Must Own Stock Reaches Major Inflection Point

Investment and Company Research
Opportunity Research
COMPANY UPDATE

What better stock to own that one slated to double revenue for the year, record operating profit in the current quarter, with more revenue opportunities on the horizon in the fall.

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DAYBREAK OIL AND GAS, INC.

Company To Double Revenue and Generate Operating Profit in Q2

Rob Goldman
rob@goldmanresearch.com

Aaron Schweitzer
aaron@goldmanresearch.com
July 25, 2013
 

DAYBREAK OIL AND GAS, INC. (OTC:QB – DBRM - $0.155)

Price Target: $0.95 Rating: Speculative Buy
 

COMPANY SNAPSHOT

INVESTMENT HIGHLIGHTS

Daybreak Oil and Gas, Inc. is an independent oil exploration and production company. The Company and its partners control oil producing property in fertile Kern County, California. The property is in the same region as the Occidental Petroleum discovery considered the largest California oil discovery in decades, potentially yielding hundreds of millions of barrels of oil. The Company drills cost-effective, shallow wells that are currently producing oil in 18 wells with plans to develop 20 more wells over the next few years in this potentially lucrative territory. Daybreak has nearly 300,000 barrels of proved oil reserves and on a net working interest basis, 3.8 million gross barrels of potential recoverable oil reserves.

 

KEY STATISTICS

 
Price as of 7/24/13 $0.155  
52 Wk High - Low $0.23 – 0.01  
Est. Shares Outstanding 48.9M  
Market Capitalization $7.6M  
3 Mo Avg Vol 38,000  
Exchange: OTC:QB  
 

COMPANY INFORMATION

Daybreak Oil and Gas, Inc.
601 W. Main Ave
Suite 1017
Spokane WA 99201
www.daybreakoilandgas.com
Ed Capko, Investor Relations
815-942-2581
edc@daybreakoilandgas.com

Late last week, Daybreak Oil and Gas, Inc. announced remarkable production results from its recent drilling program at the East Slopes Project in Kern County, California. 

The Company drilled seven development wells on 4 of its key properties during May and June of this year.  Not only were all of the wells successful, but management has confirmed that they are all now currently under production, as we forecasted in our recent initiation of coverage report.

It should be noted that the daily production of these seven new wells more than doubles the daily production of Daybreak’s previously existing wells. Daybreak now produces 239 barrels of oil per day on a gross basis, versus 113 prior to the success of the new wells. 

The key takeaway for Daybreak is that due to higher working interests in the new wells, on a net basis, Daybreak enjoys a 125% increase in daily oil production. Moreover, timing could not be better given the high oil prices and the fact that the Company is currently receiving a 4% premium to West Texas Intermediate crude oil prices on it sales.

Based on the recent success of its development wells, we maintain that the Company will nearly double revenue from FY14 (Feb ‘13) to FY15 (Feb ‘14) and could generate operating profit beginning in the current quarter.

With 5 new development wells to be drilled in the Fall, and 3.8 million gross barrels of potential recoverable oil reserves, DBRM has just scratched the surface of its production potential. We reiterate our Speculative Buy rating and our $0.95 price target.

Recent Trading History For DBRM

(Source: Stockta.com)

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Senior Analyst: Robert Goldman

Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.

Analyst Certification

I, Robert Goldman, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.

Disclaimer

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