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Pulse Oil executing on strategy, says Mackie, which repeats a 'speculative buy'

As well as the output boost, the oiler announced the acquisition of petroleum and gas rights in 160 acres

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The oiler also announced the acquisition of petroleum and natural gas rights in 160 acres of Bigoray land

Broker Mackie repeated a 'speculative buy' stance on junior firm Pulse Oil Corp (CVE:PUL) following news the firm had lifted daily output through well reactivations in its Bigoray area assets in Alberta.

The oiler also announced the acquisition of petroleum and natural gas rights in 160 acres of Bigoray land immediately next to its Bigoray Nisku D Enhanced Oil Recovery (EOR) project.

Mackie targets $0.50 for the Pulse shares, which is more than double where they are now at C$0.20 each.

Pulse revealed it had upped production to about 300 boe/d (barrels of oil equivalent per day) at 84% oil, from around 70 boe/d, through the completion of the first phase of well reactivations where it has 100% working interest (WI).

"After flush production, these wells are expected to add around 250 boe/d of long life production.

"In the coming weeks, Pulse plans to reactivate another five to seven wells at Bigoray and Queenstown," noted analyst Bill Newman.

"We estimate potential production additions of another 250 boe/d taking corporate production to 500 boe/d," he said.

Pulse's Bigoray assets include a 100% interest in two Nisku Pinnacle reefs that have produced an average of 35% of the 26mln barrels (mmboe) of oil initially in place (PIIP) with waterflood techniques.

The average recovery factor of 52 nearby analogous reefs from another technique called miscible flood is around  80%.

Newman notes that assuming Pulse achieves a similar recovery, a miscible flood has the potential to add up to 12 mln barrels of reserves with production additions of over 2,000 boe/d.

 "With a recovery factor equal to the average of 80%, we see upside value potential of $177 million ($2.01 per share)," says the analyst.

"As most of the required infrastructure is in place (100% owned by Pulse), the miscible flood project requires a relatively small investment per Nisku Reef providing massive upside without the risk and significant cost of an extensive horizontal drilling program."

Quick facts: Pulse Oil Corp

Price: 0.015 CAD

TSX-V:PUL
Market: TSX-V
Market Cap: $2.27 m
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on 04/12/2019

2 min read