₪ David Pescod's Late Edition October 18, 2007
PAN ORIENT ENERGY (V-POE) $7.80 +1.25
We follow Pan Orient Energy and own it because it was one of the top picks of Warren Verbonac of Octagon Securities and also Peter Hodson of Sprott, who is picking up quite a following on BNN for some of his top picks over the last while and also has it as a top pick and has mentioned a target of $10.00 in the past.
Unfortunately, we can’t get a hold of either today as Verbonac is up in Alaska and Hodson is, shall we say, really busy.
Today Pan Orient announced more drilling success of field development well NS8-D1, which has come on production at a rate of 1400 barrels a day. What makes a story like this particularly economic is that it is at a true vertical depth of a mere 886 metres. No $25 million well here! This is pretty good economics.
Best of all, this is in Thailand folks, where there is no Royalty Review. Which gets us to the decision coming out of the Alberta Government shortly and we will be blunt. If the Royalty Review goes through anywhere near current expectations with labor and drilling costs so high and the Canadian dollar going through the roof, we’ve already seen natural gas stocks get clipped 50% to 90% because of that environment, so if the Royalty Review goes through unchanged, you will not want to own any oil and gas stocks in Alberta.
So get used to having a map open that has places like Guyana, Thailand and the North Sea, etc.
PEDIMENT EXPLORATION (V-PEZ) $2.60 +0.42
Today Pediment Exploration announces some pretty interesting drilling results as they intersect 6 metres grading 15 g/t gold that was within a bigger sector of 150 metres that graded 1.6 g/t on their San Antonio gold project in Baja California Sur, Mexico. Not bad.
We go to Eric Coffin because the Coffin Brothers have played quite a significant role in putting that company together, but because of the insider-type stuff, Coffin doesn’t like to make public comments about the company even in the Coffin’s publication, The Hard Rock Analyst.
Pressed to why the stock is reacting so well, Eric suggests that apparently Greg McCoach has been telling people he loved it on a U.S. trading show today. He notes that drilling is still continuing at San Antonio and there should be more results next week.
As far as some of his favorite stories of the day, he suggests he has high hopes for Silvercrest Mines (SVL) and is surprised it is being so harshfully dealt with today as he thought the drilling results were quite decent. He suggests there could be a production decision on their project as early as this month. Another story he is quite keen on is Minefinders Corp. (MFL), a company that he believes down the road is a potential take-over candidate.
SHANGHAI STOCK EXCHANGE:
On October 16th the Wall Street Journal had a good look at the Chinese stock market and raised some very important questions - not just for the Chinese but for world markets in general.
The Wall Street Journal writes “China is in the throes of the stock market frenzy that looks increasingly unsustainable. Chinese stocks have nearly sextupled in value in just two years and set yet another record with the benchmark Shanghai Composite Index catapulting above 6000 for the first time.”
They continue “big unknowns loom over the market, starting with whether China is in a bubble that’s in danger of popping. But there is strong evidence that even if the boom ends with a crash, China’s investing frenzy will also leave behind much lasting good, because it is helping build a modern market, driven financial system.”
“From glitzy Shanghai to gritty industrial centers like Wuhan, tens of millions of Chinese have poured substantial savings into stocks. As a result, China suddenly has a stock market that is as powerful as its economy, now the world’s third-largest. That is an astonishing turnaround for a system considered beyond repair three years ago.”
It was truly an interesting article and we have copies for those who are curious, but nevertheless there are some real world comparisons that have to be made. Currently the Chinese market is trading at 60 times earnings, yes 60 times earnings. Currently the American markets are trading at 16 times earnings and Toronto at 19 times earnings.
One has to admit that most Chinese, or at least this generation, has no idea what a stock market should be, what the rules are, what valuations really are and for many of us whether we should even trust Chinese accounting systems is definitely open to debate. But one wouldn’t be surprised if sooner or later reality doesn’t hit the Chinese market and possibly big time and the question is, would it affect the rest of the worlds markets at all?
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A century or was it two centuries ago, or even longer, it was suggested that authors in Russia were paid by the word. That probably explains why some of those old classic Russian novels were thick…make that really thick and definitely heavy.
This was brought to mind when we look at Fred Kozak’s and partners (Peters, Wyman, Haas, Currie and Liu) who put together a huge report on the North Sea and the Canadian oil and gas explorers that work there.
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