QIS Update #6 2012 - February 9th 2012
Included in this update:
- Cobra Venture announces completion of sale of Saskatchewan assets
- Dalmac Energy provides corporate update
QIS Capital has recently added a new Research Report to the Independent Research section of the website at www.qiscapital.com/research.php. We encourage you to have a look at this 2-page article on an underfollowed junior service company. This same company was also recently purchased in QIS Capital’s online Trading Summary portfolio: www.qiscapital.com/trade_summary.php .
QIS Capital has two upcoming Small-Cap Conferences. On March 15, we will be in Calgary for an evening investment conference at the Coast Plaza Hotel and Conference Centre. In addition, we will be in Vancouver on April 10 with another slate of companies and guest speakers to provide some engaging presentations to investors at the Vancouver Convention Centre. We are actively looking for a few more presenters, so feel free to pass this information along to a company or management group that may have an interest in attending and/or presenting. For more information on these events and to register to attend, please visit: www.smallcapconference.ca. As always, attendance is free for all 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.
Cobra Venture Corporation (CBV:TSX-V)
Current Price: $0.345 (coverage commenced May 22/07 - $0.205)
Cobra Venture Corporation has announced that it has completed the sale to Keystone Royalty Corp. of all of its freehold mineral and royalty interests in the Province of Saskatchewan, effective as of January 1, 2012, for an amount of $5,250,000, which amount is subject to usual industry adjustments for the period between the effective date and the date of closing. A final settlement of all applicable adjustments shall occur within 60 days of closing. The purchase price was paid by Keystone by: (i) the transfer of 1,767,000 common shares of Cobra Venture which were owned by Keystone to the Corporation for cancellation, at a deemed price of $0.30 per common share; and (ii) $4,719,900 paid in cash.
The sale was approved by 99.90% of the votes cast in person or by proxy at the special meeting of shareholders of the Corporation held on January 30, 2012. In addition, Sayer Energy Advisors provided a fairness opinion to Cobra’s board of directors, which opinion was included in the management information circular of the Corporation sent to shareholders in respect of the special meeting, that as of December 23, 2011, the consideration to be received by Cobra in connection with the sale was fair, from a financial point of view, to the company and its shareholders.
Upon final approval of the sale by the TSX Venture Exchange, and as a result of the disposition of the Saskatchewan assets, Cobra Venture shall be a Tier 2 oil and gas issuer on the Exchange. It is anticipated that the 1,767,000 common shares being transferred to the Corporation for cancellation in partial satisfaction of the purchase price shall be cancelled as soon as practicable, resulting in 15,903,748 common shares of the Corporation being issued and outstanding.
QIS Capital Comments:
With the successful completion of the sale of its freehold mineral and royalty interests in Saskatchewan for $5,250,000 in cash and shares, Cobra Venture will have pre-tax cash of over $7.25 million ($0.45 per share – post cancellation of Keystone shares), 3.625 million shares of Zodiac Exploration ($0.05 per share) and additional working capital and minor property assets. Cobra presently has a bid-ask spread of $0.27-$0.325. The total number of shares outstanding should currently be around 16 million
Dalmac Energy Inc. (DAL:TSX-V)
Current Price: $0.47 (coverage commenced Nov 15/11 - $0.37)
Dalmac Energy Inc. is pleased to provide a corporate update to shareholders. The company had a very successful third quarter as a result of its proactive corporate strategy, increased activity levels in the industry, and improved charge out rates. Management is very pleased to report that Dalmac is well on-track to significantly exceed its revenue forecast of $30 million for the fiscal 2012 year ending April 30, 2012. The company is confident that current positive industry indicators will continue to translate into higher revenues and earnings for Dalmac throughout the remainder of fiscal 2012 and well into fiscal 2013. The company intends to report its third quarter financial results in mid to early March 2012.
Dalmac further reports that the majority of its previously issued warrants were exercised at the end of January 2012 raising additional gross proceeds of $744,822. About 65% of the subscribers for these warrants were insiders. The proceeds were used to reduce existing debt and to improve the balance sheet. The company’s debt obligations have consequently been decreased by 649,584.
Utilization rates in the industry are continuing at record levels and the forecast for the upcoming year is expected to continue on an equally strong footing. The metrics driving the current activity stem mainly from strong oil prices. The current weakness in natural gas prices has been offset by the producers making a shift from natural gas to liquids and crude oil. Concurrent with this development is the resulting trend towards more complex well completions which are deeper and take longer to drill. Over the past decade, vertical wells would yield about 500 meters of exposure to a formation whereas the new horizontal wells are yielding 2,000 to 4000 directional meters in optimal positions within the formations. This trend is serving to provide an increased revenue stream for Dalmac’s servicing of the drilling and production sectors.
QIS Capital Comments:
It appears that Dalmac is poised for a very successful 3rd and 4th quarters for fiscal 2012. The company is on-track to significantly exceed its previous revenue forecast, and with higher charge out rates and less money being spent on safety training (as was the case in the first two quarters), we expect Dalmac to show a nice increase in earnings for Q3 as well. Previous forecasts for fiscal 2012 called for revenues of $30 million and earnings of $2.5 million or $0.13 per share. This forecast will likely be revised after third quarter results are announced in early March.
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 416,000 shares of Cobra Ventury Corporation and 25,500 shares and 200,000 options of Dalmac Energy Inc. 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.