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Manitok Energy Inc.


Manitok Energy Inc. is a public oil and gas exploration and development company focused on conventional oil and gas reservoirs in the Canadian foothills and southeast Alberta. The corporation will utilize its experience and expertise to develop the untapped conventional oil and liquids-rich natural gas pools in both the foothills and southeast Alberta areas of the Western Canadian Sedimentary Basin.

The information provided below is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.

Expert Comments:

Chad Ellison, Dundee Capital Markets (11/17/14) "Manitok Energy Inc.'s Q3/14 is in line, and its production guidance reaffirmed. . .Entice production is slated to be tied-in in December and in Q1/15 following the completion of the multi-well battery. There is enough behind pipe production that management expects South Entice will keep the 7 Mmcf/d gas plant at capacity (~1,800 boe/d, ~40% liquids). . . at Stolberg, one well is currently planned for Q1/15. As a result, H1/15 capex is expecting to be only 6070% of cash flow, which should see ~$9M in debt reduction."

Shailender Randhawa, RBC Capital Markets (11/17/14) "In Q3/14, Manitok Energy Inc. reported CFPS of $0.12, which met our expectations on improved unit opex performance and lower corporate overhead expense. . . in December, we expect production tests on four Entice wells, including at least 1 Glauc well and 2 Basal Quartz wells. . .we maintain our Outperform rating."

Brian Bagnell, Macquarie Capital Markets (11/17/14) "Manitok Energy Inc.'s new Lithic Glauc well in the central part of Entice is currently being production tested, while four Basal Quartz wells will be completed and production tested by the end of Q4/14. . .to date, results from the company's drill program at Entice have been impressive, most notably from recent Lithic Glauc wells."

Daniel Choi, Clarus Securities (11/11/14) "Manitok Energy Inc. provided an operational update that was mixed. While results from Entice continue to look promising, investors will likely wait for more stabilized rates before passing final judgment on the wells. . .the fourth horizontal well (16-32) drilled at Entice. . .helps confirm Manitok's estimated 68 additional locations in the Glauc channel located in the south end of Entice. The wells are anticipated to be online in late Q4/14. . .the company appears to be on track to meet the lower end of its 4,7504,950 boe/d average guidance."

Chad Ellison, Dundee Capital Markets (10/9/14) "Manitok Energy Inc. drilled the third of a 10-well program targeting the lower Basal Quartz (BQ) formation in the southern end of Entice, testing at 376 boepd (48% 27 API oil) over a 2.9-day period. . .we are already beginning to see cost improvement at Entice; this well came in at $2.7M, down from the previous BQ cost of $2.9M. Although the latest result is early days, we view it positively."

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Shailender Randhawa, RBC Capital Markets (10/1/14) "We remain positive on Manitok Energy Inc. shares at current levels as the company addresses recent growing pains at Stolberg, and upcoming results at Entice. Although initial well results at Entice have been mixed, news flow is slated to pick up in H2/14 as Manitok has added a second drilling in the area. . .the company is currently trading at the lowest 2015E EV/DACF multiple in our coverage group at 2x (versus balanced peers at 7.3x) and a P/NAV of 0.6x (versus peers at 1.2x) using RBC's price deck."

Chad Ellison, Dundee Capital Markets (9/19/14) "Manitok Energy Inc. stated well tie-in work is moving forward to get the eight (4.1 net) behind pipe Cardium wells tied in and onstream early in Q4/14. . .while we are beginning to get results and a growing inventory from Entice, the majority of production and cash flow still comes from Stolberg."

Daniel Choi, Clarus Securities (9/19/14) "Manitok Energy Inc.'s management has been able to derisk 1012 additional locations with its first two horizontal wells at Entice. . .the company's second Hz Entice well drilled in the southern end of the acreage (3-28-22-25W4) targeting the middle Basal Quartz formation produced at an average rate of 205 boepd (66% oil) over 3.3 days."

The Energy Report Interview with Malcolm Gissen (9/11/14) "Manitok Energy Inc. is an undervalued company that would be an attractive investment for a high-risk/high-return investor. The company recently announced production was below guidance due to third-party delays (infrastructure). The stock was hammered and has not recovered, even though drilling results are exceeding expectations. We recently met with the company CEO, and he indicated that the problems were behind the company. Investors willing to wait 618 months should do quite well in Manitok." More >

Canaccord Genuity's Morning Coffee (9/2/14) "Manitok Energy Inc. released Q2/14 results. . .the company continues to trade at a significant discount to its peers."

Daniel Choi, Clarus Securities (8/29/14) "On the bright side, Manitok Energy Inc.'s Entice activities have led to a great well that averaged 761 boe/d over six days. With a number of additional wells to be drilled at Entice in Q4/13, there may be some positive catalysts."

