QIS Update #28 2014 - September 23rd 2014
Included in this update:
- Blackbird Energy announces $35.5 million in financings and appointment of new director
- Quattro Exploration and Production to buy $800,000 database
- Quinsam Capital reports material increase in portfolio value
The Small-Cap Conference to be held in Calgary on October 7, 2014 is near fully booked and we’ll have the schedule up on the website soon at www.smallcapconference.ca.
This year’s Calgary Small-Cap Conference is highlighted by a variety of guest speakers and quality companies from a number of industries including oil & gas, mining, manufacturing, biotech and more. The guest speakers will be sharing their outlook on the markets and current economic conditions, and will be providing their top picks. As usual, we have several door prizes to give away at the conference.
Registration is now open and investors can sign up to attend the event at www.smallcapconference.ca/register.
Alternatively, you can email us to sign up at firstname.lastname@example.org. As always, it is free to attend for investors.
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: $0.33 (coverage commenced Aug 19/11 - $0.18)
Blackbird Energy Inc. (TSXV: BBI) (“Blackbird” or the “Company”) is pleased to announce it has entered into an agreement with a syndicate of underwriters led by National Bank Financial Inc. and including Raymond James Ltd., Haywood Securities Inc., TD Securities Inc., Cormark Securities Inc. and Jennings Capital Inc. (collectively the “Underwriters”) pursuant to which the Underwriters have agreed to purchase on a “bought deal” private placement basis 86,207,000 special warrants (the “Special Warrants”) and 14,706,000 common shares to be issued on a flow-through basis in respect of Canadian Exploration Expenses (the “Flow-Through Shares”), (collectively the “Financings”) at a price of $0.29 per Special Warrant and $0.34 per Flow-Through Share for gross proceeds of $30.0 million.
In addition, the Company intends to complete a non-brokered private placement of Special Warrants (the “Non-Brokered Private Placement”) of up to 18,813,800 Special Warrants at a price of $0.29 per Special Warrant for gross proceeds of $5.5 million.
Garth Braun, Blackbird’s CEO commented: “These financings are transformative for the Company and allow Blackbird to reach the next level in its development. Blackbird has captured an exceptional land base in its core Montney area and with these financings the Company is positioned to deliver additional value to its shareholders from an accelerated drilling program, ability to delineate its extensive liquids rich Montney resource and pursue incremental strategic acquisitions in its core area.”
Total gross proceeds from the Financings and Non-Brokered Private Placement will be $35.5 million. Blackbird currently has over $9.0 million of positive working capital on its balance sheet and post-closing of the Financings and Non-Brokered Private Placement, Blackbird expects to have approximately $42.8 million of cash and net working capital.
Blackbird intends to use the net proceeds from the Offering along with its current net working capital balance to fund ongoing exploration and development of its core Montney lands at Wapiti, potential strategic acquisitions and for general and corporate purposes.
In addition to the Financings, Blackbird is also pleased to announce that it has appointed Mr. Kevin Andrus as an independent member to its Board of Directors. “We are very excited to welcome Kevin as a partner and Board member of Blackbird, Kevin brings extensive experience to our Board from a financial and capital markets perspective,” said Garth Braun, Blackbird’s CEO.
Mr. Andrus is the Portfolio Manager of Energy Investments with GMT Capital Corp., a private investment company based in Atlanta, Georgia. A graduate of the Masters of Business Administration program from Regis University, Mr. Andrus is also a Chartered Financial Analyst charter holder who has spent the past two decades with various investment management companies. Mr. Andrus also sits on the board of DeeThree Exploration Ltd.
Each Special Warrant will entitle the holder thereof to receive one common share of the Company (a “Common Share”) and will be exercisable by the holders thereof at any time after the Closing Date for no additional consideration and all unexercised Special Warrants will be deemed to be exercised on the earlier of: (a) the date that is four months and a day following the Closing Date, and (b) the third business day after a receipt is issued for a (final) prospectus by the securities regulatory authorities in each of the Provinces of Canada, except Quebec, where the Special Warrants are sold qualifying the Common Shares to be issued upon the exercise or deemed exercise of the Special Warrants (the “Final Qualification Prospectus”). The Company has agreed to use its commercially reasonable best efforts to obtain such receipt for the Final Qualification Prospectus on or prior to the date that is 60 days from the Closing Date.
The Financings and Non-Brokered Private Placement are scheduled to close concurrently on or about October 15, 2014 (the “Closing Date”) and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange, and other securities regulatory authorities as applicable.
Blackbird Energy Inc. has reported that it has successfully closed the previously announced disposition of 8.0 gross (3.5 net) sections of Montney rights, known as Blackbird's Bigstone project, for net proceeds of $8.89 million after closing adjustments.
