CALGARY , Dec. 30, 2011 /CNW/ – Western Canada’s intermediate oil and gas
explorers and producers outperformed the overall stock market in 2011,
a survey released today shows. Although the average investor would have
lost money by buying and holding a basket of intermediate oil and gas
companies in 2011, dividends helped limit the median loss to 6.6
percent. This compares with a median loss of 26.5 percent in 2011 for
Western Canada’s junior oil and gas companies, a loss of 16.9 percent
for the SP/TSX Capped Energy index and a loss of 11.0 percent for the
broad SP/TSX Composite index.
Financial communications firm Bryan Mills Iradesso released its 2011
share price survey in conjunction with the distribution of its
quarterly iQ Report comparing the third quarter 2011 operating and
financial results for all the junior and intermediate oil and gas
companies that operate in Western Canada and trade on the TSX and TSX
Venture Exchange. The iQ Report defines junior oil and gas companies as
those with production between 500 and 10,000 barrels of oil equivalent
per day (boe/d) and intermediates as companies with production between
10,000 and 100,000 boe/d. A total of 29 intermediates and 56 juniors
fit into these categories in the third quarter of 2011.
Bryan Mills Iradesso’s share price survey measures each company’s total
return, which is defined as the change in the share price plus any
dividends paid during the year. Five juniors and 13 intermediates paid
dividends to shareholders in 2011.
The range in the total return is significant. For the intermediates,
Compton Petroleum delivered the poorest performance in 2011, losing 95
percent of its market value. The strongest performance in the group in
2011 came from Trilogy Energy, offering investors a return of 208
percent, including a monthly dividend of $0.035 per share.
The share price swing isn’t as dramatic for the juniors. Skope Energy
sits at the bottom of the list with a loss of 77.5 percent despite a
quarterly dividend of $0.175 per share. On December 15, 2011 , Skope
announced the suspension of its dividend. Skope pointed to “low natural
gas prices and volatile capital markets” as the reasons for the
decision. The top performer among the juniors in 2011 was Crocotta
Energy with a total return of 105.7 percent. Crocotta did not pay
dividends in 2011.
Although share prices are immediately measurable, investors will have to
wait to find out the financial and operating performance. The results
for 2011 won’t be known until the last TSX Venture issuer reports its
annual numbers at the end of April 2012 . In fact, public companies just
finished reporting their third quarter 2011 results. To help investors
compare and contrast Western Canada’s junior and intermediate oil and
gas companies, Bryan Mills Iradesso compiled the third quarter 2011
results into its latest iQ Report.
Highlights from the Q3 2011 iQ Report
The median enterprise value of Western Canada’s junior oil and gas
companies slid in the third quarter of 2011. Enterprise value is
calculated by adding a company’s market capitalization to its net debt.
Companies with high valuations are often better positioned to access
capital or use equity to complete accretive deals.
For the juniors, the median enterprise value in the third quarter of
2011 fell to $59,912 /boe compared with a median enterprise value of
$74,834 /boe in the second quarter of 2011 and $59,692 in the third
quarter of 2010. The range in the latest quarter is from $19,229 /boe to
The median enterprise value for the intermediates stayed consistent in
the third quarter of 2011 at $74,958 /boe compared with $72,751 /boe in
the second quarter of 2011 and $70,968 /boe in the third quarter of
2010. The enterprise values in the latest quarter range from $14,338
per boe to $184,073 per boe.
Production per Share
The stock market malaise faced by Canada’s oil and gas companies was not
a function of their operational performance in the third quarter of
2011. In fact, both the juniors and intermediates managed the rare feat
of increasing their production per share during the quarter.
From the second quarter to the third quarter of 2011, the intermediates
showed a median increase of 5.0 percent in overall production and 4.0
percent in production per share. The juniors performed almost as well,
with the median overall production level increasing 4.2 percent while
production per share increased 1.9 percent.
By comparison, from Q1 to Q2 2011 the intermediates showed a median
decline of 2.9 percent in production per share. The juniors fared even
worse, with the median production per share dropping 5.3 percent from
Q1 to Q2 2011. The production per share growth in Q3 2011 is
Given the low natural gas prices, Western Canada’s junior oil and gas
companies have been making slow but steady progress on the path to
decreasing their dependence on natural gas since the second quarter of
2010. Despite the trend, the average junior and intermediate
exploration and production company is still producing more natural gas
than oil. The median junior had a natural gas weighting of 55.5 percent
in Q3 2011 compared with an almost identical 55.6 percent in Q2 2011.
Meanwhile, the median intermediate natural gas weighting was 65.0
percent in Q3 2011 compared with 67.9 percent in the previous quarter.
About the iQ Report
The quarterly iQ Report tracks the performance of all junior and
intermediate conventional oil and gas companies that operate primarily
in Western Canada and trade on the TSX and TSX Venture Exchange. Select
information is also provided on oil sands players, international
operators and emerging producers. The comparison is available free at http://iq.bmir.com.
About Bryan Mills Iradesso
Bryan Mills Iradesso helps clients identify, reach and influence key
audiences through a broad spectrum of disciplines, including investor
relations, websites, annual reports, branding and marketing. With
offices in Calgary and Toronto , Bryan Mills Iradesso has professionals
with backgrounds in communications, investor relations, brand strategy,
design, marketing and journalism. The firm’s Calgary office publishes
the iQ Report as part of its specialty communications services for
energy clients. Bryan Mills Iradesso is an MDC Partners Inc. company.