David Pescod's Late Edition February 16, 2006
DIAZ RESOURCES (T-DZR) $1.11 -0.02
SHARON ENERGY (V-SHY) $0.72 +0.04
Now these are pretty good numbers! Or at least they used to be when people last cared about natural gas prices. Sharon Energy and Diaz Resources announced successful completion of two Allen Ranch wells which were fracture stimulated late last week and tested over the weekend.
The Allen Ranch Hancock #2 well in Texas completed one of eight potential Wilcox gas zones and is flowing to sales at a restricted rate of 5 MMcfd with some very good pressure of 10,150 psi.
The Allen Ranch Hancock #1 well also completed the fourth
Wilcox gas zone and is currently flowing at a restricted rate of
5.6 MMcfd with pressure of 7800 psi. Yes, folks, these are really
good numbers.
I suspect it would have been really significant two months
ago, when gas was $15.00. It’s still not bad with gas at $7.20,
but the oil and gas market has definitely softened and interest
slackened.
Meanwhile production from the Allen Ranch field is being restricted by facility constraints. But the results are pretty good for two of Bobby Lamond’s companies—Diaz Resources with a 20% interest in the wells and Sharon Energy with a 14% interest.
These are deep and fairly expensive wells in Texas, but they are certainly coming up with the results. It’s not as if they were finding something really neat like copper, zinc or nickel, which seems to be of a little more interest these days, but should gas (in a few months) finally bottom in the summer time when demand for gas once again, creates interest, this should be two stories to watch.
We sold both our Diaz Resources and Sharon Energy when gas started weakening a month ago, but all this is still good news for veteran oil and gas man Bobby Lamond.
It will help him pay for some tickets later this week for the production of “Guys and Dolls” at the Citadel Theatre here in Edmonton.
While Lamond mentions that he has had some influence on his family—after all, his two boys became geologists, his daughter totally escaped his influence. She is a performer with Broadway on the Mind and featured in this play that should light up Edmonton, and lucky Bobby gets to escape the cultural waste land that is Calgary and come up for a little arts and crafts to see his daughter perform.
KIRKLAND LAKE GOLD (T-KGI) $6.00 +0.53
HUDSON RESOURCES (V-HUD) $0.65 -0.05
Talk about volatile. The price of gold over the last few days has suddenly become a traders delight. Down $20 one day, up $10 the next and you just never know what next!
Today though, gold has a positive move and the sector a great day — well, for most anyway. Kinross Gold reminds us that they don’t have the best collection of producing mines out there and announce a loss of $0.13 a share versus a profit of $0.02 the same quarter last year. The stock plummets.
In the meantime, Kirkland Lake Gold decided to come up with some good news on a good day for gold. It still amazes us that Kirkland Lake was able to put together a combination of five former producers under the one umbrella. Usually those camps were so secretive about whatever they had, they just never co-operated on anything, despite being neighbors. Sometimes within hundreds of meters of each other.
Kirkland Lake is a combination of the old Teck-Hughes, Lake Shore and Wright Hargreaves mines in the Kirkland Lake camp that formerly produced more than 20 million ounces of gold.
When we check today with Scott Koyich who has KGI as clients, he tells us that KGI’s problems they’ve had up until recently, was a severe shortage of manpower to get the mining done. There had also been a little problem with dilution of ore, but now it looks like they are into better grade ore and he mentions that while there had been reports of problems with their scoop-trams, he suggests that’s not the case.
Meanwhile today, with the release of more drilling results, and announcements of new zones discovered, the stock is attracting new believers. Koyich mentions that as of April 30th last year, they had reserves of 920,000 ounces grading .46 ounces gold per ton. It will be interesting to see what those grades and numbers are in two months, when the new numbers are ready.
Koyich suggests that if he has to pick something that wasn’t a client ... he would go with Hudson Resources, which is a diamond play that is working in Greenland. Koyich also suggests that the one firm that does research on the different diamond plays around the North Country suggest that Hudson is one of the under-valued ones amongst the diamond explorer peers compared to say Diamondex (DSP) or Stornoway (SWY) and he figures that it is cheap with a good future. Geophysics starts on Greenland in March, drilling starts in May and he suggests that it is cheap compared to its peers. We note that we have already written up Hudson once or twice, because other analysts have also been positive on it.
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