₪ Pescod's Late Edition 4/7/08-4/11/08
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.
David Pescod's Late Edition April 7, 2008
BRIDGE RESOURCES (V-BUK) $1.18 -0.02
MARCH RESOURCES (V-MCF) $0.82 -0.03
CRUDE OIL $109.09 +2.86
NATURAL GAS $9.73 +0.417
One of the busiest guys in the oil and gas patch these days has got to be Dave Antony, who is both the President and CEO with March Resources and Chairman of Bridge Resources and both Companies will know what they have in significant plays...or not have in the coming weeks...certainly by the end of April. It’s hard for Antony to keep up, so it’s a good thing he’s got Scott Koyich as a side-kick and “PR guy to the stars.”
Koyich updates us today suggesting that Bridge Resources, which is currently working on what is hoped to be a development project on their Durango field in the North Sea, should have their final data by month end. The hopes are that this horizontal well being drilled should produce about $60 million a year in free cash flow for drilling a huge portfolio of projects in the North Sea, but one much later this year—the North Piper prospect, which could be as big as 400 million to 500 million barrels ... if it’s there.
Koyich tells us that they will know if the Durango works out as expected by the end of April and that production is expected with only 14 km of pipe needed by the last quarter of this year.
Meanwhile, March Resources should be perforating their Pica-1 play over the next eight to ten days and also within the next eight days, the rig will be moving to Pica-2 to drill 2000—2500 metres deep. Koyich mentions that it’s 500 metres up structure and there are some interesting geological implications.
Meanwhile, Koyich reminds us that the Chileans don’t like being held hostage by the Bolivians and Argentineans for their natural gas, so anything that can be done (if a discovery is made) will be done to get that gas on production quickly and efficiently, at least as far as the government officials are concerned.
HERITAGE OIL (T-HOC) $5.71 -0.12
It was one of those days when you are looking at your screen and all of a sudden, you see something that’s down $45.00 or thereabouts and it kind of creates a reaction...something like, oh my God, what went wrong here?
But actually it was more bookkeeping than something gone horribly wrong in Uganda. The company has decided they are simply not getting enough attention being listed on Toronto and has decided to split their stock 10 for one and get a listing in London, which is pretty well more so the headquarters for international oil and gas plays than Toronto is. They might get a little more respect there.
Malcolm Shaw in his report earlier this year looking at nine of the high profile/high risk/high reward plays, had Heritage Oil in his report back then and suggested that the Kingfisher play, which was a 70 km square structure along the eastern shore of Lake Albert, Uganda and tested 13,900 bopd from three zones, could have as much as 450 million barrels.
They also have a huge portfolio of high risk/high reward plays in Russia, Oman, Iraq and Mali, but Shaw suggested that the bulk of investor attention has been on Uganda and he makes this very interesting note that it has great geology, but tough politics and suggested that up to 2 billion barrels in Uganda net is possible down the road. He has a potential target of blue-sky potential of $150.00 a share, which of course was before the 10 for 1 split. That talked about great geology and tough politics though centers between the border dispute of Uganda and DRC as Heritage has interest on both sides of the border and that’s not a good place to be in the middle of a civil war.
For those looking for further updates on Heritage Oil, Fred Kozak of Canaccord has just put out a report and has a more conservative target of around $8.50. He writes, “the company had completed the Plan of Arrangement whereby the “new Heritage” has been formed. As a result, shareholders of “old Heritage” receive 10 ordinary shares (HOIL on LSE) of 10 exchangeable shares of Heritage (HOC on TSX and LSE). The exchangeable shares are due to start trading on both exchanges on April 3, 2008.
Kozak also makes the suggestion that by having the primary listing in London, Heritage will be eligible for the Index, which could create additional buying interest, around the end of Q2 2008. Kozak points out that the next catalyst should occur when Heritage Oil’s common shares are trading on the London Exchange. For a copy of Kozak’s report, e-mail Debbie at debbie_lewis@canaccord.com.
David Pescod's Late Edition April 8, 2008
There has been a long list of misses lately in the high risk/high reward oil exploration game and a reminder of the old rule of thumb that only about one in ten of them come in. Mind you, if you have the one in ten that comes in...it’s not too far off from winning a lottery ticket.
We thought we would run a copy from Josef Schachter’s latest work with Maison Placements to let you see his list of the high impact drilling watch list. Of note, and a reminder of the risk is that the Dahadinni well drilled by International Frontier Resources was a dry hole (This is from Schachter’s March 24th issue). Once again, a reminder of the risks involved in this game.
Having said that, don’t you notice how many times the name Sterling Resources crops up on this list? Notice that Schachter seems to specialize in the North Sea and Latin America, so his list is quite different from Malcolm Shaw of Wellington West.
For a copy of Schachter’s latest issue, e-mail Debbie at debbie_lewis@canaccord.com.
*If you want to see the tables included in this issue, email Debbie and ask for a copy of Late Edition dated 4/8/08.
David Pescod's Late Edition April 9, 2008
AURORA ENERGY (T-AXU) $3.88 +0.38
URANIUM ONE (T-UUU) $4.26 +0.26
CAMECO CORP. (T-CCO) $36.43 +1.45
How bad is it in the uranium sector these days? Well just take a quick look at the two year chart of Aurora Energy, which is one of the more successful uranium exploration companies, and that tells you all you need to know. The entire uranium sector was on a heck of a run just a year ago, as uranium prices over the last few years has risen from $10.00 to as high as $137.00. In the last year however, uranium prices have corrected from that high level to currently
about $70.00 per spot prices.
