Bow Valley shares jump 20% Thursday

Shares of Calgary-based Bow Valley Energy (TSX: T.BVX, Stock Forum) climbed more than 20% to 35 cents Thursday, after the company announced after Wednesday’s market close that it has received, from its bank lending group, waivers and extensions to an interim date of February 15 for its senior and subordinated acquisition facilities.

The company notes that regarding its senior facility, the scheduled redetermination has been waived to February 15, and the US $10 million fixed minimum repayment has been extended by six months to June 30.

The due date of the £17.5 million acquisition facility has been extended to February 15.

“The Company expects that further waivers and extensions will be provided beyond the interim date of February 15, 2009, permitting the strategic review process to draw to a logical conclusion late in the first quarter or early in the second quarter,” says Bow Valley.

Also, following the announcement of the implementation of the restructuring plan affecting third party Asset Backed Commercial Paper, Bow Valley says it invested in ABCP in 2007 with a face value of CDN $40.6 million and it has been provided with a borrowing facility from a Canadian bank for CDN $30 million principally secured by the investment in ABCP. The company says it will make a decision at a later date whether to continue to hold or dispose of its investment.

The company announced last year that it has appointed a special committee to examine and consider a range of strategic alternatives that could include potential asset divestments, equity alternatives, strategic alliances, joint venture opportunities, mergers or a corporate sale transaction, but notes that a decision has not yet been reached.

In terms of operations, Bow Valley says fourth quarter 2008 production averaged approximately 4,800 boe/d representing a 300 boe/d increase above previous guidance. The year-end exit production capacity was running at approximately 5,400 boe/d.

The company notes that development of the Ettrick field is also nearing completion and first oil production from the Ettrick field development is currently scheduled for early March.

On the Bow Valley Bullboard Thursday, Stockhouse member fcabrese provided the following comment: “This is my first post here so I doubt any of you will take me seriously, but this news was really good for BVE. This virtually guarantees their survival and once this market choppiness starts to smooth out, I'll wager that you'll see BVX back in the $1-2 range quickly. If nat gas prices move up, I don't think $3 or 4 is a stretch...although that might be a while away[sic]…”

jinglehimmer replied: “I'm in alignment with your thinking, fcabrese. My analysis (and per my post of Dec 29) shows that BVX should be trading in a range between $1.27 and $1.59 per share, at current oil pricing levels. According to yesterdays PR, production volumes are higher than my analysis anticipated, so these numbers should be conservative. It will be interesting to watch price action over the next few weeks. Good luck[sic].”