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Gold/Mining/Energy : Petrokazakhstan Inc.
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To: cooliemon who wrote (1733)8/6/2001 9:18:02 AM
From: forecaster  Read Replies (1) of 2357
 
Cooliebayev: Uncombed Thoughts.

1. SOUTH TURGAI BASIN ACREAGE.
In a recent slide show (slide #17) is a statement relating to the South Turgai Basin Map:

"Hurricane participates in 87% of all expl and prod'n licenses."

I think that now they are after the remaining 13%. The planned acquisitions should be both concluded in August and one of them has a confirmed oil discovery. (Konys? Bektas?)

It looks to me that they deliberately delayed exploration drilling in order to buy up the acreage adjacent to the Grabens at relatively low prices. A very bulish sign.

2. BRENT OIL PRICES.
The following are monthly averages for the first seven months of 2001:

Jan 25.88
Feb 27.73 Q1 26.37
Mar 25.49

Apr 26.48
May 28.56 Q2 27.65
Jun 27.92

Jul 25.29
-----------------------------------------------
2001 (Jan-Jul) average US$ 26.76

According to Hurricane's reporting, the crude export price increased from US$12.71 in Q1 to US$15.38 in Q2. Many erroneous comments appeared on the chat boards to this respect. Logically, Brent prices were higher in Q2 and there was an additional effect of Chinese exports.

After the recent cut of one million barrels/day in OPEC production and heading into a new challenge to heat our homes in the upcoming winter, the seasonal worst in oil prices is probably behind us. The cut will take effect on September 1, and that is when we should see solid strengthening in Brent prices.

3. HHL.A VALUATION.
Peters & Co valued Hurricane's shares in the range of C$21.50 to C$23.50. The upper value of the range includes US$36 million for the "South Turgai Basin upside". A mere US$36 million for 830 million barrels of oil prospects identified by detailed seismic 3D analysis? It appears to me that this hardly covers even a small discovery such as the one in East Kumkol, estimated recently at 19.8 million barrels. Remember, Amerada paid US$5.66/barrel of proved and probable reserves owned by Triton in Colombia and Equatorial Guinea. So, I would argue that the 830 million barrels are still out there to be valuated in the near future.

After the dividend (-C$4.00) and Q2 cash flows (+US$0.66/FD share = C$1.00/FD share), the fully diluted shares are worth C$20.50. Why would anybody sell now and miss one half of something which by itself is an extremely conservative valuation?

Forecaster
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