₪ David Pescod's Late Edition February 25, 2008
BNP RESOURCES (V-BNX.A) $2.85 +0.10
We’ve written up and mentioned BNP Resources on two previous occasions and it looks like it may be one of the few stories in Alberta these days where we face the high Canadian dollar and ever-higher royalty rates, that bears watching closely.
This junior company led by three former CNQ veterans are involved with a junior that is not a big producer—just over 100 barrels a day of production plus another 300 barrels plus waiting to be connected. The excitement though, which was written up by the Calgary Herald way back on November 30th and is still must-reading, centers on a discovery called Jensen, right on the Alberta/Montana border that interestingly, has seen production on the Montana side of the border for almost 50 years.
The gossip is that they may have a discovery and those people betting on it are suggesting it could be as high as 40 million barrels with 10 million recoverable. For those following this story and notice we can’t use names at this time, are suggesting they have a third well going into the discovery as we speak and results are expected shortly. With the pop today, does someone know something? Or hope they know something?
It is estimated that it will take another six to eight wells into the Jensen play to prove to someone bigger that it might be of intriguing size, but this is one of those high risk/high reward plays that so far, looks intriguing. We hope to have an interview shortly with President Greg Bilcox, once news is out in the next 7-10 days on the latest drilling results.
INTL. FRONTIER RES. (V-IFR) $0.70 -0.08
GULF SHORES RES. (V-GUL) $0.15 -0.045
As we talk above about high risk/high reward plays, the chart to the right shows you what happens when they don’t work out...as if you didn’t already know.
Today, Gulf Shores and International Frontier and Petro-Canada announced that on their Maria play in the North Sea, it has been abandoned.
When we talked to IFR’s Pat Boswell to get an update, he points out the drilling had been a “real bitch” as it had taken them four to six attempts to get some logs done. “It was a very tough time drilling” he suggests. But he does point out that they did establish an oil-water contact and they do expect to have 45 feet of oil and 15 feet of gas pay. And they are within 1 km of another well.
Boswell suggests that they will have to evaluate and do a lot of G&G work and he suggests that he is not down in the dumps at all, but they will need to do a lot of technical work to decide what to do next.
Personally, he suggests he would love to drill another hole and points out that it is never a bad thing to find oil, but he
suggests the technical work will get done and then the various groups involved in the play, from biggies PetroCanada to
little guys IFR, GUL and Monarch, will then have to decide what they want to do next based on their own expectations.
And we should point out, also availability of money.
Personally, he suggests he would love to drill another hole and points out that it is never a bad thing to find oil, but he suggests the technical work will get done and then the various groups involved in the play, from biggies PetroCanada to little guys IFR, GUL and Monarch, will then have to decide what they want to do next based on their own expectations.
And we should point out, also availability of money.
BRIDGE RESOURCES (V-BUK) $1.48 +0.10
MARCH RESOURCES (V-MCF) $0.55 n/c
SOUTHERN PACIFIC (V-STP) $1.04 +0.06
Dave Antony is the Calgary-based accountant currently employed in different capacities by three different oil and gas companies that are also experiencing different amounts of joy at the current time. From Southern Pacific, the junior with the oil sands interest to Bridge Resources, which just spudded in the North Sea, Antony is just off this coming weekend to visit and see first-hand March Resources Pica Project down in Chile.
As we’ve written before, Chile is one of the South American countries along with Argentina and Brazil that are currently experiencing energy shortages, particularly in natural gas. Energy costs in Chile have gone up almost 60% in the past year and some big copper mines have faced shortages from time to time. So if March is successful, there is going to be a very ready market at decent prices. Antony flies to Chile this Saturday because March expects to be at depth in the next 10-11 days.
On the way down he mentions, they are going through about 600 metres or 2000 feet, of what they consider a bail-out shale zone that he compares to the Barnett shale. He suggests it could be lucrative even if it is a fallback position. Meanwhile, they are on the way to three zones over the next 10-14 days that will be prove that March either has the gas and expectations are there could be lots of it...or not. Stay tuned.
Meanwhile, for an update on Bridge Resources, they spudded on February 18th and are currently on Day 8 of drilling. Again, he mentions that they Durango project is considered development and they hope to have gas production by year-end. It’s a 45-day well they are currently drilling on and in the next few days, should be setting some casing.
For those looking for excitement though, Bridge Resources will probably give you that or disappoint you near the end of the year, when they drill one of the biggest remaining targets in the North Sea—the Piper, which is 400-550 million barrels. Traditionally, we would give the odds of chance of success of one in 10 (remember GUL and IFR certainly haven’t been able to beat those odds) but Antony does suggest it could be closer to 25% to 30%.
Meanwhile, the chart on Southern Pacific shows you what many of the junior oil sands projects have experienced in the last few months. They’ve gone from one of unrestrained joy to reality that a higher Canadian dollar and higher royalty rates are hurting the whole sector.
It might have gotten carried away a while ago, but right now, Antony suggests STP and a handful of other junior oil sands players are clearly undervalued. One thing he points out that is important for all of them to have right now is a fair amount of capital and even after they finish their project, they should have roughly $18 million in cash left in the kitty.
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