PBT, NDX, OXIHF - Strong Buys

PBT

Pemberton closed today at 6 cents on good volume, hitting a day-high of 7 cents. Upward momentum is clearly now in its favour, as a few short weeks ago it traded at 3 ½ cents on small volumes. With the Viking play acquisition, NR's (IMHO) coming shortly and strong buying cleaning out the sellers, it is poised to continue trending higher.

PBT is a stock that suffers from some deal fatigue - hence the SP and the real opportunity. The new acquisition is a fundamental one and is definitely helping shareholders (who have seen the stock come off from 85 cents a number of years ago) see the stock with new eyes.

A JV (or JV's) done in a smart fashion will really help the SP - it being imperative that their oil plays get drilled/start producing/etc. without any more undue dilution.

It's important to note in terms of production that the freeze-up is coming. This means they can probably get in to the Panny and turn it on. If we see the Exchange allowing them the additional 50%, PBT should see some decent revenue coming in the door.

Here's a look at the NR re PBT acquiring an 83 % working interests on 840 acres (340 Ha) of land in the Kindersley, Saskatchewan area - the Viking Play:

http://www.stockhouse.com/tools/?page=%2FFinancialTools%2Fsn%5Fnewsreleases%2Easp%3Fsymbol%3DV%2EPBT%26newsid%3D7556873

I've received some inboxes from locals who know the Kindersley area and they are pretty happy re PBT becoming involved in the Viking Play. This play is given a good amount of space in the Scotia Capital Oil and Gas Resource Play Spotlight.  Because of this strong Scotia coverage, some of their brokers are being influenced to buy PBT. This can only help the SP.

 Here is some good info from the Spotlight:

An outline:

"Viking - Description of Play / Recent Developments

Originally discovered in the 1950s, our estimated OOIP for the Viking oil play in

Southwest Saskatchewan stands at approximately 6 billion barrels, implying that the

play is second only to the Cardium in OOIP among non-oil sands resources. Similar to

the Cardium, the Viking is a legacy oil pool that has been developed since the 1950s

with older technology, and that now stands to be rejuvenated by virtue of

advancements in horizontal multi-stage fraccing techniques.

We note that the Saskatchewan government's estimated oil in place for the Viking

is less than 2.0 billion barrels (considerably less than our estimate of 6.0 billion

barrels), primarily, we believe, because the government considered only the upper

sandstones in its estimate. The key to unlocking increased oil in place, we believe,

lies in accessing the tighter, siltier rock that underlies the cleaner sandstones.

Reece Energy Exploration Corp. (acquired by Penn West as of April 2009) was the

first to apply horizontal multistage fraccing techniques to the Viking light oil play in the

Dodsland field, near Kindersley, Saskatchewan, in November 2006. Fracced

Viking horizontal oil wells in southwest Saskatchewan are drilled to a depth of

about 750 metres, with all-in costs ranging between $1.0 million and $1.5 million."

Cont'd info:

"With estimated original oil in place (OOIP) in the neighborhood of 6.0 billion barrels, we place the Viking play in southwest Saskatchewan second only to the Cardium in terms of magnitude among emerging tight oil plays. Similar to the Cardium, the Viking has already been well delineated.

? Private producer WestFire Energy has the largest Viking land position, with approximately 150 net sections, followed closely by Penn West (~143 net sections) and Baytex (~135 net sections). Also notable are private producer TriAxon Resources (~95 net sections) and Crescent Point (~47 net sections)."

And here are the four main reasons they like the play:

"1. Large OOIP/potential to expand play. Our estimate of 6.0 billion barrels of original oil in place

places the Viking play in southwest Saskatchewan second only to the Cardium in terms of magnitude

among emerging tight oil plays. We also see potential for significant expansion of the play.

2. Attractive per-well economics, but best wells yet to come. With estimated IRRs of 57% and

breakevens of US$34.00/bbl, Viking economics edge out the Shaunavon, and come in slightly behind the Bakken and Cardium plays. With much improvement in completion techniques still to be had, we think the best results in the play are likely yet to come.

3. Well delineated/low geological risk. Initially discovered in the 1950s, Viking oil pools in southwest Saskatchewan have been well delineated with vertical drilling, and hence there is little geological risk associated with the play.

