₪ David Pescod's Late Edition February 7, 2008
COASTAL ENERGY (V-CEN) $ 4.33 - 0.07
PAN ORIENT ENERGY (V-POE) $12.10 +0.09
These are not happy times. Mother said there would be days like this in the market, but still we wonder with demand for commodities from China and Asia rather strong and we still have lofty prices, we should be having more fun in the natural resource sector than we are. At least that’s our whine of the day. Time to make sure one has an idea of what’s going to happen over the next while and stick to that vision because frankly, there are just so many visions out there.
How about Avner Mandelman, the Bay Street analyst who is well thought of and he is suggesting that the CDO mess created by Wall Street, could take a recession of two or three years to work its way through they system. Ouch!
At the same time however, Bloomberg is still reporting huge insider buying and who should know how companies are doing better than insiders? That would have to be considered bullish.
And then there’s even big debates on individual commodities such as gold. Dennis Gartman is one well thought of commentator and he is suggesting a 15% correction in gold (at least for the short term) and can you imagine what would happen to gold stocks in this market should that happen?
Meanwhile, National Bank has just issued their thoughts that gold is on its way to $1500 and Don Coxe suggests that gold is going ever higher. So figure out a scenario out there and there is somebody behind a view.
Meanwhile, Peter Hodson is the Sprott manager who had one of the best performing mutual funds last year in Canada, up almost 35% and he has picked up a wide following through BNN because some of his stock picks have worked out extremely well last year. But he too, has suffered a bit in January (like all of us).
He tells us that his own crystal ball is suggesting that the average recession is ten months; it started in October of 2007; this one will also be ten months long and with the market always looking forward four or five months, he wouldn’t be surprised if the ugliness is over by April/May. Needless to say, we hope he’s right!
Meanwhile, we find it intriguing that one of his top three picks in his latest BNN show was Coastal Energy, which is working in Thailand, the country that is home to one of last years best-performing stocks—Pan Orient Energy.
Coastal is also one of the favorite stories of Canaccord analyst Fred Kozak. While Hodson has a big target of $8.00—$10.00, Kozak has an official $6.00 target, but an update on the story today, he writes these notes on valuation, “We currently rate the shares of Coastal Energy a SPECULATIVE BUY and have a C$6.00 target price, which represents 97% of our estimate of Proven plus Probable (2P) Net Asset Value per fully diluted share. We note, however, that this valuation does not reflect any of the company’s potential value upside from its Possible reserves or the upcoming offshore exploration program in the Gulf of Thailand and onshore exploration drilling for natural gas.”
Kozak also suggests when looking at their 2008 activity summary, “Coastal has an aggressive program for this year. The company’s contracted offshore jackup rig is expected to arrive in late Q1/08. The first drilling will focus on two or three delineation/production wells at Bua Ban.
Once these wells have been drilled, completed and tested, the drilling rig will move to the Songkhla field where a minimum of five production wells are scheduled to be drilled for the Songkhla mid-year startup. The Songkhla oil field is expected to be onstream around mid 2008. The Bua Ban field development is scheduled to be completed for production around the end of 2008 or early 2009.”
For those who would like a look at his recent report on Coastal Energy, just e-mail Debbie at debbie_lewis@canaccord.com and in the meantime, while we currently do own some Coastal already, one wonders how cheap the stock could get for us to scoop up some additional holdings in this intriguing story.
CANDAX ENERGY (T-CAX) $0.63 +0.01
We’ve been following the career of John Clarke for the last while for one simple reason, back when he was an oil and gas analyst, for two years running he was regarded as the “top oil and gas analyst” in the country. There were lots of picks he gave us that were very rewarding.
Then all of a sudden he went to the other side and became part of a management team that started and have built one oil and gas company that shall we say, has more than its share of problems over the last few years.
Candax Energy is the company and it seems they have been spending an inordinate amount of time waiting for things to happen and they’ve also had technical problems. There was a time of almost six to nine months where they were simply waiting for a rig to appear offshore Tunisia...and then they had to go elsewhere.
Lately they’ve been faced with additional technical problems. Not waiting or delaying anymore at this time is Canaccord analyst Terry Peters who now downgrades Candax Energy from $1.20 to $1.00.
Today he writes, “Production from the El Bibane field has been delayed until late March 2008, when field development is expected to be completed. Secondly, Candax has utilized its Bank of Scotland credit facility and drawn a total of US$49 million in December 2007 and January 2008, which approximates its current cash position.”
Once again, delays...and we seem to be waiting too long for things to happen. I’m sure if Clarke were critiquing Candax’s activity over the last while, he too, would have been disappointed.
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. |
