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PetroBakken buys in to TriOil

Also: Calmena Energy Services puts itself up for sale, and FirstEnergy thinks it could fetch a handsome premium

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Jan 21, 2013

by Max Fawcett

PetroBakken (TSE:PBN) shares have been beaten down badly ever since the company announced the corporate restructuring that saw Petrobank (TSE:PBG) divest its majority stake to its own shareholders. But that hasn’t stopped the company – PetroBakken, that is – from continuing to press ahead with its own agenda, and Friday, for the second time in two months, it announced that it has built up a 17 per cent stake in a junior player. After building up a position in Arcan Resources (CVE:ARN) – and at a substantial discount to the average cost of rival Crescent Point Energy (TSE:CPG)’s own share of the company – it revealed today that it’s cobbled together an equally large position in TriOil Resources (CVE:TOL), a company with holdings in the Cardium.

FirstEnergy noted that while the fact that TriOil’s Cardium assets are contiguous with PetroBakken’s own position in the play, PetroBakken’s leveraged balance sheet may put a damper on any potential upside associated with the move. As the Calgary Herald reported today, the decision by PetroBakken to buy up a stake in TriOil (and Arcan) may be a defensive move meant to make it more difficult for another player to take out the juniors and give PetroBakken the time it needs to find the resources needed to take them out itself. “Analyst Geoff Ready of Haywood Securities said both positions are defensive for PetroBakken because they may discourage others from making an offer for the two attractive takeover targets. ‘They’re a logical buyer of the assets but maybe this isn’t the best time for them to buy,’ he said.”

In other transaction-related news, Calmena Energy Services (TSE:CEZ) has decided to put itself on the block. The company, which owns drilling rigs in places like Mexico, Libya, Brazil and Colombia and was recapitalized in 2009 (and re-energized by the installation of former Precision Drilling CEO Hank Swartout as chairman and former Precision executive John King as president and CEO), announced it was looking for “strategic alternatives.” FirstEnergy thinks the company could be worth anywhere from $0.26 to $0.46 per share based on a sum of parts valuation, which is a considerable premium from the $0.15 per share that it’s trading at today. But, as FirstEnergy analyst Kevin Lo wrote, “we suspect an outright sale could be difficult given the geographic and product diversity of the company. We believe the logical acquirers for an outright sale would have to be a large multinational service company or a company like Ensign, which operates in many of these regions. As such, we view a number of separate asset transactions as a more likely scenario.”

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