Topic: Growth Stocks

BELLATRIX EXPLORATION $5.17 – Toronto symbol BXE

BELLATRIX EXPLORATION $5.17 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266- 8670; www.bellatrixexploration.com; Shares outstanding: 107.9 million; Market cap: $557.8 million; No dividends paid) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 66% of its output; the remaining 34% is oil.

In the three months ended September 30, 2012, Bellatrix’s production rose 31.0%, to 15,503 barrels of oil equivalent per day (including natural gas) from 11,837 barrels.

Cash flow per share rose 13.6%, to $0.25 from $0.22. Bellatrix’s selling price for gas fell 37.3%, to $2.45 U.S. per thousand cubic feet from $3.91 U.S. a year ago. However, the big production increase offset that decline. The company’s long-term debt is $154.9 million, or a low 28% of its market cap.

Bellatrix has just announced a joint-venture agreement with an unnamed South Korea-based investment fund. This deal should speed up development of the company’s undeveloped Cardium shale oil deposits in west-central Alberta.

The South Korean partner will pay $150 million for 33% of the production from a planned 83-well drilling program.

The company now expects its daily production to average 24,000 to 25,000 barrels of oil equivalent (including natural gas) per day this year. It could end 2013 with production as high as 30,000 to 31,000 barrels per day. To put that in perspective, Bellatrix likely ended 2012 with average production of 19,000 to 19,500 barrels a day.

Bellatrix’s shares trade at 5.2 times the company’s annual cash flow, based on the latest quarter.

Bellatrix is a buy for aggressive investors.

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