₪ David Pescod's Late Edition June 2, 2006
OILEXCO INC (V-OIL) $5.37 +0.32
If it hasn’t been for bad news over much of the last six to eight
months, Oilexco would have had almost no news to report after 3 1/2
high profile misses. The other day they announced a dry hole at
Halibut, one of their most recent targets.
Not giving up on the story and remaining quite bullish though, is
Haywood analyst Fred Kozak. He suggests in a recent report that,
“This was again a very risky play, and we did not give it more than a
1-in-10 chance of success.”
Possibly more importantly though, Kozak takes a look at what’s
coming up for the rest of the year and he suggests, “The rest of 2006
will see significant news flow as Oilexco continues with North Sea
operations”, and then he gives us a schedule of what to expect,
which I suspect many Oilexco followers would want.
For the month of June he writes, they test Brenda D1, Brenda D2
and Brenda D3 with production wells and he suggests that the news
should be neutral, but he does expect each one to come in at 7 to
10,000 bbl/d.
Sometime in June, he notes, that they should also drill the Nicol
production well with test data due in July and he figures the impact
on the stock should be neutral while he expects flow rates better
than 5,000 bbl/d.
In July they will drill the Disraeli appraisal well and he expects
positive news coming in late August to confirm the size of the Disraeli
discovery.
In September they will be drilling a 100% interest in the Shelley
prospect with results in October. The impact again demands on
what they find. He notes that it is a shallow prospect that could be a
similar field to Brenda, but not factored into his estimates.
In October they drill the 50% in the Kildare prospect with results
in November—December and again the impact depends on results
and he notes that it is a highly prospective target.
In December they drill the Laurel Valley farm-in with results possibly
in early 2007 and for impact, he suggests, again it depends on
results, but he notes that it is significant multiple horizon potential.
Kozak still maintains his aggressive $8.00 target on Oilexco and
writes, “Our target price of $8.00 represents a 3.6x multiple of 2007
before-tax fully diluted cash flow per share. This is a conservative
approach, and we note that the upside potential is still significant.
We also note that other international producers command multiples
as much as 10.0x cash flow per share.”
It is an important piece and Kozak is one of the few analysts that
does follow Oilexco closely on an on-going basis, and for copies of
the report email Sandra at sandra_wicks@canaccord.com.
www.oilexco.com |
