosophy. All of the company’s divisions are benefiting from the increased activity supported by firm commodity prices and driven by new technologies that are increasing oil and gas output. With the growing demand for horizontal drilling and multi stage fracturing, management anticipates increasing demand for the company’s products and services through 2013 and beyond.
Drilling utilization rates are expected to continue at record levels for the winter drilling season and the forecast for next year is expected to continue on equally as strong. The Petroleum Service Association of Canada (PSAC) is forecasting 11,400 wells to be drilled in 2013 and First Energy Capital Corporation has pegged that figure at 12,200. In both cased that is up from 11,250 wells drilled in 2012. About 70% of the wells drilled in 2013 will be horizontal wells which are much longer than vertical ones and the total of 22 million meters of drilling depth will be about equal to 2008 when 16,933 wells were drilled. In Alberta, the 2013 forecast for new wells is up 3% to 7,045. It is expected that the oilfield service activity will continue to be just as robust if not more in 2013 as it was in 2012.
Responding to the current surge of oilfield activity and production requirements, Dalmac is in the midst of purchasing about $6.5 million dollars of additional oilfield equipment. The company is confident that the steps being taken now will translate into higher revenues and earnings for Dalmac.
QIS Capital Comments:
Another solid quarter of results from Dalmac Energy for both revenues and earnings. Before tax numbers show an even larger improvement in profitability as the company was not taxable in the preceding year. Dalmac is well ahead of its fiscal 2012 results and remains on track to achieve its growth targets for revenues and earnings in this fiscal year. Also worthy of note is the significant improvement in the company’s balance sheet. With the new secured debt facility completed in September 2012, Dalmac now has positive working capital of $6.3 million and long-term debt of $8.7 million. This is a large improvement in the company’s working capital position and will provide leverage for the company to fund its current growth initiatives. Dalmac continues to trade at less than 4 times its trailing 12-month earnings, despite its forecasts for continued record revenues and earnings during the current fiscal year.
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 624,000 shares of Audiotech Healthcare Corporation, 130,500 shares and 450,000 options of Blackbird Energy Inc. and 31,000 shares and 200,000 options of Dalmac Energy 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 - 2012 QIS Capital Corporation.