Bankers Petroleum Ltd. intends to increase production in 2011

Jan 14th, 2011 – 1 Comment

You may see a pull back in the short term but I think that the next year will justify your interest in the company.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,

I would like your opinion of bnk.to.
Is it a good time to buy.
Thanks,

William

 

Hi William,

Thanks for the assignment. Bankers Petroleum Ltd.(BNK TSX) is developing heavy oil assets in Albania. Heavy oil as you know is priced at a discount to Brent and WTI but in sufficient volume you can wash away a multitude of sins. That’s the case with BNK. Their current production is 12,100 barrels of oil per day ( BOPD)with the goal of increasing that to 20,000 BOPD in 2011.

The target for 2014 is 40,000 BOPD. In order to achieve those targets the company plans on spending over $200 million each year through 2014 to build out infrastructure and drill their targets.  They also have oil patch veteran John Zaozirny on their board of directors which gives me additional comfort. The charts will give us a better idea of how to proceed with this opportunity.

The three year chart depicts a stock that has been building a base since April of 2010. The stock has been range bound with support at $6.50 and resistance at $8.00. The stock broke through resistance in early January of 2011 and appears to be positioned to take out the previous all time high of $10.00.

The six month chart clearly illustrates the break above resistance above $8.00. The MACD  and RSI both generated buy signals in December when BNK was trading at $6.75. Nice get as we say in the Schizas household!

At this point the RSI is indicating that BNK is overbought and the MACD appears to be curling to the downside. I think that given the plans that management has announced and the past performance in terms of production growth you want to catch this ride. You may see a pull back in the short term but I think that the next year will justify your interest in the company. It may appear that you are buying high but it looks like you will get a chance to sell higher.

The next test is taking out $10.00 but as mentioned increased production will wash away a multitude of sins.

Happy Capitalism!

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