₪ David Pescod's Late Edition March 26, 2008
CANDAX ENERGY (T-CAX) $0.78 -0.03
We’ve been following Candax Energy since its inception
almost three years ago, mainly because of the presence
of John Clarke on the management team. He was
formerly Canada’s top-ranked oil and gas analyst for
two years running and came up with such huge winners
as Niko Resources when it was starting out. So when
he joined the management team at Candax, we had big
expectations when he gave up critiquing others to work
at becoming part of the management team to make a
company and leave a mark.
That mark left is probably that of frustration because
while one is used to things not getting done on schedule
in the oil and gas business, Candax took things to
an all-together new level. One year was spent waiting
for a rig. And then waiting for another rig. Another year
was waiting for production.
Finally this week, Candax and their El-Bibane field
offshore Tunisia announces production...sort of! The
EBB-4 well started production the week of March 16, but
they announced that the production rates have been
variable, “due to onshore plant commissioning and
weather related delays.”
EBB-4 has flowed at a peak production rate of 1400
bopd and expected to rise as the commissioning of the
facilities is completed.
Canaccord’s Terry Peters suggests “while the results
from the El Bibane field are preliminary, we believe the
announcement of the first production from the field is
positive.” He maintains a speculative buy rating with a
target $1.00.
Next purportedly for Candax is some high risk/high
reward plays in Southern Africa. A cynic after waiting
three years for current results might wonder what decade
it will be for those plays to happen. Hopefully
Clarke can go back to picking a few stocks and chose a
winner for us.
BANKERS PETROLEUM (T-BNK) $1.45 +0.08
We’ve been following Bankers Petroleum since Abby
Badwi took over the management of the company, along
with his team at Rally Energy, which was one of the
most successful oil and gas stories in Canadian history.
What he accomplished in such a short period of time
with heavy oil in Egypt, was truly phenomenal.
So now he has finally announced their plans and did
a tour of Europe on what lies ahead for Bankers with
their huge heavy oil assets in Albania and natural gas in
Oklahoma.
As Genuity Capital’s Jamie Somerville writes, “The
proposed Albanian capital program of $370 million is
more than we had expected (less than $200 million).
This indicates management’s firm belief that it can accelerate
production with the implementation of multiple
recovery techniques. As a result, the targeted exit production
rates are also substantially higher than we had
previously modeled (i.e., BNK is targeting 20.0 MBbl/d
by the end of 2010 compared to our previous estimate of
approximately 13.3 MBbl/d risked).”
“Our reaction to this aggressive development program
is positive because our original recommendation
of BNK was primarily based on expectations for accelerated
development as a result of the combination of the
Albanian assets with the new management team that
joined in February. The large capital program also
raises funding questions, but we believe that Bankers
has sufficient options that this is not overly concerning.”
Somerville ends with, “We maintain our buy recommendation
with a target price that is increased to $1.80
(from $1.50) due to an increase in fully-risked NAVPS to
$1.78 (from $1.49) as a result of our remodeling assets
based on recently released reserve increases and this
development plan. We expect to review our valuation
again once the full NI-51-101 reserve report is available.”
We note that Peter Hodson of Sprott fame is also a
big believer in the stock, but is looking at taking a
longer-term view and has a much higher price over time.
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. |
