₪ David Pescod's Late Edition May 25, 2007
OILEXCO INC. (T-OIL) $10.85 +0.35
ITHACA ENERGY (V-IAE) $2.68 +0.15
ANTRIM ENERGY (T-AEN) $5.50 n/c
As the chart shows, it’s been a great ride for those who have been patient with Oilexco for the last two or so years. Now as we worry about the easy money having been made with Oilexco, one looks forward and tries to find the next one…
While Oilexco should have news any day on its Huntington well, and any hour, any day (something we’ve been hearing for many, many months) production from their North Sea facilities and just how big that number might be, Oilexco might yet have another surge, but like we say, for Oilexco to double from these levels could be tough. With a good number of Canadian juniors in the North Sea the chance of one or two of them being the next Oilexco is always possible.
We’ve mentioned Warren Verbonac, the oil and gas guy at Octagon and his search for the next Oilexco, lands on two names—Antrim Energy which will be drilling their Causeway Play any day and Ithaca Energy for their parcel of projects as well.
Bill Newman, the oil and gas analyst at Research Capital echoes the two names of Antrim and Ithaca as well, but his in-depth report on Ithaca dating back to November of 2006 and a recent update of May the 4th, is a definitive look at Ithaca and what just might be the next Oilexco.
With their October 2006 success of their Athena appraisal well and their recent early May success of the Basil well, Newman writes that “Athena could be brought onto production as early as mid-2009 and Basil bring on an additional 5000 barrels potentially by late 2008.” Meanwhile, it’s the parcel of properties they have in the North Sea to be explored over the coming years that appeals to one’s greed.
They are referring to Ithaca’s potential. Newman writes, “Ithaca has an inventory of high-impact exploration opportunities, including a number of multi 100-million-barrel oil targets and multi-100-bcf gas targets.
For the balance of 2006 and into 2007, Ithaca will process and interpret newly shot 3D seismic surveys to finalize exploration drilling locations…”
Newman also points to the success of some of the officials behind Ithaca, pointing out that Lawrie Payne, the CEO is a geologist with over 40 years of industry experience and was the President and CEO of Sunningdale Oils, which was a successful North Sea exploration company eventually sold to Kerr McGee.
Meanwhile, Neill Carson, the President and COO is a reservoir engineer with 24 years of international oil industry experience including 17 years in the North Sea with Amoco and British Petroleum. Nick Muir, the VP Exploration is a geologist with 20 years of international experience working for Shell, Eni and Total, primarily in the North Sea.
As far as looking down the road to the plays that would really attract attention, Newman points to the Triton and Poseidon exploration prospects. Newman points out that “The primary target is light oil within the Upper Jurassic Buzzard sands. Management believes that both plays have similar features and potential of the Buzzard field discovered by PanCanadian in July 2001. The Buzzard field, currently operated by Nexen Inc., has estimated recoverable reserves of over 400 million barrels…”
“The Buzzard field lies approximately 80 kilometers to the south of Ithaca’s blocks. According to the GCA report, Triton and Poseidon are multi-100-million-barrel opportunities; however, the report does rank the play as high risk due to the lack of follow up drilling success in the Buzzard field.”
“The CGA report assigned possible recoverable resource of 150 million barrels to the Triton prospect and 100 million barrels to the Poseidon prospect.”
Another prospect expected to be drilled this year is Morpheus, which is expected to be drilled in late 2007 along with partners Dana Petroleum, Tullow Oil and WHAM Energy. In the Morpheus area, prospects range in size from 20 bcf to over 250 bcf and are on trend with the Ravenspurn (934 bcf) and Johnston (290 bcf) gas fields.
Analyst Newman is obviously a big believer in the play and willing to share. So anyone who would like to see these two Research Capital reports, simply e-mail Debbie at debbie_lewis@canaccord.com to receive copies.
Needless to say, by now you might have guessed that we have our hopes set that Ithaca Energy just might be the next Oilexco, so we will be covering this story on an ongoing basis for the next two years, hopefully with the same joy that we had with Oilexco.
AURELIAN RESOURCES (T-ARU) $31.40 -1.70
DYNASTY METALS (V-DMM) $5.99 -0.11
CORRIENTE RES. (T-CTQ) $3.81 -0.14
While there is incredible natural resource riches in South America and they seem to be discovering more of it every day, it’s a scary place to invest or speculate in if one isn’t aware of the politics and let’s face it, politics changes as well.
Chile over the decade has proven to be a great place to invest and is also one of the more resource rich mining areas of the world. Columbia, which used to be known more for drugs than anything else, is now the poster-boy for Business Week to be a new place in the world to invest. And it looks like Argentina’s come around and Brazil isn’t as bad as it used to be either.
But other countries are pretty risky. It still amazes us that some people still want to make a bet on anything in Venezuela (yes, we are short Crystallex). Hugo Chavez seems to want to nationalize anything and everything in sight.
Peru, you are not too sure of and today Ecuador, once again, creates waves as various papers in the country and internet sites state that Minister of Government Gustavo Larrea, suggesting “it is not possible that there are contracts in which the Ecuadorian state has a participation of 20% and the investing company 80%.” They want to change that relationship the other way around.
Needless to say, comments like that have flashed around the world and have affected many of the oil and gas and mining stocks based in Ecuador and not favorably at all.
With a new president, who still doesn’t seem to tell the world what it is he expects to do next, a country that could be on the verge of developing vast mineral wealth, could see investors deciding to lose interest really quickly.
Aurelian, which is one the biggest players on the scene announced today that “it has become aware of a single news story that has been published on the internet commenting on potential changes to Ecuador’s foreign investment law. The company does not believe that there is any basis to this report.
Aurelian is doing everything within its power to get clarification from the government, since this single news story is totally contrary to the government’s earlier statements….”
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