Jeremy McCrea, Alta Corp Capital (8/6/14) "As far as well results for Alberta for the month of June 2014, Manitok Energy Inc. took the top spot (again) with its 10-11 Cardium well at Stolberg (35.2 Mbbl)."

The Value Man, Seeking Alpha (7/2/14) "Manitok Energy Inc. is a highly undervalued junior oil and gas company and it has well over 100% 612 month upside and even higher upside longer term. . .due to positive drill results released last week, it's extremely likely the company will hit year-end guidance, causing much of the large discount to unwind."

Daniel Choi, Clarus Securities (6/20/14) "Manitok Energy Inc. provided an operational update that was slightly positive. After several Stolberg wells that were below expectations, the company drilled a strong Cardium oil well and Mannville gas well. . .the next horizontal well at Entice is expected to be spud by the end of the month and will provide another catalyst. We maintain our Buy recommendation."

Shailender Randhawa, RBC Capital Markets (6/19/14) "We believe Manitok Energy Inc.'s contrarian strategy of focusing on conventional drilling in the Alberta Foothills (200,000 net acres) and Plains (96,800 net acres) has above-average growth potential assuming a 75% success rate and low industry competition. . .the company's extensive technical depth and experience in complex thrust and fold geology of the Foothills should work in its favor on less complicated geology on it 96,800 net acre farm-in with PrairieSky Royalty Ltd. We see the Foothills moving to a free cash flow generator with a mix of exploration as it derisks Entice in 2014."

Chad Ellison, Dundee Capital Markets (6/19/14) "Manitok Energy Inc. provided a much anticipated operational update, with results from its initial drilling at Entice confirming multizone potential. . .the highlight of the release was the latest two Foothills wells drilled at Stolberg, where a Cardium well (30% working interest) tested at 1,103 boe/d (92% oil) and a Mannville well (75% working interst) tested at 12 Mmcf/d with 15 Bbls/Mmcf (2,180 boe/d). These latest two results confirm that the team can still deliver strong results in the Foothills, with Stolberg providing a solid base that can grow near-term production and cash flow, and generate the funds to delineate the land base and build a drilling inventory at Entice."

Ray Kwan, Macquarie Capital Markets (6/19/14) "Manitok Energy Inc.'s Mannville/Cardium results will help the company meet its exit rate of 7,1007,500 boe/d. . .the results at Entice are encouraging, but we look for further horizontal results before we become more constructive on the play. Manitok is considering adding a second drilling rig in the Entice area, which would increase the operational news flow. . .today's press release had some incrementally positive results out of Entice and we look for results from its next two horizontal wells to underpin the value in the area."

The Energy Report Interview with Randall Abramson (6/19/14) "Our largest weighting at the moment in our All-Cap portfolios is Manitok Energy Inc. I picked up the phone one day and somebody recommended that we look at it. The majors in Alberta were all leaving for unconventional plays, and they left behind a perfectly good conventional play for a junior to come in and pick up! . . .a bunch of Talisman Energy Inc. employees had been drilling for deep gas wells in the Alberta foothills, and were bypassing perfectly good oil zones when they were looking for deep gas. . .when gas prices declined materially in the debacle of '08'09, and the majors left, suddenly land prices dropped back to 1998 levels. That created an opportunity for this team of former Talisman employees to swoop in, gather up a bunch of cheap land and go after the oil they knew was there, because they saw it when they were drilling for gas in the good old days. That's what created this conventional opportunity. . ." More >

The Energy Report Interview with Bill Bonner (6/12/14) "Manitok Energy Inc. has the Stolberg play in the foothills of the Cardium Basin. The Cardium generally registers 175 to 250 barrels of initial production. The foothills are registering three or four times that amount. Manitok is at its 23rd healthy well in the gas/oil Stolberg play. Plus, Manitok pulled off a really interesting deal earlier this year. Encana Corp. is a big Canadian multinational with properties in the U.S. It was farming out royalty lands on the order of 56M acres. Encana owns the railway mineral rights to the freeholds. Encana has now carved those rights out and is trading them in a public company called PrairieSky Royalty Ltd.

Manitok farmed into Encana in an area of west-central Alberta called Entice, which has been underdrilled. Manitok has a commitment to drill a number of wells during the next three years. Not only is the company running the successful Stolberg gas/oil play, it now has multizone potential in the shallower part of the basin. And it has the cash flow to develop that. Manitok needs to spend $106M during the next three years; its cash flow is about $50M a year. . .

