PetroBakken Energy Ltd. continues to disappoint

Mar 18th, 2011 – Comment

It looks to me like the big sharks are eating the little fish.


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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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Lou,

How about an update on pbn.Is it a buy now?
Thanks

Dennis

 

Hi Dennis,

Thanks for the assignment. I think there is value added when we go back and take another look at an earlier post. I have commented  on PetroBakken Energy Ltd. (PBN TSX) twice in the last six months. The first time was on October 15, 2010 on an inquiry from Heather. In that  analysis it was noted that although the stock was moving higher it seemed like a head fake. That’s exactly what happened, the stock sold off destroying shareholder value.

 The second time was on January 31 on Al’s request. At the time it was further highlighted that the best way to manage PBN was to trade it and that the stock was stuck in a downtrend. Unfortunately that analysis was correct as well. Lets consult the charts to see what may be in store for this major light oil producer with lots of potential that has unfortunately hit the ditch and hasn’t been able to get out.

The three year chart illustrates the steep decline that hit PBN after it released its Q4 results on March 08, 2011. Now its a given that some of the selling was in response to the problems roiling the energy markets because of the recent earthquake that hit Japan on March 11, 2011. However the stock was already losing steam because of disappointing earnings.

What I found curious in doing the research was that on February 22, 2011 the company reported that they had experienced a 9% drop in Q4 production. The company explained that the drop was  due to operational delays and rapid decline rates on some of their natural gas assets. Selling came into the stock but didn’t overwhelm the buying until the release of the Q4 results.  

What this seems to indicate is that many shareholders are treating their  positions in PBN like a bond or debenture.This would suggest that the more informed and seasoned investors are moving ahead of the income investors. The income investors focus on the dividend has distracted them from  information that could be material to their wealth accumulation.

The six month chart depicts the selling in March that took PBN from $22.50 down to $17.50. Currently the RSI is indicating that PBN is oversold which has attracted some buying interest. The MACD is also starting to turn higher suggesting that there could be more to come from the bounce off support at $17.50. Watch for resistance at $18.50 and at $19.00.

PBN is currently offering a dividend yield of 5.3% and is  scheduled to spend $590 million drilling 200 wells in 2011. Lots of action but keep in mind that the trend continues to be down and that if you insist on owning this one take into account how aggressively it trades. It looks to me like the big sharks are eating the little fish.

MAKE IT A MASSIVE SPRING AND HAPPY CAPITALISM!

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