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QIS Update #4 2012 - January 27th 2012

Included in this update:

  • Blackbird Energy announces operational update on second Montney well along with plans for tie-in and a third well
  • NTG Clarity Networks awarded $1.3 million contract for professional services



Audiotech Healthcare (AUD:TSX-V) should be reporting its annual results on Monday, January 30th. Through the first 9 months of the fiscal year, Audiotech achieved revenues of $4.0 million and earnings of $400,000 or $0.03 per share.


Cobra Venture (CBV:TSX-V) will be holding its Special Meeting of Shareholders to approve the sale of its freehold mineral and royalty interests in Saskatchewan for $5,250,000, effective January 1, 2012. Following the 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 ($0.05 per share) and additional working capital and minor property assets.


Please feel free to email us anytime at or call us at (250) 377-1182. We look forward to your comments, questions, and feedback.


Blackbird Energy Inc. (BBI:TSX-V)
Current Price: $0.185 (coverage commenced Aug 19/11 - $0.18)


Blackbird Energy Inc. has provided an operations update on its Bigstone Montney high natural gas liquids resource play. The Donnybrook Energy Bigstone Hz 15-32-60-22 W5M well (25% working interest to Blackbird) encountered 2,744m of high quality Montney reservoir with strong gas shows and excellent penetration rates. The reservoir encountered is comparable to the Montney interval that was successfully completed in Blackbird's first Bigstone Montney well, Donnybrook et al 14-29-60-22w5, which was the 1200m Hz Bigstone Montney discovery well that tested 4.3mmcf/d and 295 barrels of NGL's (1,011 barrels of oil equivalent per day). The reservoir quality encountered while drilling the 15-32 well proves the play and reservoir quality of the Montney at Bigstone extends at least as far north as the northern boundary of Blackbird's 1,792 ha 7 section (448 ha 1.75section net) contiguous land interests.


The 15-32 well is currently flowing natural gas, natural gas liquids and hydraulic fracture fluids undergoing clean up operations after completion of the 23 stage hydraulic fracture operation. During the hydraulic fracture operation 460 tons of fracture propant and fluids were placed. However, mechanical complications were encountered that have limited the number of stages that the operator can definitively say were successful. The final 5 stages were clearly successfully completed with 120 tons of propant and fracture fluids placed. At this time the operator is preparing to put production tubing in place and continue to flow the well. The flow rates for the 15-32 well will be released once the well has had further time to clean up and the rates are stabilized.


An industry competitor has drilled a 2,760m extended reach Hz well offsetting Blackbird's lands 800m to the west and parallel to Blackbird's 14-29 well. This well terminated 200m south of Blackbird's Section 31 and 200m west of the NW corner of section 29. The operator of the well reported a final 24 hour test rate after a 4 day flow period of 12.5mmcf/d with 770 barrels of condensate per day and expects to yield a further 30-35 bbls per mmcf of natural gas liquids that will be recovered from a shallow cut processing facility. This well is a strong indication of the productivity of the Montney reservoir at Bigstone and indicates the reservoir continues to the west and northwest onto Blackbird interest lands.


Donnybrook has informed Blackbird that surveys have been completed and contracts are in place to construct a 1.5 mile pipeline to tie in the 14-29 and 15-32 wells. Both wells were drilled from the same surface location and will be tied into the pipeline and shared surface facilities. Field construction operations for the pipeline are expected to commence in mid-February with all facilities ready for production to start by April 1st.


Donnybrook is currently waiting on surface approval to commence construction of 2 drilling pads that will facilitate the drilling of up to 6 more wells. Surveys have been completed for 5 of these development locations. Construction of the first surface lease is expected to be complete by mid-February and Donnybrook has informed Blackbird they have located a rig suitable to commence drilling the next well as soon as the third week in February. Donnybrook anticipates this well will be drilled from a surface location at 4-28-60-22w5.


Garth Braun, CEO of Blackbird Energy Inc. stated, The mechanical issues we have encountered with the 15-32 well have raised some technical issues. However, Blackbird is very confident about the quality of the reservoir the 15-32 well has encountered and looks forward to receiving results from the production test and placing the well on production. We are continuing to move ahead in the field with operations to tie in both the 15-32 and 14-29 wells, and are preparing to drill a third well on this exciting prospect.


QIS Capital Comments:


While obviously disappointing from a production standpoint due to the mechanical issues, all indications from the reservoir were extremely positive and further prove the upside that exists in the formation and Blackbird’s land package. Blackbird and its partners are expediting the third well in the program and are moving forward with the construction of the pipeline and gathering facilities which are expected to be online in early April. It is important to point out that these gathering facilities are not designed just to tie in the first two wells, but will accommodate several additional wells which the companies are planning to bring onstream in the next 12-24 months. We expect to see production test results in the next week or so but given that only 5 stages of the potential 23 stages will be producing, these numbers will likely be quite modest. The disappointing mechanical failure in the 15-32 well will be a speedbump along the road, but the entire play continues to be intact and is actually picking up speed with the imminent third well of the program and industry partners continuing to drill on neighboring lands.


NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.105 (coverage commenced Feb. 4/10 - $0.045)


NTG Clarity Networks Inc. has announced that the company was recently awarded a one year contract to supply a leading mobile operator in the Gulf region with professional services resources. The value of this contract is approximately CDN$1.3 million and NTG has already commenced the provision of services. This is the first phase of this contract which has the ability to lead to additional services in the next 6-12 months.


We are very pleased about working with this leading mobile operator to enable excellence in service delivery and customer care in this very competitive market, said Ashraf Zaghloul, NTG Clarity's Chairman & CEO. We are excited to have been awarded this contract as it demonstrates the customer's confidence in the experience and abilities of our staff.

QIS Capital Comments:


We have been eagerly awaiting a new contract announcement from NTG Clarity. This should improve revenues and earnings for the first half of 2012. For the 9 months ended September 30, 2011, NTG Clarity achieved revenues of $4.5 million and earnings of $617,975 or $0.024 per share. The company has positive working capital of $1.5 million ($0.06 per share) and is presently trading at about 3 times annualized earnings.



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 93,500 shares and 450,000 options of Blackbird Energy Inc. and 447,000 shares of NTG Clarity 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 - 2012 QIS Capital Corporation.

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