Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Tommy D who wrote (7117)	2/12/2000 5:43:00 PM
From: Baba 2	Respond to of 24920

A little update on BKP..... Berkley Petroleum Corp. Recommendation: Buy (TSE - BKP $9.00) 12 Month Target $15.00 Initiating Coverage with a BUY ?The Berkley Story Remains Largely Intact, Yet Many Investors Have Bailed Out, Resulting In Ideal Time To Buy This Stock? 1999E 2000E 2001E Fully Diluted EPS $0.37 $0.78 $0.89 Fully Diluted CFPS $1.28 $2.15 $2.47 Basic shares o/s 99.2 million Market Cap $892.8 million Investment Highlights ú Our visit with Berkley management yesterday clearly indicates to us that very little has changed with the company from the one that investors, until recently, were willing to pay a large premium multiple for. ú Over the past three years, investors and analysts generally found only one major fault with the company, and that has been Berkley' s inability, on a consistent basis, to deliver its targeted, very aggressive production volumes. Nevertheless, over the two years between 1997 and 1999, its liquids production virtually quadrupled to 10,500 Bbl/d, and its gas production more than tripled to 155 MMcf/d. And this was accomplished in a low-cost fashion with operating cost of under $5.00/Boe and finding and development cost of well under $6.00/Boe proven (6:1conversion). ú For 2000, we are conservatively projecting production rates of 13,000 Bbl/d and 220 MMcf/d. ú Berkley' s recent share price weakness can largely be attributed to investors general perception that its deep drilling program in California ultimately will not work out. This may prove to be correct, although it is way too early to write off this play. But much more importantly, investors have now totally lost sight of Berkley' s numerous other big plays that are certainly proving to be very successful. Interestingly, there is now a fairly large share price discount built-in for its California project. ú Berkley' s other major plays include: 1. Northwest Territories: Recent drilling here has been very successful with about 40 MMcf/d net to Berkley coming onstream in 1H00. Further aggressive drilling in the area should add significant new production over the next couple of years. 2. Northeast B.C. has also been very successful for Berkley. Specifically, at Adsett, its current production of over 20 MMcf/d should reach 30 MMcf/d by this year-end, and 40 MMcf/d by summer 2001. 3. At Wild River-Wildhay, in west central Alberta, its current production of 20 MMcf/d should reach 25 MMcf/d by the end of next month and 35 MMcf/d in 2H00. 4. At Dawson, northern Alberta, last month' s production of 3,200 Boe/d should exceed 5,000 Boe/d by this summer via the combination of its astute corporate acquisition (Symmetry) and the planned 15-well exploration and development program. 5. Southeast Saskatchewan has also added considerable new light oil production for the company. ú Berkley continues to be a very aggressive driller with 17 rigs currently running and with plans to drill 125 wells in 1Q00 alone. The company has always maintained a very large inventory of untested prospects, which currently stand at 102. And note its significant, net undeveloped land position of 1.5 million acres. ú We believe that at its current share price, Berkley is an excellent stock to own for the following considerations: 1. on a risk/reward basis, the stock is likely at/near its bottom; 2. probably for the first time ever, the stock is now trading at its net asset value and at a historical low multiple of less than 4.5x this year' s estimated fully-diluted CFPS; 3. it is way too early to write off California; particularly since the Berkley #1 well remains very encouraging (well results likely available within two months); 4. Berkley remains the most exciting, intermediate-sized exploration company operating in North America; and 5. although, unlikely, at its current share price, the company could be a take-over target. ú We strongly believe that Berkley' s share price will not be this low for much longer. There is now nothing in its share price to reflect any success in California or any further drilling successes in northeast B.C., in the Northwest Territories, in the Alberta Foothills, and in Saskatchewan. ú We are of the opinion that the Berkley #1 well at East Lost Hills, California has a better that 50/50 chance of being successful. If so, we expect that our $15.00, 12- month target price will reached/exceeded by this spring. Now is an ideal time to Buy this stock for a potential 60% return.