TSX Venture's Hot and Cold Junior O&G Stocks for Dec. 19th - 24th, 2013

The holiday season can be a tough time to monitor the market, especially when dealing with junior oil and gas explorers, producers and service providers. Tax selling can throw ripples into the water, while important news headlines can go unseen as we retreat to our homes to spend more time with the family.

However, aside from Christmas Day itself, the market stays open for those of us who care. While most companies at this time of year see volumes go stagnant, many others can be hit hard, or can see unexpected bumps in price and trading.

Here now is a look at the week that was, for December 19th to December 24th, 2013:

HOT

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PRD Energy Inc. [TSX.V - PRD]
December 19th Price: $0.95
December 24th Price: $1.13
Change: Up over 31%

This Calgary-based junior holds its entire operations in Germany, where it managed to pick up two more licenses over the last week. News of the new licenses (Gettorf, and Elmshorn) carried the company's momentum as it saw solid gains in price four trading days in a row. The result is a market cap increase of over $20 million, and a steady trend of 6-digit trading volumes. 

The company's schtick is that it has picked up leases in Germany with potential for re-entry into proven reservoirs with previously established infrastructure. Many of the proposed wells don't need any fracking, and thus the costs are quite economical for repeat success. Their presentation can be viewed by clicking here
 

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Edge Resources Inc. [TSX.V - EDE] [AIM - EDG]
December 19th Price: $0.115
December 24th Price: $0.145
Change: Up 26%

President and CEO Brad Nichol has been adamant that they're low-risk, repeatable strategy will bring about significant shareholder value. While the company currently sits slightly below half the price of its 52-week high, recent news regarding the company's multi-well December drilling program has helped to get the boat steered in the right direction again. All four wells were successfully drilled and cased, and are expected to be commercial producers of oil. Originally expectations were for three successful wells, but a fourth was added, and should be reflected on the company's next reserve report. Should the production tests that were done right before Christmas come back positive, it could be a much happier new year for Nichols and the Edge team.

 

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Donnycreek Energy Inc. [TSX.V - DCK] [OTC - DONYF] [BER - DE4]
December 19th Price: $2.05
December 24th Price: $2.22
Change: Up 8.3%

Donnycreek may not have seen some of the huge gains like the other two companies on the "HOT" list, but it had a solid week of gains and good news to gain some attention. One cannot consider the Montney without looking through DCK's portfolio of Montney properties and licking their lips over what 2014 will bring. The market responded positively when Donnycreek announced a positive earnings of nearly $400k in fiscal Q1, as the company claws its way back to its 52-week high that opened 2013.

Positive updates from its Kakwa project make February look interesting for Donnycreek. The company anticipates that all three of its most recent horizontal wells should be tied-in and producing by February 1st. These will come on the heels of the 16-7 pressure station and condensate stabilization facility that should be completed to end the year. Each of the wells will be tied into this facility, helping the producer retain as much value as possible for its liquids-rich gas wells that are billeted to be economic despite low gas prices.

HONORABLE MENTION:
Energulf Resources [TSX.V - ENG] — Up nearly 15%
MCW Energy Group Limited [TSX.V - MCW] — Up nearly 18%
Americas Petrogas [TSX.V - BOE] — Up nearly 8% with steady gains daily
Enseco Energy Services [TSX.V - ENS] — Up over 29%, but with low volumes
Painted Pony Petroleum [TSX.V - PPY] — Up 5%
NXT Energy Solutions [TSX.V - SFD] — Up 8%
Suroco Energy Inc. [TSX.V - SRN] — Up 13%
Yoho Resources [TSX.V - YO] — Up over 5%

 

COLD

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CBM Asia Development [TSX.V - TCF]
December 19th Price: $0.07
December 24th Price: $0.045
Change: Down over 42%

CBM Asia is one of the most interesting junior stories out there. The premise is that this company planned to develop coalbed methane for the Indonesian market. The target was for 15 Tcf of Indonesian coalbed methane, with low costs for development and a giant partner in the form of ExxonMobil for its Barito JV Project. It seemed exciting, given the success of others in the region, such as BP, Total, Aussie-major Santos. But a major wrench was thrown in this week, when ExxonMobil backed out.

It went like this: CBM Asia was set to take on a USD $30 million loan agreement with a wealthy European family office. One of the stipulations was that CBM would have to go back to its partner ExxonMobil to prove another USD $15 million credit facility. Instead of getting thumbs up letter, it got a "Dear John" letter, as the major was backing out. All is not lost for the hopeful Indonesian project, but it's going to be a rough way to start 2014 as the company still has five other PSCs with the Indonesian government, but this latest revelation really hampers things going forward.

 

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East West Petroleum [TSX.V - EW]
December 19th Price: $0.465
December 24th Price: $0.41
Change: Down nearly 12%

There aren't many clear explanations as to why East West took a tumble last week. The international explorer that spans five countries didn't release any bad news, nor did their countries of operation. However, this could be an example of tax-loss selling, if we're going to really look for a reason for the fall in price. This could also be a sign that the stock is levelling off, after having a hot streak through the fall where it saw its 52-week high of $0.71 in October.

The company received a boost in October from enhanced coverage from Smallcappower.com, and maintained a high level of interest heading into the winter. But given that the stock saw $0.54 midway through December, the $0.41 current price based on no news is troubling. What do the sellers know that we don't?

 

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Palliser Oil and Gas Corporation [TSX.V - PXL]
December 19th Price: $0.35
December 24th Price: $0.29
Change: Down nearly 18%

The day after announcing that the company expects to produce 2,330 boe/d in 2013, the market responded harshly. The stock price dropped as low as $0.25 on the 19th, for an almost 30% tanking. However, the company steadily clawed its way back with two gainful days in a row leading into Christmas' day off.

From a glass-half-full perspective, this may be one of those times where the market responded too harshly, and there is some value to be gained at the current price. Sure, the original forecast for production was off by 4%. Yes, the Q4 production was only 2,000 boe/d, down 14% from the prior quarter. But the company as a whole has some high points to look to from an economic perspective: Operating netbacks are up 59% to $29/boe, and production, operation and transportation costs are down 26% to $23/boe. However, this is a heavy oil player that has to do heavy lifting to convince the market that this sector is a winner. If we are to look at the current unbooked resource potential, there is plenty of upside in Palliser, and this seating on the "COLD" list could very well be a temporary blip.