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Canadian Energy Co. Gains Flexibility With Finances
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Having just completed a recapitalization, this Alberta-based oil and gas firm is "focused on unlocking significant value," noted a Research Capital Corp. report.

Prairie Provident Resources Inc. (PPR:TSX) completed a three-part recapitalization program, and due to its stronger financial position, Research Capital Corp. upgraded the company to Speculative Buy from Hold, reported analyst Bill Newman in a May 24 research note.

"We believe this is just a big first step of a number of transactions that could unlock considerable value for shareholders," Newman wrote.

Research Capital maintained its target price on Prairie Provident of CA$0.14 per share. Given its current share price is about CA$0.09, the difference between the two forecasts a potential return of 65%.

Details of the Deal

Prairie Provident's recapitalization involved three parts, Newman explained. They were a US$4 million (US$4M) fully subscribed equity financing, the conversion of US$72M of subordinated debt into shares, and the issue of a new CA$5M second lien note. Through the transaction, the company reduced its debt by about half.

Now, it has US$73.6M of net debt, as estimated by Research Capital, and 716,000,000 (716M) basic shares outstanding. Of those, about 75.6% are held by PCEP Canadian Holdco and will be released in thirds on six, 12, and 18-month anniversaries of the transaction. Prairie Provident has 767.6M fully diluted shares, including outstanding options and warrants.

Stronger Financial Position

Newman highlighted that the recapitalization transaction put Prairie Provident in a better financial position such that it may proceed with exploration work without having to restrict expenditures, due to overbearing debt and unfavorable hedges, as before.

The energy firm is "back in business and focused on unlocking significant value," Newman commented.

Now with some financial flexibility, Prairie Provident may pursue low-risk growth by reactivating and recompleting wells, even drilling some of its many prospects, while paying down its debt, wrote Newman. The company may now capitalize on its large reserves base that includes 43 "optimization opportunities that have quick payouts and should help to lower corporate operating costs." Also, it has the freedom, regulatorily speaking, to monetize noncore assets.

Given its Proven Probable reserves of 31,900,000 barrels of oil equivalent and large tax pools of about US$861M, Newman purported, "Prairie Provident could free up more growth capital, through the sale of non-core assets and other transactions, which could be a near-term catalyst for the stock," Newman purported.

Plans for H2/23

What is certain is that Prairie Provident has set a capex budget for this year of US$14M, which mostly applies to H2, relayed Newman.

The company intends to first concentrate on the Princess and Provost areas, both in Alberta, which require little upfront investment and potentially offer a fast payout. Management expects the company will likely drill two wells in the rest of 2023.

Given these plans, Newman noted, potential short-term catalysts are the company's well reactivation and workover program, in June, and its subsequent drill program, in Q4/23.  

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Important Disclosures:

1)  Prairie Provident Resources Inc. is an affiliate of has a consulting relationship with Streetwise Reports and has paid a consulting fee between US$8,000 and US$20,000. 

3) Dores Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor..

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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Disclosures for Research Capital Corp., Prairie Provident Resources Inc., May 24, 2034

Analyst Certification I, Bill Newman, CFA, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Relevant Disclosures Applicable to Companies Under Coverage Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at

General Disclosures The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.

Potential Conflicts of Interest All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.

RC USA INC. Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients – Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker – Dealer registered with the Financial Industry Regulatory Authority (FINRA)

Company Specific Disclosures Within the past 12 months, Research Capital has provided investment banking services to the issuer.

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