PIE: Leveraging High-Impact Alberta Basin Bakken

KIRK WILSON, Clarus Securities (11/17/2010)
"Exploration activity far the Alberta Basin Bakken on both sides of the border has piqued interest from both industry and the investment community. . .Primary has furthered its land base in Montana, which continues to expand. Primary may be an interesting addition to an O&G portfolio due to its leverage to this high-impact oil resource play.

Primary now owns over 150,000 contiguous acres (100% WI) in Western Montana, which are favorably located 12 miles south of Bakken lands owned by Rosetta Resources, Newfield Exploration and Anschutz Oil and Gas. PIE also has 20,000 contiguous acres (100% WI) in Eastern Montana, NW of the Elm Coulee Bakken field where 70 Mbbls. have been recovered.

Recent land prices point to more than $1.17/share for PIE. Based on Rosetta's comment that land prices have been $1,000–$1,800/acre recently, Primary's Western Montana lands alone could be valued at $150M–$270M or $1.17–$2.10 per FD share.

Based on various preliminary evaluations (including data from Rosetta), PIE could have 168 Mbbls. of unrisked recoverable resource on its two land blocks in Montana (assuming a 50% WI farm-out). On a risked basis, PIE has a potential NPV of nearly $5./FD share."

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