The recent Bakken results from Torquay Oil Corp. (TOC/A:TSX VENTURE) appear to be underwhelming.
Canadian brokerage Canaccord Genuity downgraded the Calgary-based company to HOLD from BUY after results for its most recent wells in the Bakken and Ratcliffe formations were not successful. Canaccord described company's results at its Lake Alma property as "discouraging."
The company's most recent Lake Alma Bakken well produced for four days before it encountered sand issues. The two Ratcliffe wells also had problems: the first broke out of the oil-producing zone and into water and the second only produced about 10 barrels of oil per day over a 12-day period, according to Canaccord.
Despite Torquay's recent setbacks the Bakken remains a very viable play. The U.S. Geological Survey estimated in 2008 that there were between 3 and 4.3 billion barrels of technically recoverable oil that has yet to be discovered.
Exploration and production has been going at a lightning clip in the Bakken with the amount of discovered resources outpacing the region's capacity to send it out. A recent estimate by the U.S. Energy Information Administration put the amount of natural gas flared in North Dakota – the state where much of the Bakken activity is centered – at 35 percent.
Canaccord reduced its target price for Torquay from C$2.20 to C$0.55. Torquay closed at C$0.33 on November 28 and hit a 52-week high and low of C$2.30 and C$0.28, respectively.