Thursday, 2 January 2014

Petrobank Resources (TSX:PBG) $0.34

Petrobank Resources is a net-net. The company has a current market capitalization of $33 million, against $68.5 million in current assets and $20.5 million in total liabilities. That means the company is trading at 68% of its net current asset value. The company has invested a great deal of capital in its proprietary THAI process for recovering heavy oil, which has resulted in consistent negative cashflow. The company has committed in its Q3 Update that they would get the THAI project cashflow positive by mid 2014 with minimum capital expenditures, or it would shut the project down. Either outcome would be positive. The company should be able to realize proceeds from its oil lands, which could be produced using other technologies by other companies. These proceeds have the potential to be material, but are difficult to quantify directly.

Disclosure: Long PBG

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