₪ David Pescod's Late Edition February 28, 2008
BRIDGE RESOURCES (V-BUK) $1.48 +0.02
WESTERNZAGROS RES. (V-WZR) $2.69 -0.06
SACRE-COEUR MINERALS (V-SCM) $1.60 -0.05
Kerry Sully currently the President of CGX Energy and the
past boss of corporate biggie Ranchmen’s Resources, tells us
that the recent Wellington West oil and gas conference featuring
companies with big potential catalyst for 2008 was a great
gathering and a big hoot to be at. Many of the companies he
tells us, hadn’t met each other and everyone was scurrying
around looking at everybody else’s data, getting very excited
and buying each other’s stock.
We’ve referred a few times to Malcolm Shaw, the editor of the
Wellington West report, “Nine Stocks with Big Potential Catalysts
for 2008” and as he published back on January 21st, Shaw
had told us at the time that if he could only buy one stock, it
would be Bridge Resources. Seeing as Bridge is up almost 50% in
lickety-split time in an ugly market, it’s time to go back to him
for some wisdom. We need the wisdom because we are about
to make some bets with Peter Hodson of Sprott fame and a frequent
guest on BNN, was supposed to pick a favorite junior oil
stock, a junior gas stock, an alternative energy story, a base
metal stock, a junior gold and a special situation stock—so it
was time to go to Shaw and ask him, “If you had to pick one
junior oil between now and October 1st, which one would it
be?”
He suggested it was time to look at WesternZagros Resources as
they are expected to spud a well within the next few months
that’s got a billion barrel potential. If you look at Shaw’s report
there is some good background on WesternZagros as he talks
about two exploration wells to be drilled back to back starting
March of 2008. He writes, “Most prospects are large undrilled
structures defined by 2D seismic and surface mapping. The 1st
well is expected to target ~1 Bbbls OOIP.” He also points out
that “Management has extensive experience and expertise in
the region.” Oh yes, there is one little problem of course, this is
in Iraq and Kurdistan to be exact. And while he gives then a
50/50 chance of discovering gas or oil, he also points out gas
would have little economic value in that area.
If you’ve read papers lately, you might have also noticed this
is a pretty scary area of the world. Iraq having its own problems,
but Kurdistan and Turkey having others. There is also the
problem of getting the oil, if it is discovered out of the area as
pipelines in the area have frequent problems.
So we ask him again the question, “if he could only buy one
stock today, what would it be?” He says, for between now and
the end of the year he will stick with Bridge Resources and suggests
“it’s just too good a story to kick out of bed at this time.”
For those who have yet to read this delightful short look
at nine of the most interesting high risk/high reward plays
out there, e-mail Debbie at debbie_lewis@canaccord.com.
Interestingly, while we had Shaw, he said if we are looking
for another chance to make a chunk of change, he is
suggesting a gold stock. It makes you curious how an analyst
in the middle of so many exciting oil and gas plays, can
still find it exciting looking over the fence at the mining
analysts stories as somewhat greener pastures than the
huge potential he sees in the nine stories he’s following.
He is suggesting that despite the fact we are seeing gold
stocks of the junior and mid-tier like, not profiting at all despite
record gold prices, he figures sooner or later that
changes and there is a gold play, Sacre-Coeur Minerals in
Guyana (oh yes, the Guyana connection) and he thinks it’s
severely under-priced. He refers to Sacre-Coeur as almost
an orphan story with grade levels that look great, good potential
to see its size grow and just considers it extremely
cheap. He also figures that sooner or later, the junior golds
will attract attention.
RYLAND OIL CORP. (V-RYD) $1.64 +0.12
With 110 million shares outstanding, Gerald Shields, the
President of Ryland Oil is the first to admit that they have a
rather lofty valuation for an oil and gas company with its
assets in Saskatchewan that doesn’t produce a single barrel
of oil. But just take a look at the volume on this stock
every day and you know that there are more than a few people
out there that are following this story and are fully
aware of what they are getting into.
Shields admits that there is no website at this time, but
they are working on it and shortly there should finally be
news on the company with some company results.
What everyone is looking for is their 304,000 acres in
Saskatchewan. Acreages that may or may not be part of
the enormously successful Bakken trend that has seen four
or five huge takeovers in the last while as new technology
has tripled, quadrupled and even better production from
this trend. Shields tells us that the first five wells have
been completed and are currently going testing and news
should be out sometime shortly.
Meanwhile, Shields tells us that Richard Findley, the
Chairman of the Company is the fellow who put together
much of the Bakken plays in Montana and is hoping to put
more of these types of plays together. The Company has
an interesting structure with most of its people located in
Denver, Shields out of Vancouver and a director in Calgary.
CONNACHER OIL & GAS (T-CLL) $3.62 +0.28
SOLANA RESOURCES (V-SOR) $3.30 +0.15
I guess the good news you could say about Connacher
Oil and Gas over the last few months when we had this gutchurning
market correction is that it didn’t fall off 50% like
so many others on our favorite list such as Oilexco (OIL)
or Petrolifera (PDP). It only fell a hurtful 26% or 27%.
But now that the market is turning, it is a good time for
Connacher to announce some good news and today they
do just that, as they announce that their Great Divide Pod
is now surpassing 5000 barrels a day of production. In
their news release today, they mentioned that when combined
with recent average daily conventional production,
Connacher is now producing roughly 7500 barrels of bitumen,
crude oil and natural gas.
Also with gas prices going up, suddenly Connacher’s
purchase of Luke Oil and its gas assets is looking a little
better as well. Dick Gusella told us yesterday that they
are still working hard on permitting for their next Pod and
hope to have that some time soon in the coming months.
Interestingly, Gusella when asked, where he expected oil
and gas prices to be this coming Christmas, his crystal
ball predicts oil at $98.95 and he isn’t getting carried away
with natural gas prices as some people might be these
days, where he is predicting $8.00 an mcf.
As far as a stock to own, other than his own, he picks
Solana Resources. In the meantime, it’s nice to see that
people can still care in this market as analyst Mark Reynolds
with GMP Securities has actually upped his target
recently on Connacher to $6.25.
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