Hi Vulcan Shareholders:
Here is an article written by Craig Westcott which appeared in the Western Star several days ago.The article addresses some of the potential surrounding oil exploration on Newfoundland's West Coast.Mr. Westcott quotes several key points made by Kirby Mercer of Can. Imperial Ventures and Pat Laracy of Vulcan Minerals, in relation to current exploration activity, as well as the untapped
potential of the area. Share price of both companies have been on the move recently in expectation of further exploration success on the Port au Port and Flat Bay properties respectively.
Speculation driving price of west coast oil juniors
By CRAIG WESTCOTT, The Express
Speculation about the size of Canadian Imperial Venture Corporation's oil deposit on the west coast of the province seems to be driving the company's share price to record highs.
The price has more than doubled in the last two weeks, trading at levels as high as 68 cents, on Monday. On Friday, the stock closed at 54 cents, with almost 1.1 million shares trading hands.
"There is a whole bunch of activity surrounding the development and our company which I think is driving the stock right now," said
Kirby Mercer, CIVC's vice-president responsible for investor relations. "In the last three weeks there has been an awful lot of activity
on the stock. There's been a lot of speculation and a lot of interest from new areas of the country. A lot of new people have been sort of looking at it and I think there's been some rumours on the street."
The company moved to quell the rumours late last week by issuing a press release confirming speculation that a seismic program at its Garden Hill play near Port au Port indicated the size of the oil field there could be much larger
than had been thought.
"In a nutshell, we thought we had a very simple structure and we had reported that we thought we had between eight and 13 million
barrels of recoverable (oil) in it," said Mercer. "We finished the 3D seismic program and the structure is quite a different shape and quite a different size."
The provincial government is expected to rule next month whether CIVC's development plan for the site is acceptable.
"We feel we will be producing oil before the end of the year," said Mercer, "probably under test mode with the (approval of)government."
Under the plan which the company filed in July, as many as 25 jobs could be created next year tapping the high grade crude and shipping it to the mainland.
Eventually, the company would like to erect a small refining plant on the site, and sell the fuel on the local market. The company is also studying the possibility of turning some of the oil into electricity to power its own
operations at the site.
The company is also trying to interest bigger offshore oil players in a patented natural gas recovery and shipment system which it unveiled earlier this year.
Mercer said the increasing share price makes it easier for the company to raise money, and brings it closer to gaining a berth on
the Toronto Stock Exchange, something it is hoping to achieve by spring.
CIVC is now listed on the Canadian Venture Exchange (CDNX). Last week's buoyant stock price drove the company's total market capitalization to about $28 million. "But we still feel undervalued given what the potential is," said Mercer.
The speculation about the value of CIVC's oil deposit near Port au Port seems to be generating some collateral benefit to another St. John's-based junior oil explorer.
Share prices for Vulcan Minerals were up 170 per cent on Friday compared to three weeks earlier. The stock closed at Oct. 25 at 25 cents compared to 11 cents three weeks earlier. Friday's volume was 68,000 shares traded.
"I guess people are realizing that there are things happening in Western Newfoundland," said Vulcan president Patrick Laracy. "It doesn't surprise me. It's got a great potential over there and sooner or later the companies involved will be justly rewarded."
Vulcan, which is also listed on the CDNX, is working a 70,000-acre parcel in Flat Bay which it acquired by buying out London Resources earlier this year.
Vulcan drilled a test hole on the property last September reporting oil shows. More drilling is planned early next year. Laracy said people don't realize how much activity is going on in the region because some of the work is being conducted by private companies. Those firms include American Reserve, which is drilling next door to Vulcan's property, and Deer Lake Oil & Gas, which has reportedly found gas potential in the Deer Lake Basin.
"Obviously it's a new area, so anybody's success will help everybody else," said Laracy. "And the fact the price of oil is staying upwards of $30 a barrel also helps from a market's perception, because the market is interested in oil and gas plays. So I would expect if the price of oil stays up you will see
more action in Western Newfoundland."
The folks at Canadian Imperial, meanwhile, are clearly tickled by the newfound interest in their company. "What we're getting is a lot more inquiries from different brokerage houses, different brokers, different
people who are hearing about it from word of mouth," said Mercer. "Last week, Yorkton (Securities) had a memo out on stocks to watch and we were written up
there. So people are finally standing up and taking notice of what we are doing." |
