CHEAPEST OIL STOCK, highest risk reward is LPR.....
Evi Resource Opportunity Overlooked: We feel the focus on Q1
operational issues and near term guidance changes has masked progress
on drilling density at Evi. Operated activity was focused on the northern
block of Evi during Q1, where LPR drilled eight wells in a single section. All
eight wells are now on stream and initial rates indicate no signs of
interference between wells. LPR has regulatory approval for up to 16 wells
per section in certain sections at Evi and has plans to initiate a pilot of up to
12 wells per section in H2. Notwithstanding certain step-out wells that did
not perform as expected, we believe LPR ultimately has the opportunity to
double its current 500 well location inventory and surface up to ~$9/share.
As well managements guidance For second half of 2012 was for 90$ wit with a differential of 12 meaning they only expected to receive 78$ a barrel for oil vs. The 112$ we are getting today. Wit at 99 Edmonton par wit premium of 13.50$ That is a big deal especially when oil accounts for 70% of rev.
At current cap ex and prices we will be fc positive in q3 with 1 rig in evi, I suspect we will add back the second one and ramp up into 2013.....and if we sell off some ng acreage, then add more evi......look out ....this stock came public at the wrong time and forest shouldn't have dividended out the ownership....there is no short interest, no interest, completely unknown which is great for us in at these vast discounts. Time will reprice. The oil is flowing. Liquidity secure with over a 100 million available and that to will expand as banks use higher price decks