₪ David Pescod's Late Edition May 23, 2006
INTL. FRONTIER (V-IFR) $1.67 +0.05
GULF SHORES RES. (V-GUL) $0.58 -0.03
OILEXCO (T-OIL) $4.75 -0.25
It’s one thing we keep learning with those “little itty-bitty” junior
oil and gas company’s that come up with a big play that could
change fortunes overnight. We learn again and again, that nothing
ever seems to happen on time. But in this case with Gulf Shores and
bigger partner International Frontier, at least we know now that it is
going to happen.
Pat Boswell of IFR, is one of the key guys behind a very significant
play in the North Sea, which I am sure you are going to hear a lot
more of over the next few months, because of its size.
While there is a lot of exploration being done these days on the
small pools that were left by the biggies 20 and 30 years ago when
exploration in the North Sea was so exciting, this is one of those big
ones that was left that could cause major drooling over the results.
While Boswell suggests that his technical people give a target
between 300 and 600 million barrels, a half a billion seems to be a
even number that people are working with and that represents an
enormous target that you would be happy to find anywhere in the
world, particularly in a relatively safe domicile like Britain.
He also tells us that according to the announcement, Oilexco suggests
that drilling will commence before year end, but part of Oilexco’s
problem is with their new discovery of Disraeli and when they will
use their rig to do additional appraisal wells there.
The one important thing though, is that at least it is getting explored,
because many of the permits in the North Sea states that if
you don’t get a look at them by a certain date there is a risk that you
can lose your permit.
Clive Stockdale, the former oil & gas analyst at Pemberton, Dominion
and Loewen Ondaatje, comes up with many of our favorite
high risk/high reward oil & gas plays and this was a story that he
talked about to us way back when Gulf Shores was $0.20 a share.
He says today, “it’s going to be fun” and the only difference between
what we expected a while ago and now is of course the time
difference, and then all of a sudden three plays we own shares of are
involved in the same play.
IFR has an advantage, though, in that they have a carried interest,
but the question to be asked about a little guy like GUL is, what
would a punter pay for a lottery ticket that if this well hits and hits
big, could be worth $15 or $17 a share? Would he pay $1.00, could
he pay $1.50 or could he pay $2.00?
We would be very disappointed if GUL is anywhere near it’s current
price when this play is spudded.
COPPER $4.0755 +0.4355
GOLD $673.40 +16.30
SILVER $12.99 +0.625
OIL $71.76 +1.80
Volatile or what? Dead cat bounce or what? It doesn't
matter what you want to call it - some huge moves in
commodity prices, but according to Bloomberg today
after the huge sell off in commodities (it’s funny how
what goes up slowly comes down quickly, isn’t it?)
around the world are actually doing quite well. In
China today, which is not the freest of free economy's
– authorities have allowed prices on many
commodities related to oil to rise and it didn’t disturb
the market at all. And once again, what happens in
China is moving commodity prices worldwide!
AURIZON MINES LTD. (T-ARZ) $3.18 +0.88
Once again, in a very volatile commodity market, the question
remains; if you are big mining company is it better for
you to go and buy some potential production or just keep
your exploration team busier than ever and hope they actually
find something? Today Northgate Minerals (NGX) seems
to be following in line with others, as it suggests that it’s
not as easy to find those big commercial deposits anymore
and despite not knowing which way commodity prices are
going next…they put their money on the line and decide to
make a take over offer for Aurizon Mines. Aurizon is not necessary
cheap, but its Casa Berardi project will be going
into production later in 2006 and it’s a fairly sizable one in
Northwestern Quebec. This isn’t cheap, of course, as Aurizon
has 149 million shares outstanding, so this is a fairly
sizable deal worth approximately 1/2 billion dollars.
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