₪ David Pescod's Late Edition January 11, 2008
MARCH RESOURCES (MCF) $0.58 +0.03
Yesterday, Bloomberg did an interesting article entitled “Chileans Balk at Geysers Generating Electricity, not Tourism” and they took a good look at Chile, which is booming because of an economy that has gone through the roof, courtesy of mining, smelting, wine making, you-name-it, it’s one of the economies along with Brazil in South America that is just moving along almost perfectly. Almost that is because they have a huge problem ... energy.
The article in Bloomberg takes a look at Chile’s El Tatio geysers and Italy’s Enel SA, sees as an untapped energy source and wants to tap it and convert water heated by magma into electricity. The problem is the surrounding towns don’t want the government to go ahead, saying it threatens revenue from the 100,000 tourists or so who visit the geysers annually.
A commentator in the article says, “Chile is going through a period of energy scarcity, so they are considering every option.” It points to Chile’s desperation for energy. In the article they write, “Chile imports almost three quarters of its energy. President Michelle Bachelet vowed to develop new power sources and boost alternative energy to 15% to supply part of their needs.”
The big problems for Chile’s desperate situation for energy is that neighboring Argentina began slashing natural gas supplies in 2004, driving up electricity costs 40% in the past year affecting the economic growth.
It’s a very interesting time for March Resources led by one very prominent Calgary family that has played big roles in past significant exploration plays to be in Chile with a very high profile project. One of those high risk/high reward plays that if it works, it could be very, very significant. If it
misses, the little company doesn’t have much to back it up.
March Resources announced in a new release on Wednesday that the rig has finally moved onto the Pica #1 location and expects to spud on or about January 21st. Getting a rig has been quite a problem and they had hoped at one time to be drilling this play as early as last October.
Needless to say, they are a little bit behind schedule. According to March’s news release the Pica North and Pica South blocks consist of about 9500 square miles. Their exploration and development rights are valid for a period of 35 years. They point to an independent assessment of the potential resource, estimating the prospective resource ranging rather widely from as little as 86 bcf to as much as 1.5 TCF with a best estimate of 655 bcf.
All of this of course, is just a guessing game until the rig goes down and finds out what’s there. Their report estimates to primary structure to be approximately 16 miles long, 4 mile wide with a vertical closure of 2500 feet. March suggests that there are three objective sandstone horizons at depths of 4300 feet, 7000 feet and 8470 feet. Porosities are in the range of 12-19% and permeabilities up to 5 MD have been measured in the surface outcrops.
What they are hoping is they have a bail-out zone or a fourth target zone which encompasses approximately 2000 feet of black shale that has been planned to be tested for prospective shale gas development.
Either way, for Chile, this could be quite a significant source for new energy should this well work and very much the same for March Resources. For a country desperate for energy, if this play hits way up in the high elevations of the desert area of the Andes, this could be important.
Go to their website presentation at www.marchresources.ca for an informal look at the company.
POINTS INTERNATIONAL (T-PTS) $3.30 +0.29
As we mentioned here a few days ago, Peter Hodson who runs one of the top performing mutual funds in the country which was up almost 35% last year, despite the second half of the year being a real bummer, gives us his top pick for the coming year as Points International. You can actually see an interview with company CEO Rob MacLean on BNN last week on Tuesday at 4:00PM
and he gives a good description of what the company does.
Our problem however is that despite all the press the company is getting and we have to admit the stock has done quite well, particularly considering the number of shares outstanding, but we have yet to find anyone who has yet used this service.
If there is anyone out there who has actually gone through the process of going through the program and whether it was a satisfactory experience, would you recommend to your friends, is it applicable to those who are computer challenged, or any other thoughts on this whole process, we would very much appreciate hearing from you. So far we have asked so may people and have yet to find a single person who has used the service. That either tells us that maybe not that many people are interested in using the service or on the other hand, there’s that many people more people who down the road might use it. Help!
While oil prices remain high and natural gas prices seem to be doing a little bit better, you look at the prices of some oil and gas stocks and you’d think we were in a depression, not a recession.
So it was great to have one of our own personal heroes, Jeffrey Rubin of CIBC on BNN yesterday and talk about being bullish on oil ... the message is not to worry. For him, what’s going to be so bullish for oil is delays in the building of big projects around the world. He writes, “The delays will subtract over 5 million barrels per day from global production growth over the 2008-2012 period. Coupled with accelerating depletion at existing fields, where output is dropping at an annual rate close to 4 million barrels per day, actual supply is likely to come in as much as 8 million barrels per day below International Energy Agency and US Department of Energy estimates, with production apparently peaking at just over 88 million barrels per day in 2011.”
A very interesting point in his research is that gasoline prices around the world are quite different. He points to astronomical prices in Germany and the United Kingdom where taxes are so exorbitant to relatively normal prices (or at least what we think are normal prices) in Canada and the U.S. But he points to prices that have virtually no taxes and in some places are almost subsidized in places like Venezuela, Iran, Saudi Arabia and Kuwait, where prices are so low and demand increases are going through the roof. Absolute must-reading for anyone worried about your oil and gas stocks.
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Canaccord has picked some of their top picks for 2008 and these are the ones that we find most interesting: Andina Minerals, Lake Shore Gold, Tournigan Gold, Yamana Gold, Oilexco and TSO3.
For anyone who would like some of the latest reports out of Canaccord on these companies, just email Debbie at debbie_lewis@canaccord.com.
To receive the Late Edition and be on our daily circulation simply e-mail Debbie at Debbie_lewis@canaccord.com and give your address, phone number and e-mail and we’ll have you on the list tonight. |
