Another Provident Acquisition
October 23rd, 2007 by Grant in: Energy, Investing, Oil & Gas, Royalty Trusts, Stock ThoughtsYesterday Provident Energy (PVX: chart, web, Y!) entered an agreement to buy out a privately held company with oil assets in southeast Saskatchewan for $79 million in shares.
The short end of this is that PVX is spending money to increase reserves, and add to their daily production. In fact, they’ll add 1,300 barrels per day of production, nearly all of which is crude. Provident’s proved plus probable reserves are estimated at 3.6 million barrels of oil.
“This acquisition provides excellent strategic and economic value to Provident, improving the quality and supporting the sustainability of our existing southeast Saskatchewan assets,” said Provident President and Chief Executive Officer Tom Buchanan. -Source
A side benefit to this is that 17,900 net acres of undeveloped land are part of the deal, and 100 gross drilling opportunities wait in the wings. To top it all off, the operating costs of the existing wells are under $5.00 per barrel.
This is a sweetheart deal for Provident in terms of reserves and increased production, and if you’re conservative, this is a 4 year payout on a $79 million in stock.
Not bad. Provident lost $0.33 per share today on the news combined with retreating crude prices… If I weren’t so overweight in the stock already, it would be an attractive time to pick some more up.
This smaller acquisition is on the heels of the Capital Energy Resources deal back in May.
Tags: CANROYS | oil and gas | Provident Energy | PVX | Royalty Trusts | Stocks
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