₪ David Pescod's Late Edition May 24, 2007
PACIFIC ENERGY RES. (T-PFE) $2.98 -0.02
It was just over a month ago that we joined a group touring
Pacific Energy’s facilities offshore California and it was a
bit of an eye-opener. Some of America’s big oil and gas
companies were selling these slightly heavier oil plays and
one could easily suspect part of the reason were concerns
about owning offshore platforms offshore California, the
home of the “Greens”.
To see on these rigs, the number of seals (at any given
time there were somewhere between 20 and 50 seals on any
given platform and how these platforms were absolutely
covered with mussels, clams and the like) no wonder old
rigs these days are being sunk as they provide such a
unique habitat to encourage fish and animal life.
After a long time of negotiation, Pacific Energy has taken
over some of these facilities and we met on the tour, Octagon
analyst Warren Verbonac who as of yesterday, initiated
coverage of Pacific Energy with a recommendation of a buy
with a target price of $5.50, but the details are interesting.
He writes, “Pacific Energy has acquired significant oil
reserves in California at minimal costs; there are several
low-risk development opportunities underway that could
add substantial production as exploitation begins. The acquisition
has a 3P reserve life index of 90 years.”
He also points out the big interest in “The primary investment
appeal of the stock lies in a high-impact Wyoming gas
play; initial drilling results are promising and a success
could have a multiple effect on the share price.”
As far as details, he writes, “Pacific Energy has acquired
a mature, under-exploited offshore oil property that offers
significant immediate value, with long-term growth potential.
Total production is currently 3,000 bd. However, producing
assets have the ability to double (and perhaps triple)
production as exploitative efforts commence later this
year.”
He also points out that as they ramp up production, it
could “cut operating costs in half from the current US$30/b
to approximately US$15/b.”
As far as reserves, he suggests their “onshore California
net proved and probable were 19 million barrels” but additionally,
their offshore California assets, the Beta Unit,
“contains 32 million barrels equivalent of proved and probable
reserves, plus 32.9 million barrels equivalent of possible
reserves.”
But then it gets interesting. He writes, “A high-impact
gas play in Wyoming is in the early drilling stage, and if
successful, could meaningfully impact the value of the
Company. Using the bottom end of the resource estimate,
a 26.8% interest in 3 tcf could be worth almost
$11.00 per share to Pacific Energy.”
It’s a very interesting report and finally someone has
given a good background to Pacific Energy, which I’m
sure when we get to mid-July and they start testing the
play in Wyoming, is going to be watched by an awful lot
more eyes than are currently covering this story.
For a copy of this report, simply e-mail Debbie at Debbie_
lewis@canaccord.com.
If you would like to see a short video of our trip to
California, also, e-mail Debbie.
TYLER RESOURCES (V-TYS) $0.85 +0.35
Tyler Resources was halted for a while yesterday and
then announced a huge increase in their metal inventory.
Now they suggest they have 4.5 billion pounds of
copper, 96 million pounds of molybdenum, 67 million
ounces of silver, 1/2 million ounces of gold and 6.3 million
pounds of zinc and at these metal prices, that folks,
amounts to a huge chunk of wealth. Which is the good
news…
In the fine print later on, you get to the grades that
much of these minerals were running at in the mining to
date and these grades folks, are skimpy...very skimpy.
The question is, could you make money mining all of
this even at these lofty levels particularly with no sweet
spot yet discovered that would make getting cap ex
back quickly and help the economics of a project.
Some of the folks we talked to took one look at the
grades and took a pass. The one fan of the project
pointed out that they still have lots of money in the bank
and an aggressive drilling program ahead of them.
Tyler currently has about 135 million shares outstanding
fully-diluted which these days doesn’t look all
that bad...at least comparatively speaking. |
