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Shares of Pacific Coal Resources, Renegade Petroleum and Twin Butte Energy all made big moves last week. Here’s why.
Pacific Coal Resources (TSXV:PAK) led the way in trading volume on the TSX Venture Exchange on Wednesday and Thursday as 21.5 million shares changed hands over the course of both days. The stock rose a total of 33.3 percent, closing at $0.16 on Thursday.
The move came after Pacific Coal announced that one of its main shareholders, Blue Pacific Investments Group, had significantly increased its stake in the company. On Tuesday, Blue Pacific bought 19.75 million Pacific Coal shares at the then-market price of $0.11 each, as well as 20.38 million share-purchase warrants at $0.005 each. That brought Blue Pacific’s interest in Pacific Coal up to 27.56 percent.
Pacific explores for and produces coal in Colombia. Its biggest producing asset is its 100-percent-owned La Caypa open-pit mine, which is expected to produce 1.3 million metric tons (MT) this year. It also owns the Cerro Largo open-pit mine, which has an expected output of 700,000 MT for 2012, and the Ci Jam underground coking coal mine (35,000 MT). In all, the company is forecasting 2 million MT of coal production this year, with that figure rising to 3.4 million to 3.6 million MT in 2014.
Currently, Pacific trucks its coal between 250 and 280 kilometers to the port of Santa Marta, where it has 1.8 million MT per year of shipping and storage capacity. That costs the company between $20 and $24 per MT. However, it expects to be able to ship more coal from Puerto Brisa, which is closer to La Caypa and Cerro Largo, starting in early 2013. It is also developing a port facility for its concession near the Port of Barranquilla.
Pacific Coal is now trading at $0.13 a share.
Renegade Petroleum (TSXV:RPL) saw a trading volume of 6.5 million shares on Wednesday, good for second place on the TSX Venture Exchange, behind Pacific Coal. Shares rose 8.2 percent on the day to close at $2.65.
The catalyst was a series of transactions that the company entered into in order to transition to what it calls an “income plus growth dividend paying corporation.”
Under its plan, Renegade will acquire Canadian Phoenix Resources (TSXV:CXP) and $405 million worth of assets from a “Canadian senior producer,” including production of 3,600 barrels of light oil per day. It will finance these deals through a share issue, a $114.3-million private placement and a $70.7-million bought-deal financing (this arrangement involves a commitment from the underwriter of the deal to buy securities from Renegade for resale to the public).
The company feels these moves will increase its production such that it will have sufficient cash flow to pay an initial monthly dividend of $0.0192 per share. The annual rate of $0.23 would yield a high 8.8 percent based on today’s share price.
Renegade hopes the high yield will help it stand out from other small-cap energy stocks, most of which don’t pay dividends.
The stock is currently trading at $2.62.
Twin Butte Energy (TSX:TBE) was the most actively-traded stock on the Toronto Stock Exchange on Thursday, with 22 million shares changing hands. The stock finished the day at $2.90, down 3 percent.
The company is focused on what it calls a “heavy oil fairway” that runs north to south between Frog Lake, Alberta and Primate, Saskatchewan. Twin Butte currently gets about 75 percent of its production from this area. In the second quarter of 2012, its total output rose 88 percent from a year earlier, to 14,193 barrels of oil equivalent per day, largely due to acquisitions.
The higher trading volume came after the company closed its purchase of privately-held Waseca Energy last week.
Twin Butte paid $57.6 million in cash and issued 30.2 million shares to pay for Waseca, for a total of about $136 million. In its September 4 statement announcing the deal, the company said Waseca will raise its production to 19,100 barrels of oil equivalent per day, 89 percent of which will be oil and natural gas liquids. It will also sharply increase Twin Butte’s reserves and undeveloped landholdings.
The company also raised its monthly dividend by 6.7 percent, from $0.015 a share to $0.016. The stock now yields 6.5 percent on an annualized basis.
Separately, BMO Capital Markets initiated coverage on Twin Butte on November 1. The firm’s analysts currently have an outperform rating and a $3.50 target price on the stock.
Twin Butte is now trading at $2.93.
Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.