Garth Braun, Chief Executive Officer of Blackbird noted, Blackbird is pleased to continue to add further focus to its Elmworth project through the disposition of non-core assets. With the above noted disposition, Blackbird has significantly strengthened its balance sheet as it begins to de-risk and delineate its Montney resource.
Blackbird is also pleased to announce that Joshua Wylie has been appointed as Manager, Land.
Mr. Wylie's career has been focused on working as a Landman for junior and small intermediate oil and gas companies. Mr. Wylie holds a Bachelor of Commerce degree in Petroleum Land Management from the University of Calgary. Both his enthusiasm and experience with acquisitions and divestitures will be an asset to Blackbird Energy's growth strategy.
In connection with his appointment, Mr. Wylie has been granted an aggregate of 500,000 stock options exercisable at a price of $0.385 until September 15, 2019.
Blackbird Energy Inc. has provided the following update on its operations and ongoing business.
Completion of Additional Montney Land Acquisition and Receipt of Crown Lease
Blackbird is pleased to report that it has closed its previously announced acquisition of 8 additional sections contiguous with its existing Elmworth Project and 77 sections of Montney prospective land in East Wapiti located northeast of the Elmworth Project. With completion of this land purchase, Blackbird now holds a 36 section contiguous block of land at Elmworth bringing the company's total Montney prospective land position to 117 sections (74,880 net acres). In addition, Blackbird is pleased to announce that it has received its Mineral Surface Lease from the Alberta Energy Regulator for the construction of its first well site for the drilling of its previously announced well to access the Montney formation in the Elmworth Project. With the receipt of the Lease, Blackbird will proceed with the next step of obtaining the required well license, which it anticipates receiving shortly.
Anticipated Closing of Bigstone Sale
As previously announced, the company has signed a binding purchase and sale agreement for the sale of 8.0 gross (3.5 net) sections of Montney rights, known as Blackbird's Bigstone project, for a cash purchase price of $8.8 million before closing adjustments. The previously announced expected closing date of September 1 has been moved to September 15, and the sale has received TSX Venture Exchange approval.
Appointment of Vice-President of Drilling and Completions
The company is pleased to announce that Randy Schmautz has been appointed as Vice-President, Drilling and Completions of Blackbird.
Mr. Schmautz is a Registered Engineering Technologist with over 35 years of experience in the Western Canadian Sedimentary Basin. Mr. Schmautz has designed, executed and directed drilling and completion operations on over three hundred and fifty wells over the past sixteen years. During the past two years, Mr. Schmautz has been responsible for all Duvernay drilling and completions engineering and operations targeting the Duvernay at Trilogy Energy Corp. Prior thereto, Mr. Schmautz was Director, Drilling and Completions at Progress Energy Resources Corp. from 2008 until 2012, where he presided over a capital budget of between $120 million to $240 million per annum, targeting the Montney.
In connection with his appointment, Mr. Schmautz has been granted an aggregate of 1,000,000 stock options exercisable at a price of $0.365 until September 10, 2019.
Garth Braun, CEO of Blackbird noted, Blackbird continues to execute on its strategy of aggregating both exceptional land at a cost effective basis and exceptional talent that will assist in the development and delineation of its resource assets. Blackbird going forward, is determined to continue to grow through further land acquisitions and production opportunities commencing with its first high impact Elmworth well scheduled for Q4 2014.
QIS Capital: Quite a month for Blackbird Energy with the completed sale of a major property, the completion of a major financing, the purchase of another major land position in the Montney, and the appointment of some key influential individuals. Blackbird is now gaining increasing institutional interest and is being quoted in numerous media reports, newsletters, and various publications.
Quattro Exploration and Production Ltd. (QXP:TSX-V)
Current Price: $0.55 (coverage commenced Mar. 24/14 - $0.32)
Quattro Exploration and Production Ltd. has announced that it has entered into an arms-length agreement (the Letter of Intent or LOI) with an Alberta-based private company for the acquisition of the company's well database for $800,000 and a GORR of 1.5% on targets developed utilizing the database within the Western Canadian Sedimentary Basin.
Quattro intends to fund the acquisition with the issuance of 8,000 Convertible Class B shares priced @ $100 per share, paying an annual interest rate of 4%, to be created by the company prior to Closing. The holder will have the right in the 3rd year to convert the Class B shares into Class A common shares at a ratio of 25 Class A share for each Class B share converted, (25:1), valuing the Class A common shares at a deemed $4.00 per share.
Quattro will acquire a data base of 2,000 well logs, including all pore pressure analysis, the associated computer algorithms and equipment dedicated to the analysis of the pore pressures and associated fracturing of certain geological oil and gas prospects within the foothills of Canada. The information was accumulated over the past 38 years and is extensive, ranging from the US border to the Yukon Territory. The data has been a key component in the design of safe and efficient drilling programs, with the further benefit of assisting in the identification of pore pressures and natural fracturing - one of the fundamental aspects of successful well design and fracking programs.
