PetroBank Could Revolutionize Oil Sands

I own shares of PetroBank (PBEGF.PK) for two reasons.  First the company has been doing a credible job of buying and exploiting conventional oil and gas resources.  In Q2 it reported diluted EPS of $1.92 ($C) vs. $0.26 based on 23.9k boe production vs. 6.9k in Canada and Colombia.  Just based on those results, the companies $45 price per share seems well supported.  But the main reason I own the stock is that the company has developed two related new technologies for exploiting deep deposits of heavy oil and bitumen that could have wide applicability around the world.

As reported in a recent Press Release, their Whitesands test well in Alberta succeeded in producing oil of an upgraded quality using a combination of their Toe and Heel (THAI) production and their Capri upgrading technologies.   All the work is accomplished subsurface thus eliminating the need to mine and move material and vastly reducing if not eliminating any emissions.  Moreover, the process eliminates the need for natural gas that existing sub-surface operations require.  It uses the bitumen itself, combined with oxygen pumped into the well, to melt and refine bitumen into oil, which is then recovered to the surface.

The company needs to refine the process further, to prove that it can operate in volume, and to demonstrate the economics of the process in volume.  Those tasks will take some time and involve some risks of failure.   But since the apparent proof of principle just completed, the risks seem diminished.  There seems little doubts that the potential rewards to PetroBank from both using its technologies to exploit its own considerable oil sands leases and through licence income could be very substantial if the technologies prove out as hoped.

Posted in Categories: Canada, Contributor, Energy, External Research, Stocks, UK.

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