David Pescod's Late Edition March 9, 2006
OILEXCO INC. (T-OIL) $4.24 +0.08
We’ve been following Oilexco closely for much of the last year
and have had high hopes for it...that hasn’t (unfortunately)
materialized. Over the last several months if it wasn’t for bad
news, there wouldn’t have been any news. First the Brits decide
to increase income taxes which affects everything in the
North Sea and then Oilexco has two significant misses on
some of their joint ventures. Not good. Josef Schachter
though, is featured on ROB-TV last night and picks Oilexco as
his number two pick and maybe you should tune in—just go
to www.robtv.com, watch past videos, Wed, 8:00 PM ET. The
reason he picks it for his number two is because he sees the
big cash flow that could come out of their Brenda operations
near the end of this year and give cash flow of $2.00 a share.
Meanwhile, the company is drilling some offsets to the
Brenda and if they both come in, Schachter suggests you
could see as much as $3.00 a share in cash flow. Considering
the stock is only trading at a little over $4.00, those cash
flow numbers both make the stock look cheap, but very
cheap should these projects currently being drilled comes in.
Looks like we have to keep watching this story.
ZINC:
While at the PDAC Convention in Toronto, we mentioned that
we asked every analyst and veteran mining man we could talk
to, what two commodities would you invest in or speculate in,
over the coming years? While uranium was the top pick, silver
and zinc were pretty well tied for second and I suspect
everyone knows what uranium and silver is about—zinc
might be a mystery to most. So what should you know? According
to www.zinc.org/zincuses.html, zinc is the third most
used nonferrous metal (after aluminum and copper) and the
American consumers use more than one million metric tons
annually. They suggest that the average person will use 730
pounds of zinc in his/her lifetime. It is primarily used as a
coating on iron and steel to protect against corrosion. It is
suggested that zinc makes the average automobile last
longer—17 pounds of zinc protect it from rust. Another 20
pounds are used to make zinc die cast parts like door handles
and locks and each tire contains about a half pound of
zinc, which is needed to cure rubber. Zinc can store six times
as much energy per pound as other battery systems, increasing
range of electric vehicles. Zinc-air batteries have powered
cars to speeds of 120 mph. Zinc sheets used in architecture,
for roofs or facades on counters and on bar tops
have a maintenance free life of over 60 years. And most importantly,
there is not of new zinc production coming on
stream and to get the base metal mines up and running these
days, can take five to ten years, rather than just a couple.
And inventory just keeps going down.
WAYS TO PLAY ZINC?
Wolfden, Eurozinc, and Western Keltic.
Not many!
GALLEON ENERGY (T-GO.A) $29.83 +8.83
There’s nothing like coming in with that high impact, big reserve
project that can just make your day if you are a speculator. Today,
that’s what happened with Galleon Energy when they announced
sweet oil discovery in the Puskwa/Peace River Arch
area of Alberta. The 10,300 foot well encountered 33 feet of oil
pay and flow tested at 2500 boepd. The other zones were in this
well including the Granite Wash, according to the press release
and is expected to be gas bearing. Galleon suggests that they
took a role of the dice on this play and have a 100% working
interest in 31 sections of land in this area. The suggestion is
from the press release that using 3D seismic, Galleon has identified
28 locations in this area measuring 6 miles by 4 miles and
expects production rate by year end 2006, to reach 2000 to 4000
barrels per day and by 2007, could amount to 4000 to 8000 barrels
per day. Needless to say, the market paid attention and
Sprott Securities raised their target on Galleon to $45 and made
it a top pick.
INTL. FRONTIER RES. (V-IFR) $1.53 -0.01
When you speak of companies trying to find a high risk/high
reward/big impact play, you’d have to put International Frontier
Resources in the list of juniors attempting it. Their stock has
been hurting over the last little while because the company is
normally associated with its high profile exploration wells
along with big companies like Husky up in the NWT. Their D-
57 well and Summit Creek K-44 well in the NWT may or may
not be completed this winter, mainly due to weather concerns.
Needless to say, in that area of the world, they are
hunting for elephants. Worries about weather delays have
definitely hurt the stock. But IFR is going to be increasingly
attraction attention because for the rest of the year what were
they doing? Nothing! Their new plays in the North Sea give
speculators something to look forward to and we have to take
our hats off to Pat Boswell and his crew of geosciences out of
England that are putting together quite a number of plays in
the North Sea for IFR and partners. Pat Boswell today tells us
they expect to have four plays—two of which are announced
to be drilled and they would like to find a rig to drill these
plays one right after the other. What we find interesting is
that Boswell would prefer to drill the lower risk 41-42 play
first. Not us, we’ve got eyes for only one girl and her name is
Quad 14 and a 600 million barrel target.
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