Blackbird Energy Drilling Update Does Little to Curb Share Price Slide

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Popular Montney energy junior Blackbird Energy Inc. (TSXV: BBI) has seen its stock get hit by the falling oil price

SmallCapPower | July 26, 2017: Blackbird Energy Inc. (TSXV: BBI) announced Tuesday that it has added additional acreage in its Pipestone/Elmworth location and reported updates to its development program and its expansion of the Eastern Pipestone/Elmworth gathering system. Blackbird Energy increased its Pipestone/Elmworth Montney rights to 125 gross (108.9 net) sections, equivalent to 80,000 gross (69,696 net) acres. This is up from its previous 76,800 gross (66,469 net) acres.

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Blackbird Energy has focused on furthering the development of its southern Wapiti core area, enhancing production capacity, and the continued delineation of its extensive Montney resource. In the next quarter, the budgeted program encompasses the drilling, completion and recompletion of a total of six development wells and the drilling and completion of four (1.75 net) delineation wells.

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Blackbird Energy has successfully recompleted the first of three wells. The remaining two wells are planned to be recompleted in August and September, respectively, with initial production testing to follow thereafter.

Blackbird Energy has begun the surveying process for its Eastern Gathering System, which will tie in production from an existing well and allow the tie-in of additional development wells. The Company estimates that the gathering system will cost approximately $4.4 million, and will be functional within the first half of 2018.

Blackbird Energy has a substantial land position in the Montney region, one of the most economic energy-producing regions in North America.

In a research report late last year, Ubika Research estimated that once the infrastructure facility is in place, Blackbird will be pumping approximately 3,150 barrels of oil equivalent (boe) per day, producing over US$57mm in revenue based on an oil price of US$50/barrel.

In terms of valuation, Blackbird Energy currently trades at price to TTM sales of 84.67x and price to book value of 1.59x. This popular stock has been hobbled by the slide in the oil price, with Blackbird shares sinking more than 50% from its year high to its current stock value of $0.35.

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

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