Beyond the Oil Sands: Betting on Alberta’s Peace River Arch Region
Small cap Canadian oil stocks Birchcliff Energy (TSE: BIR), Dejour Energy (NYSEAMEX: DEJ), Long Run Exploration (TSE: LRE) and Aroway Energy (PINK: ARWJF) are players in the Peace River Arch region of Northern Alberta, Canada.
Feb 28, 2013 3:13:47 AM PST
Alberta might be known as the home of oil sands but small cap Canadian oil stocks Birchcliff Energy (TSE: BIR), Dejour Energy (NYSEAMEX: DEJ), Long Run Exploration (TSE: LRE) and Aroway Energy (PINK: ARWJF) are major players in Northern Alberta’s Peace River Arch region – which could become the next hot Canadian oil play with small caps already in the region becoming acquisition targets.
What is the Peace River Arch?
Located in northeast British Columbia and northwest Alberta, the Peace River Arch is increasingly being recognized for having a history of high quality reserves with significant opportunities for the recovery of new and remaining reserves of that same quality. Thanks to the region’s geologic and geographic diversity, companies operating there have been rewarded with prolific oil or natural gas production. In fact, the region is renowned for its large wells that have long reserve lives as they can produce for up to 15 to 20 years.
Some Small Cap Peace River Arch Players
The following small cap stocks are active in the Peace River Arch area and this could also make them acquisition targets for bigger oil or gas players:
- Birchcliff Energy. An intermediate oil and gas exploration, development and production company, Birchcliff Energy is apparently the largest producer of oil within the Peace River Arch area. Specifically, Birchcliff is focused on two Peace River Arch plays: the Montney/Doig Natural Gas Resource Play (1,850 net potential Montney/Doig horizontal natural gas drilling locations) and the Worsley Light Oil Resource Play. All told, Birchcliff Energy held 493,968 (456,952 net) acres of undeveloped land with an average working interest of 93% and a reserve life index of 36 years at the end of 2011. Back in August, Birchcliff Energy completed a preferred unit equity issue for $50 million with the proceeds being used to pay down debt and to strengthen the company’s balance sheet. Birchcliff Energy has a market cap of C$1.10 billion plus the stock is down 31.7% over the past year and down 11% over the past five years.
- Dejour Energy. Vancouver based Dejour Energy has significant oil and gas assets in key regions of Colorado, Utah, British Columbia and Alberta – including the Peace River Arch area where it has 8,500 net acres that are 75% owned and operated. Dejour Energy has done $1MM 3D seismic work that was interpreted in the first quarter of 2010 and completed the Waterflood of existing oil pools in the second quarter of 2011. Currently, the company has 9 wells (3 oil and 6 gas) there. Dejour Energy has a market cap of $27.01 million plus the stock is down 63.7% over the past year and down 89.4% over the past five years.
- Long Run Exploration. An intermediate oil and natural gas company focused on Western Canada, Long Run Exploration has a dominant land position of 600,000 net acres in the Peace River Arch. Back in December, Long Run Exploration completed the disposition of its non-core Viking interests located in the Plato / Dodsland / Lucky Hills areas of Saskatchewan for $180 million in cash. Long Run Exploration has a market cap of $C509.69 million plus the stock is down 24.5% over the past year and down 39.4% since the end of 2009.
- Aroway Energy. Trading as ARJWF on the OTCQX and as ARW on the TSE-V, Aroway Energy is a Western Canadian junior oil company focused on oil prospects in Alberta and Saskatchewan, Canada. Aroway Energy has a joint venture partnership in the Peace River Arch of Northern, Alberta where it and its partner have assembled a land package of 70,400 acres with 3D seismic coverage over 75% of this area. More importantly, all of these exploration and development targets are close to tie-in, gathering and plant infrastructure. It should be mentioned that when Aroway Energy began its operations in the Peace River Arch back in 2010, land could be purchased for $50 to $100 per hectare at crown land sales; but today, land is being purchased in the $300 to $900 per hectare range with prices continuing to rise. Aroway Energy has a market cap of $30.3 million plus the stock is down about 47.5% over the past year but its also up 4,669.9% over the past five years.
In other words, keep an eye on the above small cap stocks as the Peace River Arch region increasingly finds its way on the radar of big oil.