"Over the next two years, Pulse plans to build a substantial production base through additional well reactivations, a Mannville development drilling program and through the implementation of the EOR (enhanced oil recovery) project at Bigoray which could increase corporate production to 4,600 boe/d (barrels of oil equivalent per day)," notes analyst Bill Newman.
Last week, the firm revealed it had upped output from around 70 barrels of oil equivalent per day to more than 300 Boe/d (84-per-cent oil) with the start of Pulse's planned reactivation program in its core Bigoray area.
In coming weeks, Pulse plans to reactivate another five to seven wells at Bigoray, and one at its Queenstown asset.
The massive resource upside, however, comes from the miscible flood (rather than just waterflood) EOR project at two Nisku reefs at Bigoray, and, with the completion of the well reactivations, infill drilling and initial response from this EOR program, output is targeted to increase to around 1,680 boe/d in 2018, reckons Pulse.
With the full impact of the EOR work, this is earmarked to grow to 4,600 boe/d in 2019.
At Bigoray, two Nisku reefs have produced an average of 35% of the 26 million barrels (mmboe) of petroleum initially in place (PIIP) under waterflood, but the average recovery factor of nearby reefs developed with a miscible flood is around 80%.
Assuming Pulse achieves a similar recovery factor, a miscible flood has the potential to add up to 12 mln barrels, says Newman.
"Assuming a recovery factor at the bottom end of the range of 55%, and a modest $15/boe cash flow netback, the potential NPV10 is $78 million ($0.61/fd share).
"With a recovery factor equal to the average of 80% and a $15/boe netback, the NPV10 increases to $177 million ($1.39/fd share)," says the analyst.
"The potential upside from a successful Nisku Reef EOR project is so large that we expect substantial stock price appreciation, even if the miscible flood achieves expectations at the low end of the range," adds the analyst.
Pulse shares stand at C$0.18 at the time of writing. Mackie's target is C$0.50 each.