₪ David Pescod's Late Edition September 6, 2007
CRESCENT POINT ENGY. (T-CPG.UN) $19.06 -0.20
INNOVA EXP. LTD. (T-IXL) $7.42 +1.23
PILOT ENERGY LTD. (V-PGY) $1.70 +0.10
One of the stories of the day today is Crescent Point Energy
taking over Innova Exploration. One of the interesting aspects
to this transaction is the Bakken play, an oil and gas
trend in Saskatchewan that has been well known over the
years, but it looks like new technology maybe changing the
economics of this area of the world dramatically.
One former oil and gas analyst tells us that this play which
traditionally produces some of the sweetest highest price
crude you can find is also liquid rich. It’s a kind of play that
traditionally could IP 70 to 100 barrels a day and then settle
out at 50 barrels a day for quite decent economics.
Now new technology being developed is suddenly producing
some wells over the last year that are doing 2, 3 and 400
barrels a day. But where it settles out at is still an unknown
because the technology has only been developed in the last
year, but those initial production rates are dramatically different.
Richard Wyman in Canaccord Adams Research writes “is
this the right time to sell Innova” regarding the takeover and
writes, “Crescent Point and Innova are joint venture partners
in Southeast Saskatchewan splitting off operatorship among
the joint interest lands so the proposed transaction is a good
strategic fit”…but...he writes…“while it is too early to know
the full benefits of the Packers Plus techniques in terms of
longer-term production and ultimate reserves recovery, this
technique does seem to represent a material change of operating
circumstances.”
Needless to say this has people going to the maps suddenly
looking for who else has land in the Bakken, and Innova
and Crescent Point are too obvious but there are also
other private companies in the area plus a few public.
One little guy whose timing is near perfect is Pilot Energy,
with a mere 22 million shares outstanding and a big chunk of
it owned by insiders who have been buying in recent financings.
The company was doing about 700 barrels a day until 3
recent Bakken wells have come in nicely and production may
now be dramatically higher at around 1,100 barrels a day and
3 other wells are expected to be drilled this fall which if the
hit will add nicely to production and they have an additional
20 to 25 locations. But in the Bakken, Crescent Point is the
main player.
GOLD $704.60 +13.90
MIRAMAR MINING CORP. (T-MAE) $4.95 +0.19
PACIFIC RIM MINING CORP. (T-PMU) $1.07 +0.07
METALLICA RES. INC. (T-MR) $4.31 +0.08
AURELIAN RES. INC. (T-ARU) $6.90 +0.56
It’s not a bad day in commodity markets at all and for a change,
it’s not just farmers looking at record prices for wheat, corn and
the likes. Oil climbs to 5 week highs as U.S inventories have
declined more than expected, but a pleasant move in gold for
the gold bugs.
As we’ve mentioned in the past Canaccord analyst Graeme
Currie and others now expect that if the U.S does drop interest
rates then one would expect it could lead to a lower U.S dollar
which would beneficial to gold.
When we talked to Currie today, he suggests that a move
above $700 (which happened today) will attract people to the
gold sector, a sector that’s never really seen gold correct that
much but gold stocks certainly did.
He believes that a move to $700 to $720 in gold would probably
be led by the senior gold's, but above that level most of the
juniors should participate. From the juniors that he watches,
his favorites remain names like; Miramar, Pacific Rim, Metallica
and for those looking for a little speculation, Aurelian Resources.
CORRIDOR RES. INC. (T-CDH) $11.13 -0.36
He’s had the magical touch in the oil and gas sector much of
the last 2 years and the chart on Corridor shows just how well
one of his top picks has been.
Andy Gustajtis of Dominick and Dominick had liked the Corridor
stories since a mere $1.50 a share and he’s definitely
benefited. When we catch up with him yesterday, his top 3 hasn’t
really changed that much going with #1: Connacher, #2: Corridor
and #3: Petrolifera.
Connacher should be starting to steam any day with production
by Christmas on their first pot up near Fort McMurray. Corridor
is now an ongoing story in the natural gas sector and one
of the very few winners in that sector.
While we feel Petrolifera currently drilling in Argentina will be
one of the plays of the year next year for what it may have/
hopefully has in Peru...potentially some of the biggest gas plays
one could find anywhere in the world, in an area of the world
that needs gas.
For someone looking to follow the Corridor story probably
one of the best research reports that gives you the possibilities
of the play is put out by www.jenningscapital.com/
research3.asp of Jennings Capital.
If you would like to receive the Late Edition, email Debbie at debbie_lewis@canaccord.com |