4. Upside to technology/cost reductions. As with most tight oil and tight gas plays that are exploitable using horizontal multi-stage fraccing, continued technological innovations to completion techniques have the potential to increase recovery factors and improve economics. In the case of Viking, the impact of expected cost reductions on per-well economics is magnified, because drilling costs for these relatively shallow wells are already significantly lower."

Here's more:

"Aided by lower drilling costs (~$1.2 million per well), economics in the Viking are very

competitive with other tight oil plays.

With IRRs of 57% and breakevens ofUS$34/bbl, Viking economics edge out the Shaunavon and come in

slightly behind the Bakken and Cardium plays

While we only have 11 wells inour data set at theCardium, initialresults point to thebest tight-oileconomics in

Canada.

? Lower drilling costs and large areal extent are key factors distinguishing the Viking play. Viking wells are typically drilled to a vertical depth of only 750 metres, with capital costs currently in the neighbourhood of $1.0 million. This is considerably shallower and cheaper than tight oil wells in the Shaunavon, Bakken, and Cardium plays, and offsets (we believe) the lower expected ultimate recovery per well (currently forecast at 75 mmboe) in the Viking. With a broad areal extent, we think that the potential for the extension of known Viking pools is significant, and in our opinion, is a major source of upside potential to the play. A comparison of key metrics from the Viking, Shaunavon, Bakken, and Cardium plays is provided below in Exhibit 16.

We believe the early dominance by trusts (existing and former) in tight oil resource plays such as the Bakken, Cardium, Shaunavon, and now the Viking is no coincidence - and is supportive of our hypothesis for the sector.

With a number of active private players in the play, and with interest from the trusts and

intermediates growing, we think M&A activity in the Viking is likely to increase."

Here are the Operators in the Viking Play according to the Spotlight:

"Penn West  PWT

Duce Oil  PRIVATE

Triaxon  PRIVATE

Flagstone PRIVATE

Crescent Point CPG

Petrobank PBG

Baytex BTE-U

Meridian PRIVATE

Westfire PRIVATE

ISH Energy PRIVATE

Husky Oil HSE

Rife PRIVATE

Three Martini Ventures PRIVATE

Ammonite AMO"

Crescent Point and Petrobank are close to PBT, but Reece Energy, which was acquired by Penn West as of April 2009 in the $92 million range is right beside their property. Note that the big players are taking over the smaller players in this play, as this bodes well for the SP.

I like what the Spotlight had to say about PBT's neighbour, Reece Energy:

"Reece Energy (a private company) deserves credit as the leader in the application of

horizontal multi-stage fraccing techniques in the Viking play. Reece drilled 28 of the 52 fracced HZ wells in our data set (Dodsland area) before being acquired by Penn West in March 2009 (for total consideration of $92 million)."

Clearly PBT is now rejuvenated - and the SP should continue to rise.

NDX

Novadx has had a LOT of ANONYMOUS selling. My DD tells me that's it's a personal situation and has nothing to do with the company's fundamentals. Pay zero heed - and note that without it the SP would be well into the thirties.

I know I'm repeating myself here, but here are some da-n impressive numbers:

It's safe to estimate that with the final mining permit NDX will make $12 million a year for the next 4 ½ years - and that's without adding to its reserves. Today its market cap is about $7 million.

Suffice to say, the dichotomy between its potential earnings and its market cap is ridiculous. Look for the final mining permit to come out ASAP. With that accomplished, any small-cap fund manager will sit up and take notice.

Here is a BNN bit on NDX

http://www.b-tv.com/features/watch-now.html?clip=BNNNovaDXMcoal.wmv

And here is the new updated website. Make sure you visit the Rosa Coal mine video,  which shows succinctly how simple and profitable this venture will be.

http://novadx.com/

If you haven't got your position, get it now or doubtless you'll be paying higher prices.

OXIHF

Oxford is very close to revenue. Make sure you accumulate your position right now while it's down here at low prices in the 4 to 5 cent range. As has happened over the last two months, any kind of buying (I mean a few decent trades) will put this into the low thirties.

For more info please read previous jimrockford blogs. I welcome your inbox.

Jim