Novus Exit Volumes Impress

ROBERT PARĂ©, Jacob Securities, Inc. (01/18/2011)
"The company exited 2010 with production volumes of ~2,050 Boe/d (~66% oil and liquids) on the back of an active Viking light oil resource play focused drilling program in the year (33 wells at 100% WI) Entering 2011 at +2,000 Boe/d (+50% from Viking light oil at Dodsland), we believe Novus will continue to actively capitalize this key play. With cash flow ramping up on base production volumes, no debt and existing credit capacity of $28 million, we expect 2011 drilling to resemble 2010 activity, likely focused on a Viking program of 45 to 50 operated wells. . .Activity also kicked off in Q4/10 with a Bakken light oil well spud at Roncott and two Halfway light oil wells spud at Wembley, indicative of the option value in the stock, with all three wells expected to be completed in Q1/11. . .We believe Novus offers excellent exposure to the ongoing development of the Viking light oil play in southwest Saskatchewan and remains a strong candidate for consolidation amongst a number of larger, intermediate players in the Dodsland area. . .Maintaining significant financial flexibility while pursuing an active 2011 drilling program, including potential catalysts in higher-impact light oil plays, we see Novus delivering lower-risk, predictable growth from the Viking and free option value on other drilling activity."

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