Sign up USA
Proactive Investors - Run By Investors For Investors

Pulse Oil not your 'typical junior', says broker Mackie, which starts coverage

The development of the firm's exciting Bigoray assets in Alberta should mark a game-changer for the firm
Crane
The enhanced oil recovery play could add between 6.5 million and 12 million barrels of light oil reserves

Broker Mackie has begun covering Pulse Oil Corp (CVE:PUL) with a 'speculative buy' rating and C$0.50 target, saying it is not your 'typical junior' oiler.

That's because huge upside could be achieved by the company with very little capital, reckons analyst Bill Newman.

WATCH: Pulse Oil moves to acquire 100% of Bigoray assets in Alberta

The development of the firm's exciting Bigoray assets in Alberta should mark a game-changer for the firm.

Bigoray consists of the Cardium oil pools, the Mannville gas pools, the Pekisko oil pool and the Nisku oil pools.

And recently the firm took 100% of the Nisku-D and E pool acreages via two transactions.

Together these two oil pools are estimated to contain an impressive 26mln barrels of oil initially in place (PIIP), of which around 9.3mln boe (barrels of oil equivalent) has already been recovered using water-flood techniques.

But Pulse plans a miscible flood project to target up to a further 12mln barrels of estimated remaining reserves which would represent an impressive 80% recovery factor.

"...what differentiates this small cap company from others in the current market, is its miscible flood enhanced oil recovery (EOR) project of two Nisku Pinnacle Reefs at Bigoray (100% W.I.)," says Mackie's Newman.

The EOR play has the potential to add between 6.5mln and 12mln barrels of light oil reserves, he says.

This is valued at C$65mln (C$0.74 a share) on the low end with upside to over C$177mln ($2.01 per share), he adds.

That's against a current market capitalisation of the group of around C$4mln, notes the broker.

"As most of the required infrastructure is in place the miscible flood project requires only C$3.0mln of investment per Nisku Reef providing massive upside without the risk and significant cost of an extensive horizontal drilling program," it adds.

Mackie also notes that Pulse's management have 'skin in the game' with Garth Johnson, the chief executive and Drew Cadenhead, president and chief operating officer, having a combined investment of C$1.3mln in Pulse at an average cost of around $0.11 per share holding, around 14% of the outstanding shares, while taking no salary for the last two years.

"The significant level of ownership aligns the interest of management with shareholders."

The analyst notes that at the current market price , Pulse currently trades at a steep discount to the broker's core NAV (net asset value) estimate of C$0.23per fully diluted share, excluding the Nisku miscible flood.

That net asset value rises to C$0.75 per fully diluted share when the broker includes its conservative valuation for the flood.

Pulse Oil shares added 20% on Thursday to C$0.12.

View full PUL profile View Profile

Pulse Oil Corp Timeline

Related Articles

1537383711_PumpJack.jpg
Wed
Permex has assets across West Texas and southeast New Mexico..
oil and gas operations
July 17 2018
With its third major transaction set to complete soon, the US-focussed oil and gas firm is continuing its transformation
oil and gas operations
August 31 2018
With management changes and new deals coming in recent weeks this is plainly a busy time for Solo Oil

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You understand that the Company receives either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate.

You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Copyright © Proactiveinvestors.com, 2018. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use