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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area

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To: Crossy who started this subject	1/9/2004 8:04:15 AM
From: Crossy	Read Replies (1) of 37387

re: CHAR.OB I promised you KAZ companies... This is my first selection for the thread's main porftolio : CHAR.OB - Chaparral Resources, added to the folio at yesterday's closing price of $1.65 One company that I liked very much is CHAR.OB (Chaparral Resources). Looks like they are producing at least 12.000bopd as of now. Yet their marketcap is around $60m - 38m shares out, current price at $1.60. The shares are thinly traded - less than 10% float, however the value I believe is exceptional. 63% is held by CAIH (Central Asia Invest Holding) which is controlled (30%) by son-in-law of Kaz. President Naserbajew. Not that CAIH also does own a good chunk (20%) of PKZ and even more of Nelson Reserouces (NLG.TO) Last quarter (2003/Q3) they finally made it to REAL revenues, around $20m - netting around $20 per barrel oil. Export quote was 95% or so. The company promised a reserve update end of January which I suspect could lift proved and PP reserves by an order of magnitude - as company PR regarding well logs imply. You can download an IR kit from their webpage, registration required but is free. Valuation is interesting here. My formulae of BCFE (PP) / M$Mcap has them around 6 with PP reserves (proved + probable) at around 360 BCFE net to the co.. Cashflow stability reached (no need to secure financing for operational matters except the rather minor $10m due 2004 from their credit agreements which looks like could be repaid by just forward sales of production) The company is expected to develop their Karakudu field further - with 37 wells producing and further 70 wells to be drilled in the coming years - implying big increases in the volume of oil produced to materialize. Drilling success so far has been extraordinary, with a hit rate of almost 90% if what I read is true. Sales are conducted by tying into one of Kaz export pipelines after succesfully linking up with it by means of a 18km dedicated pipeline link further info can be obtained by visiting the following websites: In German: russlandaktien.info Co. Website: chaparralresources.com SEC Edgar: sec.gov =&State=&SIC=&owner=include&action=getcompany Valuation looks compelling in light of the recent success stories of KAZ companies (PKZ, NLG.TO) which netted 10baggers or more to their respective investors. Also, comparable companies, producing in excess of 12.000 bopd are valued usually a couple of times CHAR's marketcap. CUX.TO (Centurion) for example has around twice the marketcap of CHAR, others in this legion are even more pricey. The upsde potential of IMHO highly likely reserve additions should provide additional support to the company's stock price as does the strong pricing environment for commodities ! Finally, KAZ (Kasachstan) received a rating upgrade yesterday, alongside Turkey from a french rating agency (country risk upped from C to B) pls. do your own DD also and double-check all data before investing. This investment is not without risk given the narrow market and the fact that 18 months ago the sustainability of the company was really in question. However those problems appear to be solved now and the reserve upgrade due in January as well as the upcoming 10K should shed further light on their progress.. The investor presentation posted to their website highlights another goal that could be benefial to the bottom line of CHAR : to pursue a refinancing and a move to a major exchange. right now they pay interest between 12-14% on their loans. If you look at the history of PKZ you will see that it should be possible to get below 10% interest rates once they make the move to a major market.. all the best CROSSY

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