More on IVAN from the odious mouth of Thom Calandra
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As stated this week in the full edition of The Calandra
Report, I spoke with several large owners of Ivanhoe Energy (IVAN on Nasdaq) shares. Nothing has changed except the willingness of some in the financial press to take shots
at the emerging natural gas and oil company. That's every fiscal scribe's right in this great investing marketplace. Concerns about proper valuation of an energy company are usually well conceived.
But do those valution concerns have the interests of pioneering investors at heart? Especially when energy prices are rising sharply (in the futures market) and few if any major oil and gas producers are achieving 100
percent replacement ratios on their energy reserves? Do questions about whether a small energy company should trade at 80 times cash flow belong in a world in which enterprising oil and gas executives are trawling Libya, Chad and other energy hot-spots, searching for 25,000-barrel-a-day prospects?
Ivanhoe Energy (IE in Canada) is fast developing oil and gas parcels in China, Wyoming, California and Texas. One buys shares of Ivanhoe Energy, as I have at 95 cents and again at $4.48 U.S., because of the small company's
potential as a super-producer of energy assets in an emerging oil and gas portfolio across the globe. Ivanhoe Energy's appointment of a new board member, J. Steven Rhodes, a former U.S. ambassador to Zimbabwe, bodes
well for the company's efforts in Iraq and elsewhere.
Some day, investors may awaken to find Rhodes in the White House, discussing how a small company such as Ivanhoe Energy plans to undertake -- in partnership with others -- the accelerated production of Iraq's southern oil
fields, a project whose timing becomes more critical as that cash-hungry and war-torn nation moves closer to democracy. I also believe, as I am in touch with Ivanhoe Energy's senior management, that the Canadian company has
yet to entirely give up on efforts to develop vast natural gas resources in Qatar, a country it withdrew from in the spring after CEO Leon Daniel spent many months attempting to negotiate a pact with the Middle Eastern nation's
energy ministers.
I am going to repeat -- for the record -- my Ivanhoe Energy statement made this week in the full edition of The Calandra Report. I hope, at some point soon, that investors who are alongside me on Ivanhoe Energy will see concrete developments in the small company's rush to increase cash
flows, build reserves and cement global links with China, Iraq, and possibly Qatar.
A remote possibility in coming months is a spinoff of Ivanhoe Energy's Sunwing Energy unit as a free-trading unit, possibly in Hong Kong or on the Canada stock market.
Repeating here: Shares of Ivanhoe Energy, originally recommended here more than six months ago at 95 cents U.S. a share, continue to slide. I own them at 95 cents and again at $4.48 a share. Large owners of the energy
company's shares, which have become the subject of intense speculation regarding cash flows, foreign-country risk and the speed with which the company can erect wells in Wyoming, California and China, are still believers.
David Martin, Ivanhoe Energy chairman, suggests a venture with Derek Oil & Gas (DRK in Canada) in Wyoming could lead to 10,000 barrels of oil a day.
Still, financial writers question whether the company's summer run-up in price exceeded prudent valuation sense. I am a believer in Ivanhoe's efforts to ramp up oil and natural gas output in an era when major energy producers
are struggling to retain replacement ratios. Ivanhoe Energy shares would have to hit $2 for me to consider selling or removing from The Recommended List.
Disclosure: Thom Calandra owns shares of natural resources companies Atlas-Cromwell, Bitterroot Resources, Caledonia Mining, Ivanhoe Energy, Ivanhoe Mines, IMC Ventures, Nevsun Resources and Victoria Resource.
Thom also owns shares of Sunridge Gold, Pacific Minerals, Sparton Resources and Gold Marca Ltd. He owns shares of diamond exploration company Tahera Corp.
He is an owner of shares of MarketWatch.com, the publisher of this newsletter. Thom owns shares of Intraware, an electronic software manager, and he owns shares of Cardima, a medical device developer. He owns GigaMedia, a Taiwan Internet music and service provider. He owns shares
of Illumina. He owns the Australian dollar in a revolving six-month certificate of deposit. |
