Wall Street Research sees upside in NuLoch Resources as oil and gas production rises

In a research note to investors, Wall Street Research (WSR) outlined NuLoch Resources (TSX-V: NLR, OTC-QX: NULCF) upside potential and it continues to drill out its acreage which lies within the 4.3 billion barrel Bakken Formation.

Currently, the company is producing approximately 1,000 boepd (barrels of oil equivalent per day), and is focused on actively expanding and developing properties in North Dakota and Saskatchewan - where NuLoch is targeting the Bakken Shale and the Three Forks Sanish formations of the mid-continental Williston Basin.

The Bakken Formation is the largest continuous oil formation ever assessed by the United States Geological Survey, estimated to hold up to 4.3 billion barrels of recoverable oil, and as such it is considered to be one of the best oil plays in the US.

WSR emphasised that as drilling technology evolves, the recoverable oil estimates for the Bakken formation may prove conservative. “This realization has generated a great deal of interest from larger oil companies. North Dakota land values have been rising rapidly”. Consequently, WSR noted that land values (per acre) have been rapidly increasing to reflect the area’s potential.

WSR also noted that NuLoch would benefit substantially from any significant increases in oil prices beyond the current US$80 level.

“Following a series of land and production acquisitions in the past two years, NuLoch currently has a total of approximately 67,000 undeveloped net acres prospective for high-quality light and medium Bakken and Sanish oil, consisting of largely contiguous properties at Tableland in southeast Saskatchewan, and Burke and Divide Counties in North Dakota”.

According to WSR, NuLoch is planning to drill 7 wells in Tableland and 24 wells in North Dakota. “The company’s robust oil-focused drilling program bodes well for intensified interest in NLR shares and an improving valuation reflective of its sizeable land position and growing production in one of the fastest growing oil producing areas in North America”.
WSR has set a 12 month price target of $2.17 per share, based on a 2011 cash flow multiple of 7, based on 2011 production of about 662,000 barrels of oil and 602,000 mcf of natural gas.

http://www.proactiveinvestors.com/companies/news/5662/wall-street-research-sees-upside-in-nuloch-resources-as-oil-and-gas-production-rises-5662.html