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Extract from his interview in the Energy Report (7 Feb). GLTA
TER: So we know what you’re avoiding. Let’s talk about some companies that look interesting at this point.
KS: Strategic Oil & Gas Ltd. (SOG:TSX.V) is a very interesting story. It has a play called Keg River right on the border of the Northwest Territories in Alberta. There’s this statistic called the recycle ratio that’s basically the profit-per-barrel divided by the cost per barrel. Most of these companies run anywhere between 1:8–3:1. This Keg River play is 10:1, where every dollar that goes into the ground produces $10. This is one of the highest recycle ratio plays I’ve ever seen in my life. With 50–60 well locations like that, it can really pay for a lot of its other development work. It has been able to secure railcars to go down into the U.S. to deliver its oil, giving it a better price than it otherwise would have to the pipelines. It’s run by a very smart guy, President and CEO Gurpreet Sawhney. He had his own reservoir engineering company in Calgary, so he’s very technical. He knows how to model these reservoirs, and he’s very bright. I really like that story and the Street is starting to reward it.
Raging River Exploration Inc. (RRX:TSX.V), Neil Roszell’s company in the Viking, has the absolutely top blueblood management team in the junior sector right now. It has great cost discipline. It knows how to use the premium in its stock as currency to get what they call “tuck-in” acquisitions—small land packages right beside and adjacent to where it is. That’s a quality name.
Novus Energy Inc. (NVS:TSX.V) is also in the same play and is probably my number-one takeout target for the year. It’s put itself up for sale, and I really do believe that sometime this quarter we’re going to see a bid from somebody. That’s a great stock for investors to look at.
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