₪ David Pescod's Late Edition March 24, 2008
OILEXCO INC. (T-OIL) $12.60 -0.30
Last week on March 19th, Oilexco released its 2007 year-end
results including financial and operational results and new reserve
estimates. Fred Kozak of Canaccord, a longtime follower
of the stock suggested that so far, the impact is neutral but
writes, “This NAV is still a conservative estimate of the company’s
true value as the 2007 year-end reserves do not include
all the recent exploration discoveries such as Huntington Fulmar,
Bugle and Kildare.”
He figures the stock is still a buy and his target is unchanged
at $24.00 and he writes that the next catalyst for Oilexco, “is
currently drilling an exploration well on the Moth prospect. This
well is targeting an Upper Jurassic-aged Fulmar sand, which
may contain either oil or gas. The well is expected to reach
total depth by the end of April.”
If you would like a copy of that report, just e-mail Debbie at
debbie_lewis@canaccord.com.
Meanwhile, another group that has followed this story for a
long time is the Schachter team where Jason White actually
does all the hard work and the number-crunching, while Josef
is off doing TV shows, on glamorous trips and the like.
When we talk with White, he suggested that their numbers
were a little bit shyer than they had expected for production and
costs were a bit higher than expected, but he also makes the
comment that there’s very few companies of this size that will
experience the increase in production rates that Oilexco should
experience in the coming 10 months. They maintain a $24.00
target, but White also cautions us that we are going from the
high demand winter energy time of year to the shoulder season,
when energy demands slacken before we get into the traditional
driving season. Again, they maintain a $24.00 target.
This of course is never a universal opinion as we notice that
Jamie Somerville of Genuity Capital points to the slightly lower
than expected production rate and higher G&A costs and interest
payments and are actually adjusting their near-term assumptions
for cash costs upwards. They actually lower their
price target from $19.50 to $18.00.
He does add however, “We are now giving Oilexco a premium
to fully-risked NAV in recognition of both near-term exploration
potential (i.e., Moth and Sparrow) which is not included
in our fully-risked NAV, and continued high oil prices,
which we have not yet incorporated in our modeling and which
continue to make the company’s projects generally attractive
investments.”
Meanwhile RBC Securities considers Oilexco merely a sector-
perform. One of the four analysts might be right!
TIREX RESOURCES (V-TXX) $2.65 -0.05
BANKERS PETROLEUM (T-BNK) $1.37 +0.07
We’ve been jokingly calling it “the Albanian Index” but
there is not much joking about it. In a market that has
been absolutely brutal, two of the star stories have actually
been Bankers Petroleum led by Abby Badwi and his
experienced team from the old Rally Energy which made
people rich, plus Tirex Resources.
Tirex is run by ex-Canaccord broker Bryan Slusarchuk
and he managed to grab a huge chunk of land in Albania
(the former communist country run in Stalinist-type conditions)
that was never explored by modern geological
methods, but still with a strong mining history.
Now that a lot more bookwork and geology has been
done on assets in Albania, Tirex now posts this map
showing first of all, the scale of their land holdings and
secondly, just how many smaller mines and possible
producers exist in this huge realm.
Slusarchuk suggests there are three types of targets
on this project: 1) being extensions of former producing
mines 2) zones of mineralization partially defined but left
un-mined, often because of reportedly high zinc content
in the core (that in those days, they simply didn’t bother
mining) and 3) airborne geophysical anomalies that have
never, ever had any drilling.
A frequent question Slusarchuk receives is, “how
come so many high priority geophysical targets were
never drilled by previous State-run exploration programs?”
He answers “that the past exploration expeditions
by the State Mining Company never had access to
this type of information. It was Tirex that flew the first
ever airborne geophysical survey in the history of Albania.”
Needless to say, Slusarchuk is in a position where
one always wants to remain optimistic, but he does write,
“To have a potentially world-class VMS District with no
previous airborne geophysical survey data may surprise
many geologists and investors out there, but therein exists
the Tirex opportunity.”
Definitely a story to be watching!
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