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Casimir Capital maintains buy for Greenfields Petroleum


Casimir Capital maintained its ‘buy’ recommendation for shares in Houston-based oil and gas junior Greenfield Petroleum (CVE:GNF) but adjusted its target for the stock, currently trading at $4.60 on the TSX Venture Exchange, downwards to $7.25 per share from $9.75, in an analyst’s note released Wednesday due to a lower net asset value driven by decreased oil price deck.

Greenfields’ updated reserves for year end 2012, released Tuesday, saw total proven reserves for the company decrease by 3 per cent from 2011’s figures to 9.0 million barrels of oil equivalent.

The reduction in proven reserves was attributable to the production of 367 thousand barrels of oil equivalent during the year, or an average of approximately 1,005 barrels of oil equivalent per day. 

The company’s proved plus probable reserves were reported to have increased by 4 per cent to 12.6 million barrels of oil equivalent. The changes to the proved reserves were principally due to production and the late start of development drilling in 2012.

The same figures revealed no additions to the reserves, due to delays in expected production starting up during calendar 2012, although the analyst, Ryan Galloway, said in the note that Greenfields should be ready to move forward with drilling for 2013. 

Due to lower forecasted price decks on the reserves ($96.07 per barrel during 2013 vs. $105 per barrel previously, and $102.38 per barrel by 2024 versus $118.75 per barrel previously), the measure of present value of future net revenue discounted at 10 per cent for proven reserves decreased by 33 per cent to $49 million and proved plus probable decreased by 12 per cent to $118 million.

The change in value is primarily associated with changes in future oil pricing assumptions as applied by the independent qualified reserves evaluator. 

Total estimated future development capital now stands at approximately $173 million, a 2 per cent increase from year end 2011, with about $76 million of which to be spent in the next 3 years.

The oil and natural gas exploration and development company, which actively seeks to “capture and exploit previously discovered but undeveloped international oil and gas fields, also known as ‘greenfields’” according to a company statement, has booked interest in 23 wells (7.6 net) at the Gum Deniz offshore oil and gas field and 7 wells (2.3 net) at the 76, 500 acre Bahar project offshore oil and gas field, both in the Caspian Sea off Azerbaijan, as of December 31, 2012. 


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