₪ David Pescod's Late Edition September 25, 2006
AURELIAN RES. (V-ARU) $30.35 -0.55 Volume: 65K
SKEENA RES. (V-SKE) $0.86 -0.01 Volume: 4.59M
PLEMAR RES. (V-PLE) $0.67 -0.10 Volume: 3.86M
GOLDMARCA LTD. (V-GML) $0.84 -0.07 Volume: 3.87M
LATEEGRA GOLD (V-LRG) $1.10 +0.23 Volume: 2.17M
It’s definitely becoming an area play right now, as four of the most active stocks on the Venture Exchange today are all surrounding the Aurelian play.
David Coffin is one of the speakers at the Toronto Resource Investment Conference, that is currently going on for the mining types and despite the beating the resource stocks have taken in the last few weeks and months, he tells us that the attendance on Sunday was pretty good, a little thinner today but then lots of people still have a work week to attend.
As a speaker at several of the events and panels, David’s own take of the market right now is that he does agree that Aurelian Resources is one of the plays of the day and he does admit to owning it and when we ask him for a target on the stock, he mentions Dundee’s target of $50.00 just might be his own!
As far as the brutality currently going on in the resource sector, he worries that it could go on for several more weeks, but expects a turn around by year end. He also suggests, that a person shouldn't be looking at selling producers these days, because many of them should be reporting pretty good third quarter numbers.
When we get to his picks of the day, his number one pick is Aurelian Resources, which we have mentioned before that he is a big shareholder of and as a second pick he goes with First Quantum Minerals LTD. (T-FM) for their copper production and low PE ratio and it is a stock that today got hammered and suddenly is a lot cheaper.
As far as spec plays, particularly those that are currently drilling, Selkirk Metals Corp. (V-SLK) is involved in a play at Ruddock Creek in Northern B.C. that he suggests people should be following.
As far as the Aurelian play in Ecuador, that is creating such as following, Coffin reminds us that it is quite often that the company who makes the original discovery is the only one left happy, because frequently the area plays have not had the goods. He tells us that it appears that where the Aurelian trend goes, that they own most of the land on the trend. There are companies that are working on areas that have been drilled several times over the last few decades, such as Goldmarca, but the Aurelian is still the big play.
Again we’ll reiterate his hopes that gold and the resource sector changes by year end—here’s hoping!
www.aurelian.ca
www.goldmarca.com
Goldmarca Limited has fully diluted almost 250 million shares!
CORRIDOR RESOURCES. (T-CDH) $5.90 -0.02
RALLY ENERGY (T-RAL) $2.80 -0.11
CONNACHER OIL & GAS (V-CLL) $3.28 -0.07
PETROLIFERA (T-PDP) $17.80 -1.20
Given the 25% drop in oil prices and the virtual disappearance of value for natural gas, it was time for a little hand holding by the one guy who we figure has been our top oil and gas stock picker for the past year, Andy Gustajtis.
We enjoy talking to a lot of knowledgeable, entertaining oil and gas analysts, commentators and the like, but Andy Gustajtis has had just a banner year. His Corridor has tripled, his Kodiak Oil and Gas had tripled (before the recent correction), his Rally has also doubled and I don’t even want to talk about the Petrolifera that I obviously sold too soon! Yes, that’s almost a 10-bagger!
Andy (who is the oil and gas analyst with Dominick & Dominick) could you hold our hand just a little bit here and tells us what’s next?
Gustajtis says that he has had this theory since the late 1990’s - that the demand for oil will continue to rise by about one and half million barrels a day for the foreseeable future and sometimes that demand could bounce up in some of the areas of the world that were previously considered poor (ie: India, China, Vietnam) as they see their economy spurt!
Meanwhile, he also suggests that we are also getting to the era (if we’re not there already) where supply has maxed out. This is a great environment to be following oil and gas stocks, he says, although there will continue to be bumps! In weakness, he suggests, whether it lasts for a couple of weeks or a couple of months, this simply is a buying opportunity! Needless to say, we hope that he is right after the punishment we have received.
What to do now, we ask, particularly seeing that Gustajtis admits to having a sizable cash position, that he previously thought that he would be putting to use by now. I’ll just watch the charts, he says, particularly concerning natural gas stocks and see when they finally put in a bottom.
Meanwhile, he also does worry about what next in the Middle East, as he notes the serious developments there. There is a fiasco in Iraq he suggests, the folks are bogged down in Afghanistan, the belief now by many in the Middle East countries is that Israel is not invincible and this is still the area of the world that we rely for much of our oil. He points to an article in Time Magazine a few weeks ago that featured what the Americans might do if they do attack Iran. Scary!
At this moment, he suggests, that we have high inventories (very high for natural gas) and today the news that environment Canada expects yet another mild winter ahead, it is probably more important what happens in Chicago then Canada, but still this is not good news. (Also tanks are currently almost full of inventory.) The positive take on this, he suggests, is that drilling has already been cut back significantly (at least in Canada) and the new natural gas reserves that are found are generally of much lower quality. In the long term, he suggests, this is probably going to turn out to be a buying period. But, I suspect Gustajtis is like many of us—who when they are looking to buy are hoping to find the bottom.
When we ask him for his favorite picks, and one thing we note right away……….he hasn’t given up on natural gas stocks at all! His first pick is actually one we can’t talk about right now because they are currently in registration, but gassy it is.
His number two pick is a stock that has done quite well by him over the last year and that’s Corridor Resources. They have found a lot of gas on their McCully play in New Brunswick of all places, but it’s what's underneath the McCully that will have the big excitement next. Sometime probably around mid-November they will drill the Dawson Settlement and if it hits, Corridor could see multiples of current price levels. That’s if it hits of course!
In the international field, he’s got two favorites—Rally Energy for their exploration plays and continuing production gains in Egypt and whatever they might find in Pakistan and the other pick is Petrolifera that has also served him incredibly well! While Petrolifera’s work in Argentina continues to come up with absolutely awesome results and they haven’t issued too many shares, he looks forward to about a year from now when they drill in Peru where they are suggesting is that the targets, if successful could once again have Petrolifera multiples of current levels. If………….
As far as Connacher, also one of his picks, he suggests if the stock stays at this level for very long he wouldn’t be surprised to see an international oil player decide that they want to get into the heavy oil game and could use Connacher in a takeover as a method of doing that.
www.petrolifera.ca
www.rallyenergy.com
www.connacheroil.com
www.corridor.ns.ca
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