Oil and gas stocks are largely unloved at the moment yet energy is still the lifeblood of our economy. Ubika Research analysts have combed the Canadian junior oil and gas universe and have uncovered two new names that could still do well despite this challenging environment. So much so, that both have been added to the Ubika Energy 20 (UE20) index.
Corridor Resources Inc. (TSX: CDH)
Corridor has what it calls “three high-impact prospects with tremendous upside potential:” Natural gas production and reserves in the McCully Field in New Brunswick; a 43,000 acre potential oil prospect off the coast of Newfoundland; and a 21.67% interest in Anticosti Hydrocarbons (liquids-rich shale), a joint venture on Anticosti Island, Québec with an estimated 6.7 bboe net undiscovered resource.
For 2015, Corridor Resources expects 1,125 boepd of production and $8.7 million in cash flow from operations. The company’s cash flow from operations netback increased to $73.13/boe in Q1 2015 from $71.16/boe in Q1 2014, which it says is the “industry top decile and highlights the premium natural gas pricing market at Algonquin city-gates during the winter.” One of Corridor’s strategic priorities for the year is to add new growth projects to its inventory.
According to Ubika Research analysts, Corridor delivers great value to investors, trading at 1.7x LTM Revenues, 3.5x LTM EBITDA, and 2.3x LFQ (annualized) Free Cash Flow. The company also holds no debt on its books, providing less risk and much more opportunity for additional future debt financing. Corridor’s stock is off 20% so far in 2015 to its recent price of $0.70 a share.
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Orca Exploration Group Inc. (TSXV: ORC.B)
Orca investors have actually seen a positive 2015, with the company’s shares gaining more than 10% to its recent price of $3.20.
The Tanzania-based company is engaged in hydrocarbon exploration, development and supply of natural gas in Tanzaniaand oil and gas exploration in Italy. Orca has a Production Sharing Agreement with the Tanzania Petroleum Development Corporation and the Government of Tanzania, covering the production and marketing of certain gas from the SongoSongo Block offshore Tanzania.
Orca Exploration announced on June 15, 2015, that International Finance Corporation has received approval by the board of World Bank for an investment of up to US$60 million in Orca’s operating subsidiary, PanAfrican Energy Tanzania Limited. This will allow Orca to proceed with the first phase of the SongoSongo development program.
Ubika Research analysts like the fact that the company is trading at 0.5x LTM Revenues and 3.3x LTM Free Cash Flow. Orca also has no debt on its books and has delivered positive cash flows in the past seven out of eight quarters.
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