CANADIAN NATURAL RES. (T-CNQ) $57.34 -0.56
CENTURION ENERGY (T-CUX) $11.97 +0.89
You can almost hear the air whistling out of the balloon
– the Western Canadian Sedimentary Basin is probably the
most expensive area of the world to operate and explore
in—high wages, high service costs, high land costs plus a
maturing basin—and now the “Sugar-Daddy” that supported
this high cost operation—the Income Trust has
been taken away.
Canadian Natural Resources alone has announced cut
backs in exploration (mainly gas) of about $1.5 billion,
which tells you something…….Yes, one company $1.5 billion.
They have also repeatedly stated in the press that if
the big companies do cut back it might bring service costs
down.
Drillers and service companies aren’t going to be as
busy as they were and the rates that they were charging
before are probably going to be weakened, which probably
sets us up for another cycle for natural gas down the road.
Meanwhile, there are always opportunities and the news
out of the Middle East that Dana Gas is buying Centurion Energy,
the Calgary based company with assets in Egypt and
Tunisia, makes one wonder if suddenly the assets of those
Calgary based companies with assets and plays in the Middle
East might be worth a little more……..
Another play that is based in the Middle East that might
benefit from the CUX buy-out is Rally Energy, the Abby
Badwi company that has repeatedly enjoyed recommendation
calls from analyst Andy Gustajtis and also oil-man
Dick Gusella (Abby and Dick have worked together before).
With the higher prices for the last few years for oil, one
wonders if the Middle East companies aren’t flushing cash
and maybe there can be some more of these take-outs
down the road as well, or at least again the thought of
higher valuations for companies based in that area of the
world.
Meanwhile, there are also some junior explorers out
there such as John Clarke’s Candax Energy with plays in Tunisia
and the Middle East and also Oracle Energy with some
high profile plays in Yemen.
PACIFIC ENERGY RES. November 3 $1.53
(T-PFE) Today’s Price $1.40 -0.02
STERLING RES. November 3 $1.36
(V-SLG) Today’s Price $1.68 -0.08
On November 3, 2006 we wrote a column on a little
stock-picking contest between Josef Schachter
and ourselves.
We talked about smoking him in the last contest
and as several folks have pointed out to us…….he
smoked us in the first contest we had.
Josef has always been very generous with his
time and ideas for us here at Stocktalk and the
whole tone of that Interview was pretty poor on our
part.
So, we apologize to Josef for the tone on that article.
Meanwhile, we do have that little contest with
Josef. As of Friday November 3rd he picked Sterling
Resources then $1.36, as he feels it has been overly
beaten up from the shareholders plus their Breagh
field should be drilled sometime over the next
while—depending on rig availability that is and
needless to say if it hits………..His target is $3.00 by
June 15th, which is the end of the competition!
Our high risk pick was Pacific Energy, who is about
to spud a high risk play in Wyoming, not too far
from where Ultra had its big success. Spud date is
December 1st.
Disclosures: Sterling Resources &Candax Energy: Canaccord Capital covers these stocks and has a Speculative Buy rating
them. (Speculative buy: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments
in the stock may result in material loss.) Canadian Natural Resources & Ultra Petroleum: Canaccord Capital covers
these stocks and has a Buy rating on them. (Buy: The stock is expected to generate risk-adjusted returns of over 10% during
the next 12 months.)
Canaccord has recently participated in a financing for Pacific Energy Resources.
Canaccord has recently led a financing for Sterling Resources, Candax Energy & Oracle Energy.
www.pacenergy.com
Sterling Resources
www.sterling-resources.com |