The market was recently critical of Manitok. One of the senior managers left and the market thought that was the end of the company. But one individual does not a company destroy. Manitok put the right managers and technical people into the driver's seat. It has 30 or 40 more wells to drill in the foothill land, and about 300 to drill on the Encana block." More >

Daniel Choi, Clarus Securities (5/30/14) "Despite Manitok Energy Inc.'s challenges, it is trading at a steep discount to the peer group and Entice could be a sizable positive catalyst, considering the multizone potential spanning 150+ sections."

Chad Ellison, Dundee Capital Markets (5/30/14) "Manitok Energy Inc.'s Q1/14 production is in line, with higher than forecasted royalties and lower capex. . .Entice has had early multizone success; specifics to come mid-June. . .we reiterate our Buy recommendation and target price of $4/share."

Morning Coffee (5/2/14) "Manitok Energy Inc. shares were up after the release of its financial and operating results for Q4/13, as average Q4/13 production increased to 4,989 boepd (57% light oil and liquids) from 3,819 boepd in Q3/13. CFPS improved to $0.18 from $0.12 in Q3/14."

Daniel Choi, Clarus Securities (4/30/14) "One of the key catalysts for Manitok Energy Inc. will be initial results at Entice, expected in early to mid-May. . .we are maintaining our $3.75 target price and Buy recommendation. . .the company reported production of 4,989 boepd for Q4/13, which was a 31% increase from Q3/14 and a 62% increase from Q4/12."

Chad Ellison, Dundee Capital Markets (4/29/14) "We expect a Manitok Energy Inc. operations update on its Entice project to come in early May with potential results to date from two of the four vertical wells as well as the horizontal well. . .due to the deep and largely unwarranted discount valuation, the company is at an attractive entry point. . .we reiterate our Buy recommendation and target price of $4."

Daniel Choi, Clarus Securities (4/17/14) "Manitok Energy Inc. increased its Proved reserves by 18% to 9.5 Mmboe and its 2P reserves by 12% to 16.7 Mmboe. . .and despite the operational delays, the Entice play is moving ahead. . .we are optimistic that there will be some success given that these would be the most attractive high-graded locations."

Chad Ellison, Dundee Capital Markets (4/16/14) "Manitok Energy Inc. announced its year-end reserves, showing strong growth in proved developing producing reserves and oil weighting and 60% net asset value/share improvement, which we believe highlights the current discount valuation. . .we reiterate our Buy recommendation and $4 target."

Anthony Petrucci, Canaccord Genuity (3/27/14) "We are initiating coverage of Manitok Energy Inc. with a Buy rating. . .the investment case speaks for itself: Top-tier growth, both in production per share (47% last year, 38% forecast for this year) and cash flow per share (82% last year, 72% forecast for this year), at an extremely discounted price (2014E EV/DACF of 2.8x versus peers at 6.3x). Add to that a very strong balance sheet (D/CF of 0.7x), with the extra appeal of several potential catalysts on the horizon."

Daniel Choi, Clarus Securities (2/28/14) "We view Manitok Energy Inc.'s corporate update [regarding the recent asset disposition] as positive. The disposition brings greater focus into several core areas while making the robust balance sheet even stronger. As evidenced by an increase in drilling in non-Stolberg targets in the foothills, we believe a number of exploration opportunities remain."

Chad Ellison, Dundee Capital Markets (2/27/14) "Manitok Energy Inc. announced the disposition of some of its central Alberta Foothills gas assets for $22.85M. . .production in February has averaged 6 Mboe/d (58% oil) pre-disposition, ahead of our previous 5,561 boe/d Q1/14 estimate, allowing management to reiterate guidance of 6–6.2 Mboe/d despite the sale. $10.6M of the proceeds will go to additional foothills capex for two (1.75 net) wells, the balance will reduce debt. . .we expect the company to target Mannville liquids-rich gas west of Stolberg; the formation is generally more expansive than the Cardium, providing a higher chance of success and a free look at uphole, stacked Cardium sheets."

The Mining Report Interview with Keith Schaefer (2/18/14) Manitok Energy Inc. is a conventional oil play with a lot of gas. Now that gas prices are starting to move up, the company has been given a huge bonus. Manitok has a lot of leverage because even at very low gas prices, its wells were paying out in 8 to 10 months. It still has very low valuation despite the fast payback, so it is something that investors should know about.
The Mining Report: Does it also have an advantage because it has a conventional well and doesn't have to deal with the depletion rates that some of the fracking wells have had?
KS: That's right. You are looking at very low depletion rates compared to fracked wells. A tight shale well could decline 65% in year one; these guys are closer to 40%. It makes a big difference in how many times you can pay the well back over the course of the life of the well. It is a big advantage. More >

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