400 of the wells logs within the database have penetrated the deep basin, including the Montney and Duvernay formations, resulting in an extensive analysis of regional geological trends, measured poor pressures and associated analytical information used to determine well behavior and performance.
The opportunity to make an acquisition of an extensive database of this magnitude is clearly in our mandate, said Leonard Van Betuw, President and CEO, Quattro is a focused Company that is dedicated to combining low cost production with high impact exploration. This acquisition directly supports our continuing plan to focus on diversified operations and development drilling, in combination with only the best defined and de-risked material exploration opportunities.
Quattro Exploration and Production Ltd., is pleased to announce the formation of an Advisory Board to the company's officers, management, staff and Board of Directors. The company is pleased to announce the following initial two members to the newly formed Advisory Board;
Mr. H. Craig Willis, is a recognized leader in Deep Well Design and Mud Engineering Specialist for over 40 years. His career ranges from his early years in offshore Newfoundland and Sable Island, to onshore Western Canada, which included assisting with the early challenges of Jumping Pound to the active geological settings associated with operating in the region of Fort Liard, Northwest Territories. Craig has been the mud engineer and consultant to over 400 deep wells, typically drilling to target depths of 3,500 to over 5,000 meters. His years of experience have more recently been utilized in Syria, the Ukraine, Brunei, Tunisia and Mexico to assist in the drilling of high pressure and high temperature deep wells in faulted areas. As a recognized expert in the field of hydraulics, mud rheology and well design, Craig shall be called on to apply his extensive expertise assisting with Quattro's well design, poor pressures and drill monitoring during our exploration efforts over the coming years, both in Canada and Guatemala.
Mr. Les Tochor, brings over 20 years of comprehensive financial management experience in both the private and not-for-profit sectors including enterprise risk management, treasury and cash management, internal audit, supply chain management and financial reporting and planning. He has held financial management roles at the University of Calgary, Alberta Health Services, The Calgary Health Region and TransAlta Utilities. Mr. Tochor has focused on enhancing enterprise decision making capabilities through strategic utilization of information systems, reducing the time to report financial results and increasing the level of risk management and internal controls within an organization. Mr. Tochor successfully implemented changes in complex environments, while being sensitive to the intricacies of corporate governance and policies. Mr. Tochor has a Bachelor of Commerce degree (1990) from the University of Saskatchewan. As well, Mr. Tochor holds the designation of Chartered Accountant with the Institute of Chartered Accountants of Alberta and has a Certification In Risk Management Assurance with The Institute of Internal Auditors.
As Quattro builds its foundation, the company has formed its Advisory Board to insure that we have additional expertise to call on that is continually informed and dedicated to the company. In anticipation of our accelerating business plan, we believe that an Advisory Board allows the company to remain flexible, efficient and agile in combination with an ability to add the various areas of expertise necessary to continually strengthening our corporate governance and risk mitigation across our diversified business plan, added Mr. Van Betuw.
QIS Capital: The acquisition of the well database is a strategic move for Quattro as the company attempts to build its crown land position as well as gaining further insight into lands already owned by the company. To date Quattro has successfully met its production and financial targets although the company is still not very well known. Management is forecasting to reach 2,500 boe/d by the end of 2014. Production in the second quarter averaged 1,525 boe/d.
Quinsam Capital Corporation (QCA:CSE)
Current Price: $0.16
Quinsam Capital Corporation has commented on its recent strong portfolio performance.
As reported in its August Performance Update Press Release, Quinsam holds 600,000 shares and 600,000 warrants issued by EnerDynamic Hybrid Technologies Corp. (EHT:TSX-V). These shares were purchased in early 2014 when EHT was a private company.
EHT completed its listing process and in recent days commenced trading on the TSX Venture Exchange. On September 15, 2014, the closing price of EHT shares was $1.15. At a price of $1.15, Quinsam's 600,000 shares have a value of $690,000 and its 600,000 warrants have an aggregate intrinsic value of $390,000, representing a total value of $1,080,000. As at August 31, 2014, the carrying value of this investment in Quinsam's $1.9 million portfolio was $150,000.
We are delighted with the positive performance of EHT, said Roger Dent, Quinsam's CEO. Of course, EHT has only been public a short time and the share price is likely to fluctuate. However our belief in the company's prospects has clearly been recognized by the market.
Quinsam normally does not highlight individual investments but in light of the substantial increase in portfolio value the company felt additional disclosure was warranted.
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 219,00 shares and 350,000 options, and 706,348 warrants of Blackbird Energy Inc., 65,000 shares of Quattro Exploration and Production Ltd., and 895,000 shares of Quinsam Capital Corporation,. 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.