In a Sept. 24 research note, analyst Bill Newman with Mackie Research Capital Corp. reported that Point Loma Resources Ltd. (PLX:TSX) and partner Salt Bush secured rights to a new Rex oil play that represents a "third high-impact play for large value creation," along with its Duvernay and Banff assets.
"Drilling of the Banff and Rex plays starting in Q4/18 offer the potential for multibagger returns and a great catalyst for the stock," Newman added. Point Loma holds an 80% working interest in Rex; Salt Bush owns the remaining 20%.
"Drilling of the Banff and Rex plays starting in Q4/18 offer the potential for multibagger returns and a great catalyst for the stock." - Bill Newman, Mackie Research
Newman pointed out that Rex, in the Upper Mannville group, has large reserves potential in that it could hold up to 60 million barrels of original oil in place (OOIP). "Assuming a 10% recovery factor based on primary production only, we calculate a potential net recoverable resource of about 4.8 million barrels (4.8 MMbbl), equivalent to ~65% of Point Loma's current Proven and Probable reserves." For comparison's sake, other wells in the area have reached 250–300 barrels of oil equivalent per day of initial production.
As for Banff, Point Loma plans to drill a horizontal well this quarter at one of the two defined oil pools it identified on its West Cove lands, which "could be a game changer," wrote Newman. "Based upon OOIP resource of between 25–75 MMbbl, we calculated a mean potential net value of CA$40 million, or CA$0.66 per share (CA$0.66/share) per pool with an upside case of CA$135 million, or CA$2.24/share, per pool."
Regarding its Duvernay holdings of 12,544 net acres of prospective rights, Point Loma is exploring ways to unlock shareholder value from them, Newman relayed. The Duvernay shale is an area that is bustling with activity, including drilling, land sales and partnership formations.
The analyst purported that despite Point Loma's "exceptional" success in adding asset value via transactions, the company's stock does not reflect it. Rather, the company is still "highly undervalued."
As such, Mackie reiterated its CA$1.10/share price target and Buy rating on Point Loma, whose share price today is about CA$0.27.
[NLINSERT]Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
Disclosures from Mackie Research, Point Loma Resources Ltd., Update, Sept. 24, 2018
RELEVANT DISCLOSURES APPLICABLE TO COMPANIES UNDER COVERAGE
Relevant disclosures required under Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at www.mackieresearch.com.
ANALYST CERTIFICATION
Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst's personal views and (ii) no part of the research analyst's compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.
