₪ David Pescod's Late Edition December 13, 2007
PAN ORIENT ENERGY (V-POE) $11.71 -0.04
COASTAL ENERGY (V-CEN) $3.75 +0.15
Yikes! What is this...a stock that goes up? What do you
do? Is it legal? Excuse us, but with so much press on the
asset-backed mess and how it is going to affect the economy
and how we could see a recession, we’ve also seen oil
stocks clobbered despite $90 oil, uranium stocks absolutely
hammered, and gold stocks trading as if gold was $400.
We’ve seen lots of downgrades on many companies that
previously looked great.
So what’s with Pan Orient hitting new highs? We’ve
watched it because Warren Verbonac, an oil analyst with
Octagon has liked it and now...hold your breath...he’ had to
up his target! When was the last time you saw that?
Yesterday he wrote, “New Drilling Technique Sets Production
Record for Onshore Thailand.” He continues, “Pan
Orient’s latest well (60% interest) is free-flowing at a sustained
stabilized rate of 3,940 bd. Storage, trucking constraints,
and a restricted choke have limited production of
the well—it is probably capable of a higher rate.”
He continues, “The highly deviated well, drilled at an angle
of 51 degrees, penetrated an oil column of 150 metres,
allowing maximum reservoir thickness”… “With two rigs
working and 30 locations identified for future drilling, there
is substantial potential impact on future production. The
near-term constraint will be trucking, which is expected to
be capable of handling up to 15,000 gross bd, or 9,000 bd
net, to the Company.” He then points out, “Annualized cash
flow at this rate would be $2.99 per basic share, or $2.75 per
diluted share. A 6.0x multiple on the basic cash flow estimate
provides a target of $18.00.”
Yikes! Eighteen dollars! Yes, good things still can happen
in a market that’s been this bad.
While we are speaking of Thailand, one of those areas of
the world where at least currently, it seems it’s a great place
to be looking for oil and actually putting it into production
because the government hasn’t decided to take it all away
on you if you do find it. There’s another company benefiting
as well as Pan Orient.
Fred Kozak has been following Coastal Energy for just brief
period of time and yesterday they announced a $50 million
financing.
Kozak writes, “Closing The Funding Gap But No Change to
Target Price.” Kozak notes that “Coastal Energy announced that
it has entered into a bought deal arrangement to sell 14,300,000
common shares at a price of C$3.50 to raise $50 million.”
He suggests the impact is “Neutral to positive. With this financing,
the company has mostly closed our previously identified
funding gap as the company works to bring two offshore
oilfields in Thailand on production through 2008 and into 2009.
On a per-share basis, we have adjusted our estimates downward
to account for the dilution from this issue, but note that the company
still trades at a substantial discount to the company’s asset
value.”
He currently gives the stock a Speculative Buy and a $6.00
target price.
As far as the next catalyst as to what could get people paying
attention to this stock, he writes, “The company plans to initiate
its development drilling plan for the Bua Ban and Songkhla fields
in 2008. Coastal expects to commence drilling two to three production
test wells at Bua Ban in March 2008. After the completion
and testing at Bua Ban the company will move the drilling
rig to the Songkhla field where it plans to drill a minimum of five
production wells.”
Now that should attract attention. If there is something good
in all of this, it’s that previously this stock was very illiquid as
one insider owned a few chunks of this company. Hence, it’s
rather illiquid trading history.
Now, we are going to see some liquidity down the road. Suddenly,
one needs a map of Thailand!
ANTRIM ENERGY (T-AEN) $4.37 -0.13
In the exploration business, whether its mining or oil
and gas, no never knows what you’re going to find or in
the most likely case, not find with the next drill hole. But
then, keep looking because without looking, for sure you
don’t find.
So what the heck has Antrim Energy stumbled across in
Argentina? Today we hear that Antrim, drilling with its
partners on the Los Patos property in Tierra del Fuego in
the very southern part of Argentina, and fully expecting/
hoping to find what they had found on their last two wells,
nice little wells, doing about 40 to 60 barrels a day. Meat
and potatoes type stuff.
Instead, the Los Patos 1011 was recently tested and
announced today that it came it at 1000 bbl/d. It is currently
on production at 755 bbl/d (Antrim holds a 25% nonoperative
interest). How excited should one get? Well,
obviously the market is more into fear than greed these
days, but the question remains, how big this field could be
and whether this is typical of an oil well they might find in
the future, or just one of those lucky shots. Stay tuned.
Fred Kozak maintains a $7.50 target for Antrim which is
lower than others. |
