Dennis da Silva BlackPearl Resources Inc PXX-T BUY Jun 27, 2014

This is a name you have to own if you like heavy oil or steam flood projects. They have a great project in their steam flood project in Onion Lake, and the market doesn’t give them a lot of credit for it. Because it is such a large project, they’re going to have to find a joint venture partner to pull it off.

Sees no reason to own this for at least another 6 to 9 months. At one point, they were the most esteemed management team when it came to heavy the oil, and the stock was as high as $7-$8. They had the ability to fund at the time, because they had 2 projects that required massive, massive funding given their oil sands developments in situ, but they chose not to for reasons that were beyond him. They are now in a situation where they have to sell funds, and that takes longer. Have 3 primary properties. One is flat lining in terms of production so it is difficult to get excited about. The next is Onion Lake where they will have results in the 2^nd half of 2015. On the 3^rd one, they need external funding. Trading at roughly 6.3-6.4 times next year’s cash flow, similar to Spartan (SPE-T), which is actually growing production, internally funded with better economics and balance sheet as well as higher inside ownership.

Fell in love in it when heavy oil story was evolving in Canada. He thought it would react better. They are seeking a partner to make Onion Lake happen. Until they do this the stock will remain quiet.

This is a heavy oil producer and the differential is very small. Their project, however, requires massive funding. There are such great opportunities in businesses that are fully funded. Move money into his top picks today.

A little nervous about what this company has. It is a heavier oil play in a market where prices are horrible. They needed to find a venture partner which he expects will be harder to do now.

There was a lot of promise early on that this was going to be the next Blackrock that Shell bought years ago. Certainly the technical team is pretty proficient. Most of the value was a SAGD oil project that was well into the future. He wasn’t willing to pay that much in advance for those types of projects. What you are getting here is torque to oil prices and will go up significantly if oil prices do. If it stays where it is, the company probably has capital financing problems.

This doesn’t meet with the hallmarks of something he would put in his portfolio. Very much a net asset story. They have 3 main properties and an oil sands project. To value this stock you have to ascribe value to something that is several years out, and potentially longer if prices don’t recover. Management is considered best in class, and he is very confident in the balance sheet position that they can weather the storm. Should oil prices recover to $60-$65, he thinks it is game on again in some of their projects.

A heavy oil producer out of Onion Lake. Also, have plans of developing a SAGD project down the road. It needs higher oil prices. Doesn’t think they have a debt problem, but they are challenged in trying to figure out how to pay for the next phase. They sold a gross overriding royalty to Prairie Sky for about $55 million. A lot of the value inherent in this stock is kind of time value for projects that they haven’t executed on, that goes out several years. You have to have a long-term view of where oil prices are going and be constructive on oil to own a stock like this. Management is very highly regarded in Calgary.

Oil sands and heavy oil. They have a large project called ‘Black Rod’. It is a huge project. Onion lake is a thermal project coming on in 6000 barrel increments. They are funded for this project although not for Black Rod. She is not recommending it today but as a long term prospect it has tremendous potential.