3 Headline-making Resource Stocks to Watch

Investors took a particularly keen interest in these three resource stocks last week, putting them among the most actively traded on the TSX Venture Exchange. Here’s a look at all three companies, including what impact all that trading had on their share prices.

Pinecrest Energy (TSXV:PRY) was heavily traded all week and was the top stock by volume on the TSX Venture Exchange on Wednesday. In all, 23.2 million Pinecrest shares changed hands last week. The stock ended the session at $1.17 on Friday, up 1.7 percent from its March 15 close.

Investors zeroed in on Pinecrest after it reported sharply improved results on Monday, March 18. The company’s net income soared 284 percent in 2012, to a record $32.1 million, or $0.13 a share, from $8.4 million, or $0.04 a share, in 2011. Production jumped 133 percent, to 3,142 barrels of oil equivalent per day from 1,348 boe/d. Operating cash flow was also up sharply, rising 130%, to $71.8 million, or $0.30 a share.

Calgary-based Pinecrest has exploration, development and producing properties in Alberta and Saskatchewan. In 2012, it increased its proven and probable reserves by 107 percent, to 16.2 million barrels of oil equivalent. The company, which focuses on light oil, aims to expand through strategic acquisitions and exploration drilling.

Pinecrest’s management mainly consists of staff from the former Peerless Energy, which was acquired by Petrobank Energy and Resources (TSX:PBG) in a $334-million deal in 2007. Peerless was involved in the Bakken shale play in southeastern Saskatchewan. Pinecrest feels their experience in this area will be useful in developing other projects in the Western Canada Sedimentary Basin.

The stock currently trades at $1.19.

Invicta Energy (TSXV:VCA) is another Western Canadian oil and gas explorer. The stock saw extremely heavy action on Monday, March 18, as investors absorbed a takeover offer from Whitecap Resources (TSX:WCP).

In all, 18.9 million Invicta shares were traded on Monday alone, putting the stock well ahead of second place KWG Resources (TSXV:KWG), with trading volume of 4.8 million shares. Invicta soared 37.5 percent on the week, closing at $0.55 on Friday.

Under the deal, Invicta shareholders can choose to receive 0.05891 of a Whitecap share for every share they hold or $0.51911 in cash, up to an aggregate cash maximum of $10.7 million. In all, the deal is worth $60.2 million, including assumed debt.

Invicta is focused on its Lucky Hills light oil play near Kindersley, Saskatchewan, where it has successfully boosted production, according to its latest financial results, which it released after the takeover offer was made public. In 2012, Invicta’s drilling increased Lucky Hills’ output by 140 percent, to 348 boe/d from 145 boe/d in 2011. It also increased the project’s proven and probable reserves by 39 percent, to 3,541 thousand barrels of oil equivalent. That helped Invicta post a profit of $1.3 million, or $0.02 a share, up from a loss of $600,000, or $0.01 a share, in 2011.

The purchase adds to Whitecap’s presence in the Viking resource play. The company expects Invicta to boost its average production by 400 boe/d in 2013 and 650 boe/d in 2014. To put that in context, Whitecap is currently producing over 17,500 boe/d. The company also feels the purchase will increase its cash flow by $8.9 million this year and $14.1 million in 2014.

“For Whitecap, this deal represents one in which it has added leverage to its highest ROI and shortest payback play but by no means transforms the story,” said Stifel Nicolaus analyst Michael A. Zuk in a note quoted by proactiveinvestors.com. “Thus, at the margin we understand the strategic intent behind the deal but don’t see it as a game changer.”

Invicta currently trades at $0.56 a share.

Rusoro Mining (TSXV:RML) saw the second-highest volume on the TSX Venture Exchange on Thursday, with 5.4 million shares changing hands. The stock ended Friday’s session at $0.06, a price around which it has consistently hovered since March 8.

The company held two producing gold mines and 10 exploration projects in Venezuela but lost them when the government of the late Hugo Chavez nationalized the country’s gold sector in 2011. At the time, Rusoro, which received no compensation for these assets, was the biggest foreign miner operating in the country. It produced about 100,000 ounces of gold in Venezuela in 2010 and 80,000 ounces in 2011, according to Mining Weekly.

On Thursday, the company filed a $3.03-billion claim against Venezuela at the World Bank’s International Centre for Settlement of Investment Disputes. “The filing of the statement of claim represents a significant milestone in the arbitration process, and we firmly believe in our case and the pursuit of fair-value compensation for the loss of our significant investment in Venezuela,” Rusoro president and chief executive Andre Agapov said in a statement quoted by the Vancouver Sun.

Rusoro currently trades at $0.06 a share.

Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.