A Pareto Securities report highlighted the
disconnect between this energy company's current share price and where it
should be.
An Oct. 3 research note by analyst Tom Eric Kristiansen pointed out a
"valuation mystery in Blackbird
Energy Inc. (BBI:TSX.V), which continues to be priced at a large discount
to peers and is the most obvious takeover candidate in our coverage
universe."
The company is currently trading at CA$0.35 per share. Pareto's target
price on Blackbird is more than three times that, at CA$1.10 per share.
"We view Blackbird as too cheap to ignore and reiterate our Buy,"
Kristiansen wrote.
The analyst offered arguments for why the company should be valued higher.
Its year-end financials, as of July 30, 2018, were as expected. Management
has guided to near-term production of 2,000 barrels of oil equivalent per day
(2 Mboe/d), an increase from 1.148 Mboe/d.
"More important," the analyst noted, "Blackbird delivers an
industry leading operational netback of CA$30 per barrel of oil equivalent
(CA$30/boe)." It is the highest among its peers, as demonstrated in the
graph Kristiansen included in his report, which compares the group on this
metric. Seven G's netback is CA$29/boe, and NuVista's is CA$24/boe. The
lowest is Birchcliff's at CA$13/boe.
Yet, as shown by Kristiansen, despite having the highest netback per boe,
Blackbird has the lowest enterprise value per section of land owned, at
CA$2.1 million, as depicted on the same graph. NuVista has the highest, at
CA$12.4 million/section; QEC's is CA$11.9 million/section; and Seven G's is
CA$8.8 million.
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