₪ David Pescod's Late Edition May 30, 2007
DELTA PETROLEUM (US:DPTR) $19.60 +0.23
OILEXCO INC. (T-OIL) $11.65 +0.47
PAN ORIENT ENERGY (V-POE) $4.19 +0.19
STERLING RESOURCES (V-SLG) $1.71 +0.19
There patience and then there’s patience...It’s not too
often you see people in speculative situations that will
stay with a story two or even three years, but then patience
is something the good people at Sprott Asset Management
and associated analysts seem to have in abundance.
It was in an interview with Eric Sprott himself some
time ago that we first got introduced to Delta Petroleum and
what may or may not exist in the Columbia River Basin.
Some suggest that the basin has the potential to have an
enormous future for natural gas and you’ve got big names
like Shell, Encana; smaller guys like Delta and little guys
like Exxel Energy, with huge acreage positions in the
area, hoping that it might be another Green River Basin.
The good folks at Sprott have now held on to their
Delta Petroleum for over two years and we notice that
while the stock was recently weak, they’ve actually increased
their position by half a million shares to almost 5
1/2 million shares. Now that's commitment.
But what’s going on? We touched base with Eric Nuttall,
who is a research analyst with Sprott Asset Management
covering oil and gas stories and as far as Delta, he
tells us, “the upcoming catalysts for this story include
delineation drilling on the Greentown Prospect in the
Paradox (they just received permit approval)” and the Columbia
River Basin has another spud date some time later
this summer on potentially 11 Tcf structure. Late this
summer, they spud on their second attempt in the Utah
Hingeline play, and they will be spudding their Gypsum
Valley well in the lower Paradox Basin.
Meanwhile, they have continued development drilling
in the Piceance Basin, so yes, Delta is in a lot of high risk/
high reward plays...but back to the Columbia River Basin
where Delta, EnCana and Shell have been drilling for almost
two years...and Nuttall confirms that, “Yes, they
have yet to announce any results from that drilling.”
One of the additional wells being drilled by Delta
though, should be to depth and have some news finally
public some time this summer.
While we have Eric, we ask for some tidbits on the oil
and gas market and he’s one of those that is bullish on
gas, predicting $10.00 for natural gas by Christmas which
is good for those holding some natural gas stocks at this
time. There’s a two for the price of one sale out there on
many gas stocks and if we see $10.00 by Christmas, that
would be good.
As far as why gas injections over the last four weeks
have been higher than expected in the U.S. being the
highest since 2001 in fact, he suggests, “it’s probably the
influence of liquid natural gas imports.”
As far as the three stories of the day that he finds most
interesting is Oilexco because it looks like their Huntington
discovery is bigger than expected. Pan Orient Energy
because he figures when the company is split into two -
exploration in Thailand and heavy oil in Alberta, it might
be worth more than the one. And Sterling Resources which
this fall should be drilling their Breagh in the North Sea
and he suggests that “if that well works, Sterling could be
worth as much as $4.00 a share.”
THE CSI 300 INDEX:
One thing about China is that everything seems to have
numbers that most North American’s can’t relate to. It’s
hard to believe that this country that was about as far from
being a capitalist enterprise as one could find just a few
decades ago, now has more than 100 million brokerage
accounts open and the value of its local stocks hit $2.5 trillion
recently.
We’ve done charts of the Chinese markets over the last
while because things are getting, well...a little silly. The
index trades at valuations more than double that of New
York and that’s if you even trust some of their accounting.
The Chinese have been concerned too and today it looks
like they’ve done something that may add a little bit of reality
as they’ve increased the tax on the trading of securities
and the CSI 300 Index drops 6.8% in one day.
High profile analyst Mark Mobius, who is the managing
director of Templeton Asset Management said in an interview
with Bloomberg that he wouldn’t be surprised to see a
further 30% drop in the Chinese market.
Needless to say, today’s action affected stock markets
around Asia, although American markets (after initially being
weak) ended up.
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