₪ David Pescod's Late Edition September 19, 2007
OILEXCO INC. (T-OIL) $15.08 +0.18
ITHACA ENERGY (V-IAE) $ 3.10 -0.05
He’s certainly had a lot of fun following the North
Sea so far and we are referring to Fred Kozak, currently
Canaccord’s oil and gas analyst covering Oilexco.
So far following Oilexco has obviously been a joy
for him because the only problem he’s ever had to deal
with, was raising his targets for Oilexco which at this
date remains at $21.00. Today the stock hits yet a new
high on rumors that appraisal drilling on Huntington
and Shelley must be doing well. Of course it’s helped
by higher oil prices.
But back to the North Sea as today Kozak initiates
coverage on another North Sea player—Ithaca Energy.
There’s lots of high risk wells drilled in the North Sea,
but so far Ithaca Energy is two for two.
Of the reasons Kozak suggests a person should
participate with Ithaca is: Diversified portfolio. “The
company has mostly high, operated working interests
in 30 blocks and partial blocks divided equally between
Central North Sea and the Southern North Sea.”
He notes their “corporate strategy of mitigating exploration
risk by farming out while still ensuring operatorship
of its discoveries.”
The company has an “experienced management
team which has extensive North Sea experience” and
that because the company has gone two for two on
drilling so far at Jacky and Athena, they are scheduled
to see production in late 2008 and 2009.
Kozak started coverage with a target of $4.50 and
we ask him, what would happen to force him to raise
that target, the problem he constantly faced with
Oilexco? He suggests that the two projects—Polly and
Manuel, both of which will be drilled this year he points
out, “are significant targets” and if they do come in,
once again, it may force him to up targets for Ithaca as
well.
For a copy of Kozak’s report on Ithaca Energy,
just e-mail Jennifer at Jennifer_
lagdamen@canaccord.com.
CGX ENERGY (V-OYL.U) $1.55 +0.20
After seven years it now looks like we finally have a decision
coming on the big border dispute between Guyana and
Suriname. The Guyana Information News Agency has announced
that the border decision between Guyana and Suriname
will be made public on Thursday, September 20th at
4:00pm (ET) Needless to say, this will be huge news to CGX
Energy.
Little CGX Energy had somehow managed to raise the
money to single-handedly have a fairly expensive rig go out
and start drilling for them on one of their bigger prizes
seven years ago, until a couple of small gun ships from Suriname
appeared on the scene. Ever since then, CGX has
been waiting for the border dispute to be settled.
The decision will be quite important because while CGX
has anywhere between eight and 11 targets that sooner or
later should get drilled, many of them are of the smaller, 50
million barrel variety. But in the disputed area, they have
two enormous world-class targets that they may or may not
own, depending on where this border dispute goes.
Needless to say, this news coming out tomorrow is going
to be very important. CGX has had a nice run up to this information
over the last year and currently sits with not a lot
in the till and about 120 million shares outstanding, but lots
of potential.
CONNACHER OIL & GAS (T-CLL) $4.01 -0.28
UTS ENERGY (T-UTS) $5.45 -0.74
We’ve seen increases in royalty and other payments
being forced upon oil companies by countries from England
to Venezuela to you-name-it and some of them have
had outrageous increases. Yesterday it was headline
news across most of the papers in Alberta, as the “Our
Fair Share” Report of the Alberta Royalty Review Panel
and because of it, today many oil sand companies got
absolutely clobbered because of the suggestions of big
increases coming for royalty payments in Alberta.
Despite huge increases in oil prices lately, equally
huge if not bigger, have been the increases in cost projections
for oil sands projects because of huge wage
increases as well as increases for everything from steel
to engineering to you-name-it. So the report that suggests
big increases for royalties in Alberta, has scared
the b-Jesus out of some stocks today and some of these
stocks lead the way down today.
Our own suspicion is that it only makes sense in
these times of high prices for the Province to increase
some of its rates, but with so many of the bigger oil
sands projects and also the upgrading facilities getting a
little shaky now, and with natural gas in the toilet, it
would only make sense that the Province have an increase,
but not outrageous increases because it could
quickly (make that very quickly) have more than a few
companies back track on those projects...real quick!
Personally, we find it more than a little embarrassing
and we remind people that this review panel is just making
suggestions. We wonder whether these are the
same people that made suggestions for Hugo Chavez.
Meanwhile, the response has been pretty dramatic as
Dennis Gartman, the well thought of American commentator
today puts out a “Special Report on Canada”.
He writes, “We have been relentlessly bullish of all
things Canadian for a very, very long while. The party
seemed to us to only just be getting good, but the party
ended last evening and we didn’t know it until this morning…”
He is referring to the Alberta Royalty Review Report.
He continues, “In this light...we may be premature
and we may be responding too swiftly...we want out of
all things Canadian and we want so immediately. We
can return at a later date, or when these proposals are
turned down by the legislature involved. Until then, discretion
is the far, far better part of valor. Goodbye Canada;
it was great fun while it lasted.”
Meanwhile, one oil and gas analyst we follow closely,
when asked for his comments, when he finally stopped
swearing, suggested that the Royalty Review suggestions
“would be an absolutely horrendous mistake,
much bigger than the federal change on income trusts”
which infuriated so many Canadians just a year ago.
Meanwhile, First Energy wrote of “Albertastan? Misguided
Intentions and the Fair Share Option” and Tristone
Capital writes, “Go West, Go East or Overseas”
suggesting investors abandon Alberta for better opportunities
elsewhere.
Natural gas tumbles again today! With natural gas
prices in the toilet and new oil sands projects economics
skimpy, the last thing an already rich province needs
is an outrageous tax grab.
Suddenly cheaper real estate in Alberta? |
