Stock Trades: Bought Rock Energy (TSE:RE)

Yesterday, I bought 1000 shares of Rock Energy (TSE:RE) at $4.43 in my HELOC account.

Stock Trade Commentary

The clock is ticking, we are already half way through October and my low commission promotion in my HELOC bank account expires on November 30. One of the things I hate the most is giving my money for free to the bank. Come November 30, only the dividend payers will be left and all combat operations in this account will cease (read investing) as my non dividend payers are sold off.

Rock Energy is currently at 65% oil + ngl and is looking to exit with a 70%+ weighting. They have been executing on their plans nicely all year long having drilled about 28 out of 30 planned heavy oil wells with only 2 left to go before the end of the year. Their year-end exit rate is +15% to their last average production reported in Q2.

Again, I like to pick companies that are fundamentally sane and undervalued to their peers. In my opinion, as long as we do not hit major air pockets in the market this stock should recover nicely sooner or later. The heavy oil wells are simply a cash cow now that differentials are narrowing again with WTI prices which will contribute to increasing their cash flow significantly.

Rock also has natural gas upside in the Montney that has not been expanded on using horizontal drilling as of yet. This could be a major catalyst to the share price since it has the potential to triple Rock’s reserve base. On the other hand, I bought RE for their oily weighting more than their gas. Horizontal drilling will probably take place in Q1 2011.

Rock will report Q3 around November 10 and I am looking forward to a confirmation of all of the above that is if i haven’t sold by then.

Are you a shareholder of Rock Energy? What do you think?

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