₪ David Pescod's Late Edition November 9, 2007
BANKERS PETROLEUM (T-BNK) $0.85 -0.04
You’ve heard of the “Six Million Dollar Man”, the popular T.V show from a decade or two ago. Constant readers here should now introduce themselves to the “Quarter Billion Dollar Man.” We’ve spent a lot of time writing articles over the last year on probably one of the better success stories of the last two years, and that was Rally Energy.
Much of that credit goes to Abby Badwi, and his team of Doug Urch and Ian McMurtrie who ran Rally and who just signed on with Bankers Petroleum. I’m sure that almost doubling in Bankers stock over the last while is solely attributable to that tidbit of news. One does wonder of course if many of the people who want to bet on Abby again, know that Banker Petroleum has fully diluted almost 510 million shares outstanding. And not a lot to show for it.
Most of what they do have is in Albania...“Albania again! Who would have thought we’d be talking about Albania two days in a row after yesterday writing up Tirex Resources (TXX) for its mining adventures there.” But Bankers currently produces 1200 heavy gunky barrels of oil a day (actually, it just got upped to 5000) in the area and have been making attempts to increase
that.
Obviously the addition of Badwi and his use of new technology in revolutionizing Rally’s production in Egypt, must have attracted the good folks at Bankers to the team that could make a big difference. Considering the numbers of shares out though, they’re going to have to obviously put out big time.
When we finally caught up with Abby this morning...he explains he has been extremely busy the last few days (needless to say) as he is still on the board of Rally and cleaning up operations there (he is on a plane tonight to Egypt and then on to Albania to look at Bankers’ operations firsthand). As to the potential he sees at Bankers, where he and his team will be taking a more active role shortly, he suggests that if there is the two billion barrels in place and their steam technology can improve current recovery, and if they can recover 20% to 25% of it like they were on trend to do in Egypt, then Bankers has much upside potential. He also expects to sell their American assets to use in Albania.
As far as the number of shares outstanding, he suggests that at the next annual general meeting, there will probably be a share roll-back of two, three or four for one for bookkeeping purposes.
The bottom line is that he sees many similarities between the work they were doing in Egypt and the potential he sees for Bankers project in Albania.
As far as looking at the oil and gas patch right now, he finds the price of oil probably higher than it deserves to be. “It’s a combination of two things. First, you have the U.S. dollar falling out of bed, which has probably created 20% of the increase in the price of oil and secondly, another 20% goes to the pretty scary world out there right now with wars and politically unstable countries that dominate the oil patch.”
He figures that the oil business should be keyed on making sure they can make money with oil in the mid $60’s which he is convinced they could easily do in Albania.
While we had Badwi, we asked him about one of this stock picks in the past—Connacher Oil and Gas (CLL) which hasn’t been doing much over the past few months.
He admits he is a little surprised by that in suggesting “it’s not getting the appreciation in the markets for the reserves they have” even though margins might be hurting a bit at the refinery and their purchase of Luke Oil was done at a price that could have seen a better deal done today. He still expects Connacher to do well when production comes on stream.
But back to Bankers and its big pop in the stock as he assures us that they are going to be carrying on with the business plan and if it works like he hopes it can, we can still be rewarded.
Today we pick up some shares of Bankers personally and if it sells off further, we will get some more. This is strictly a bet on what Abby has performed in the past and hopefully what he can do in the future.
Ironically today, Canaccord analyst Rafi Khouri publishes a report on Bankers and for those wanting to take a look at the company, e-mail Jennifer at Jennifer_lagdamen@canaccord.com.
Don Coxe is one of our favorite writers and has been so for years. His monthly “Basic Points” is absolute must-reading and his weekly conference call is always of interest. Today, in his introduction to his Basic Points he writes, “With deep regret, we are forced to remove Alberta from the shrinking list of politically-secure regions of the world for the oil industry, taking its rating from AAA to A. Venezuela it isn’t, but it isn’t Kansas either. Once a political region has violated its vows, those who believe it can be trusted not to break its new pledges are betting their companies’ futures on a dubious concept: retroactive political virginity.”
He then follows that up in his investment recommendations: “Review your investments in Alberta in the light of the change in the political climate there. Institutions considering investing in Calgary office towers should reconsider their plans.
Downtown Calgary, with its open pits, looks to be in a building boom that will end badly. It is a high-cost city, and it is no longer located in a politically-pristine province. Saskatchewan could be a reasonable alternative ... Two of Canada’s greatest companies—Cameco and Potash—are headquartered there. And the oil sands extend into Saskatchewan. Newfoundland and Labrador has moved ahead of Alberta for mining and oil investing security.” |
