By Hassan Malik
@hmalik21
When looking at
investing in companies sitting on oil, it is essential to look beyond the share
price and assess the worth of the land an oil company is sitting on. You also
have to look at future prospects. Today, oil prices are falling but don’t let
that fool you. You always have to account for a number of factors including the
improvement in technology that can potentially increase how much oil is
extracted in the coming years.
One company that is
worth looking at is Bankers Petroleum
(TSX: BNK). Although its stock
price was off more than 8% on Monday there’s more to this story than meets the
eye. The company operates in Albania, a reasonably stable jurisdiction, and controls
the Patos-Marinza oilfield which, according to Yahoo Finance, is the single
largest onshore oil field in Europe. It is estimated to be worth about $5.4
billion.
In its third quarter
of 2014, Bankers reported an average production rate of 21,865 barrels of oil
per day (BOPD), up 6% from the previous quarter. The Patros-Marinza third
quarter average oil price was an estimated $79, just coming a few dollars shy
of the current Brent Crude Oil price of around $86 following a slide in global
oil prices. Bankers Petroleum’s cash flow has been largely positive over the
past 4 years, surging from $71 million in 2010 to an estimated $300 million projected
for 2014. On average, then, its cash flow is growing at 15-30% annually.
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