Todd Pitcher Boiler Room Analyst. Its right here. Pushing Energy Power. Mark Bergman of Access1Financial and Regis Possino fame also worked at the Boiler Room Hampton Porter. Possino the convicted criminal also ran the Daily affairs of General Commerce Bank ag which was Khashoggi's bank in Austria which was recently raided by FBI. How do you know Todd?
Energy Power Buys Gas Reserves -- By doubling its stake in a large Alberta natural gas property, Energy Power Systems (EPS) Limited is dramatically ramping up its production capabilities on the drilling and exploration side, according to one analyst
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Story Filed: Tuesday, June 19, 2001 5:55 PM EST
Vancouver, Jun 19, 2001 (Stockgroup.com via COMTEX) -- By doubling its stake in a large Alberta natural gas property, Energy Power Systems (EPS) Limited (OTC BB: EYPSF) (CDNX: V.YPX) is dramatically ramping up its production capabilities on the drilling and exploration side, says a Seattle-based covering analyst.
Todd Pitcher of Willow Cove Investment Group Inc. says the company's decision to increase its interest in the nine-section Sibbald, Alberta property to an average 50% should improve Energy Power Systems' cash flow position significantly.
"It should put them in a position to tap into a large amount of reserves and translate into a meaningful amount of cash," he says.
The property, which consists of about 5,760 acres of land, currently has three producing gas wells with additional opportunities for further exploration and production recovery, the company said in a news release.
"The acquisition of these producing wells will increase cash flow to EPS and the additional land block should form part of our summer exploration and drilling program," said Sandra Hall, vice president of Corporate Affairs.
This is not the first Alberta acquisition for Toronto-based EPS in 2001. In April, the company acquired 25% ownership in a producing gas property in the Bigstone/Kaybob area.
EPS also has major interests in Atlantic Canada. Last February, the company acquired a 25% interest in 500,000 acres of oil and gas exploration property on Prince Edward Island.
The company's aggressive pace of acquisitions is dramatically broadening its production capacity, according to Pitcher.
"The real bang for the buck comes from the drilling side," he notes. "As EPS acquires more properties it will translate into a significant revenue flow influx."
One of the company's strengths is its business model, he adds.
"[President] Jim Cassina has developed a model that makes a lot of sense. It consists of an oil and gas division, an engineering & offshore division and a power division. Among those three divisions you should see a less choppy growth pattern than with companies who focus strictly on drilling."
The engineering & offshore division is currently working on contracts worth $5.5 million and Pitcher says EPS is well positioned to take advantage of build-out opportunities created by increased E&P activity offshore Atlantic Canada.
"A lot of larger companies are starting projects but they won't build out facilities themselves. Instead they'll outsource to smaller companies like EPS, which has a 147,000 square foot platform facility. That gives EPS considerable engineering power to garner a significant amount of new business."
According to EPS, construction of the floating production, storage and off-loading platform for the White Rose oil field owned by Husky Energy Inc. (TSE: T.HSE) is expected to receive the go-ahead late this summer. That could feed further growth for its engineering and offshore division in the fiscal year beginning July 1, 2001, the company said.
Another factor that bodes well for the company's fortunes is its anticipated listing with the American Stock Exchange later this year.
Pitcher says the company has gone through the first stage of the process and barring any unexpected developments, the listing "should happen sooner rather than later.
"Their last obstacle was getting the share price and market cap steady and those are holding their own pretty well. Fortunately, the company is in a relatively strong position where it doesn't absolutely need financing. It's pursuing an inorganic acquisition model at a measured pace, although if financing comes to them on their terms I think we'll see that pace pick up."
EPS's current valuation makes sense, says Pitcher, who rates it a 'long-term speculative buy.' However, he says there is upside in the stock and with the prospect of an AMEX listing on the horizon, it creates the likelihood of a broader more diversified investor base.
"Pending the awarding of a few expected Atlantic contracts there are catalysts in place that bode well for a higher valuation."
EPS closed 35 cents or 11.29% higher today at $3.45.
Energy Power Systems is a client of Stockgroup Holdings Inc., the parent company of smallcapcenter.com.
By JoAnne Sommers
Copyright 2001 Stockgroup.com, All rights reserved.
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