(B)(N) PBN PetroBakken Energy Limited

Deal Book. PetroBakken Energy Limited has cut its exploration and development budget by 30% from $975 million in 2012 to a proposed $675 million for 2013 (The Canadian Press, January 11, 2013, PetroBakken plans $675-million in capital spending in 2013 to boost output). Undoubtedly, the company knows best what it can do and what it has to do, and we, as investors, can best help ourselves and the industry by practising a discipline of risk aversion in our oil & gas portfolio. We should not expect “elephants of black gold” to leap out of the ground and into our wallets even though the industry has estimated a requirement for $650 billion, or twice its current market value, of new investment over the next ten years. Please see our earlier Post, The Canadian Oil Patch, October 2012.

PetroBakken has a current market value of $1.8 billion and pays a monthly dividend of $0.08 per share or $175 million per year for a current yield of an extraordinary 9.6%. However, the stock price at $10 is below the Risk Price (SF) of $14 and the downside due to volatility is minus ($2.25) per share.

Exhibit 1: B)(N) PBN PetroBakken Energy Limited – Risk Price Chart

PetroBakken Energy Limited is a light oil exploration and production company comprised of high growth, long-life Bakken reserves and production and legacy conventional light oil assets in southeast Saskatchewan.

(Please Click on the Chart to make it larger if required.)

PetroBakken Energy was 56% owned by PBG Petrobank Energy and Resources Limited and the company distributed its shares to its own shareholders in January 2013 (Marketwire, December 31, 2012, Petrobank and PetroBakken Announce Completion of Reorganization) and similarly, spun off its interest in PMG Petrominerales Limited in December 2010. PBG Petrobank Energy and Resources Limited was $30 in 2010 and trades for $0.99 (99¢) today amid pipe dreams of future heavy oil development on a $100 million budget and we have already noted (please see our Post, October 2012) that its other spin off, PMG Petrominerales Limited, has dropped like a stone from $20 to less than $10 in less than a year.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.