I own Bison also, spoke to the CEO last week, I post the interview. For another couple of Sask plays look at True (TUI.TO) also drilling in Bakken and WE.A, WE.B. on the TSX.
Conversation with Nicholas Swagor 1/11/04 (CEO Bison)
1. Insider ownership
CEO and management owns 20% of the shares
The total of all insiders is 45%
2. The potential of the discovery
He sees huge potential for the property.
He said he is restricted by the new standard (NI 51-101) for measuring reserves which really restricts his type of oil company due to the type of wells they drill which reserves cannot be fully booked now. Although he wouldn’t put numbers on it when I asked how much more his 2005 production would be if he drilled as he wanted he said 3500bpd.
2004 exit P+P: 5.8m
2005 exit add 2-2.5m (some reserves will be reclassified, they will upgrade some possible to proven and probable)
I asked twice but he didn’t put any more numbers around ‘huge’
3. Production estimates for 2005
2004 exit production was 1700 boe
2004 avg production was 1400 boe
2005 avg 2500-2700 (depends on the success of the horizontal wells they drill, they have 80-150 vertical location spaces, 9-14 horizontal drills)
4. What they will spend on capex in 05 and how it will be financed
CAPEX 2005 Q1 $4.5m
CAPEX 2005 Q2 $4.5m (this depends on drilling success and production, as he said he wants to retire debt, but he is also interested in adding an additional rig, in which case Q2 CAPEX would be $8m.
Therefore 2005 CAPEX could be as low as $18m and as high as $29m
Currently running BISa with a staff of 4, other similar sized companies have 20. He’ll be growing the company’s staff. Could work the company up to a trust. Didn’t state priority between the two.
They plan on drilling a number of horizontal wells
He is not planning on issuing any new shares as they would be dilutive, and believes they can fund exploration from cashflow.
He confirmed the debt and WC deficit at $17m. Their bank is National Bank. He just got their line of credit increased to $19,050,000 and credit facility of $6m for a total of $25m but he wants to decrease debt from CF in 2005.
5. What is the long-term plan for the company.continue to grow or sell out.
Although no Canadian Investment Bank Analysts follow BISa, individuals at three Calgary Investment Banks follow it as they have investments in their personal accounts. According to them, valuations were as follows:
Last year a trust offered $2.35/shr, but he thought it was worth $3/shr and turned it down
Sept 04: $5.25-$5.90/shr
Now: $6.25- 6.90
Would sell out at an attractive price. He feels the assets would be attractive to an O&G trust.
BISa is an oil-focused firm but they have a gas play, which does not fit well strategically. The Steelman Property is in central Sask. and could produce 350bpd. It is 320 acres and he believes it as $10-11m value. This is a shut-in gas play and he would like to divest or do a farm-in/farm/out play where they get a royalty but operate hands off. No 2005 CAPEX planned for this property. They book 0 reserves for this property. |
