PetroBakken Energy could be a head fake

Oct 15th, 2010 – 1 Comment

PBN looks like a case of great fundamentals not such a great chart.


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Hi Lou –

What do you see in your charts for PetroBakken?

Thanks for your insight …

Heather

Hi Heather,

PetroBakken Energy Ltd. ( PBN TSX) is an interesting company with an attractive dividend yield of 4.4% and some pretty impressive operating factors. In Q2 of 2010 they reported production of 42,263 barrels of oil equivalent per day of which82% was light oil. PBN drilled 110 wells in the first half of this year and has 2,300 development drilling targets identified. Their land position is also impressive with over 1 million acres. Lets examine the charts to see if they are  as equally impressive.

PBN  looks like a case of great fundamentals but not such a great chart. The three year chart does provide some encouragement but the downtrend that started in February 2010 has clearly worn the patience of many investors and what you don’t want is to step up for another taste of the whip. PBN caught a bounce off of support at $20.00 in August and is currently hanging onto support on its 50 day moving average.

It looks like the downtrend line has been broken and the stock is making an effort to create wealth, not destroy it. But lets be clear riding this bounce is not without risk.

The six month chart depicts the bounce off of $20.00. The MACD signalled the move off of support in September and also the sell off as PBN met resistance at $23.50. If the stock makes a move through $23.50 the next level resistance comes in along the 200 day moving average at $25.00. After that it meets resistance at $27.00.

There have been reports and comments to the effect that at some point Petrobank Energy and Resources Ltd.( PBG TSX) could be interested in selling some or all of its 58% stake in PBN. Interesting as that might be we all know that if and buts were candy and nuts it would be Christmas.

PBN has not keep pace with its bench mark index, which hasn’t been ringing up huge gains  either, but at least the group has been flat. The company will report its Q3 results on November 9, 2010. Make sure to put that day on your calendar as a flex point and watch out for a head fake.

Happy Capitalism!

Categories: Energy
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