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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Ed Ajootian who wrote (79933)9/5/2007 8:03:22 AM
From: Ed Ajootian  Read Replies (1) of 206270
 
Petrosearch Energy (PTSG) -- They have a great play going with Exxon Mobil in the Barnett Shale. They are cherry-picking some great spots in the core area, which could not be drilled by anyone else because there was no pipeline to get the gas to market, and the surface area is too built out to allow for a new pipeline to be put in. Petrosearch is a partner in a partnership that owns an old jet fuel pipeline that Mobil had out there, that has been converted to transport natural gas.

Friedman Billings has recently started covering Petrosearch, see their intial report and a recent update at petrosearch.com . As shown there, FBR projects that Petrosearch's F&D costs in its Barnett Shale play will be in the neighborhood of a buck an mcf over the next few years. This stands to reason --- there's no way Exxon would have agreed to do a project here in the US without economics that are at least this good (remember, for the long-term future price of natty they use something like $3.50/mcf for budgeting purposes). There are few if any E&P companies that can boast having F&D costs that low any more.

Right at the moment Petrosearch is being viewed as a "one trick pony" so that is why the institutions are shying away from it. But they are working on a waterflood project (Quinduno) that, if they can find a partner, would turn the trick at getting the institutions to pay attention to them. I believe they are very close to getting said partner, so I believe this is an opportune time to be buying this stock.

FBR is taking Petrosearch on a nationwide hype tour, visiting FBR clients, so any news on getting a partner for Quinduno that comes out now should really light a fire under the stock price.

The near-term weakness in natty prices will have little effect on this stock since they are not yet producing enough to have the current price of the commodity impact them that much.
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