Stock Picks: Daylight Energy (TSE:DAY)

Daylight Energy is a growth-oriented intermediate oil and gas company focused on exploiting numerous resource plays on its extensive land base in the Deep Basin of Alberta and north east British Columbia. The company has a balanced mix of crude oil, liquids-rich natural gas and resource play natural gas and has the flexibility to focus our capital investments on the commodity that provides the best economics.

Quick Facts (Q3 2010):

Production: 42,052 boe/d, 55% natural gas

O/S: 235 million FD

Bank Debt: $328 million

Tax Pools: $1.7 Billion

Drill Inventory: Up to 2500 net unrisked

Q3 Highlights

Q3 production:  averaged 42,052 boe/d  +79% Y-Y.

Q3 oil and NGL production: 17,817 b/d +162% Y-Y.

2010 exit production guidance:  45,000 boe/d.

2010 operating cost guidance: lowered to $10.25 from $10.75 per boe

Q3 payout ratio:  45% compared to 48% in Q2.

2P reserves growth of 40% in a period of 9 months.


Recently, Daylight Energy put up 5,300 boe/d for sale which represents only 12% of the Company’s production, but 55% of its wells and 75% of its properties. If Daylight successfully completes the majority of its asset sale, its natural gas weighting will decline to 46% by the end of 2011 following an oil-weighted capex.

Daylight is active in multiple resource plays:

  1. Elmworth, Alberta and NE British Columbia – Resource Play Natural Gas
  2. West Central Alberta – Resource Play Oil & Liquids Rich Natural Gas
  3. Pembina, Alberta – Resource Play Oil & Liquids Rich Natural Gas
  4. Central Alberta – Conventional Multi-zone Oil & Gas

In Summary, Daylight has good growth prospects and the flexibility to direct capital towards the commodity that provides the best economic return at any given time. For my long term hold, I believe it is a good candidate and currently pays 0.05 monthly for a yield of almost 7%. Daylight’s 100 net sections of Cardium oil prospective land will provide momentum for growth following success with their first wells in the first half of the year.


I was not paid any fees to feature this stock. I am just sharing my research. Please do your own due diligence before buying or selling any security.

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