More importantly is that many projects around the world have had significant delays in their time tables and some moratoriums on their projects. Aurora Energy was one of those, as the Nunatsiavut government in Newfoundland and Labrador, passed a bill approving a three year moratorium. Some analysts believe the move doesn’t spell the end of uranium exploration and mining, but the market obviously didn’t like it, and Aurora had some projects that were in
fairly advanced stages. The whole uranium industry is interesting time however, as Australia long in the antinuclear, anti-uranium column over the past few years has dramatically changed that stance, and looks like they will be one of the world’s major suppliers. On the other hand, countries that you would of thought that would be quite positive for additional development, such as Canada and the United States have produced delay after delay. But, what next for uranium is a pretty good question.
Uranium prices have been heading no where but down, from the peak in uranium prices a year ago when utilities around the world were concerned about uranium availability and might be accused of panic buying, which forced prices to an extreme. But, if so many projects that were assumed to be coming on schedule over the coming years suddenly aren’t…..
The big news today for some uranium stocks was a significant tidbit out of the United States. Georgia Power said yesterday that they have reached engineering and construction deal with Westinghouse Electric for two eleven hundred mega watt nuclear reactors at the utility’s Vogtle plant south of Augusta.
If approved, the plant should come on line about 2016, and of course it has to pass regulatory approvals. But, the important tidbit is this could spell the comeback of nuclear power in the United States, particularly when one looks at coal prices going through the roof, and the concern about dependence on foreign oil. Estimates for the cost of the plant is somewhere between 4 and 8 billion dollars, and nuclear plants usually have high up front costs, but low running costs. This is the first plant, if it goes ahead, to be given the ok in the United States since the 1970’s, and maybe, maybe the first of many that could
change the perception for the uranium sector which is gone from in the tank to about as bullish as you can to right back in the tank. What next?
Meanwhile, back to Aurora, and with the government decision on the moratorium the broker’s aren’t happy. Blackmont has moved their targets on Aurora from $15.85 to $10.00. Dundee from $21.00 to $14.00, National Bank from $11.50 to $5.50, RBC $12.50 to $8.00 and Canaccord has moved it from speculative buy to a sell.
ITHACA ENERGY (V-IAE) $2.82 n/c
Ever since the Alberta government raised its royalties, many oil and gas analysts had to spend a lot more time on the road, as they try to find the biggest reward in the oil patch in a suddenly bigger world. The trips are no longer up to Fort McMurray, or High Level, but they are to places like Colombia, Thailand, in search for the big play.
So, we caught up to Fred Kozak, yesterday in the Toronto airport, off on a yet another trip around the world to catch up on his stable of stories. Why we wanted to know was Ithaca Energy suddenly having a nice pop yesterday, when there wasn’t any news scheduled out on any of its various plays? Fred credits yesterday’s pop in Ithaca Energy for the simple reason that brokerage biggie RBC Capital Markets has started coverage, and they had represented much of yesterday’s buying. It was a small piece analyst David Mestres Ridge wrote, and he is based out of England, but apparently it was enough to appeal to some good folks.
He wrote, “North Sea Minnow ready to Grow and the only tidbit he wrote was undervalued company with assets in the UK North Sea and in exclusive negotiations to develop its portfolio further. Large exploration portfolio in both the CNS and the SNS, a number of which five should be drilled in the course of 2008.”
That has put five plays in one year is quite an interesting number, don’t you think? Several of which did would have big potential. Ridge gave this stock a top pick status with above average risk, and a target of $4.00 a number we have already seen it’s recent past, and we suspect that would be one of the stories worth following in the coming year.
David Pescod's Late Edition April 10, 2008
PAN ORIENT (V-POE) $11.05 +0.25
COASTAL ENERGY (V-CEN) $4.03 -0.02
It was Octagon analyst Warren Verbonac that suggested we had to follow the Pan Orient story in Thailand through much of last year and was he ever right! It was one of the success stories of last year until it, like everything else, got caught up in the recent market malaise. Needless to say, one is always looking for another story just like that, that could be just as good.
Which gets us to Coastal Energy, which more than a few analysts are following and hoping for the same kind of results. In the last few days, Coastal has announced a very ambitious drilling program that tells us they are going to have lots to talk about for the rest of the year.
According to the news release, they have announced a drilling program for the G5/43 block in the Gulf of Thailand where they hope to drill 16 to 20 wells in the block with drilling scheduled to commence in late Q2 of 2008.
The news release tells us that drilling will commence with three or four appraisal wells on the Bua Ban field using a Swiber Jack-Up-1 rig. And yes, it’s nice to know that you are dealing with a company that has actually lined up the equipment. One should take a few minutes to read the details about their ongoing program, but the Company’s Executive Chairman Frank Inouye comments, “I am extremely excited about the upcoming programme that will see the Company drilling continuously offshore for a minimum of 12 months.”
This is quite different from the North Sea where a company seems to have one well every six or 12 months. And then you wait for forever (it feels like) and when things get quiet, stocks stagnate. Getting things done seems to take forever.
For those looking for a story that’s going to have constant news flow over the next year, this may be your story. Whether it will turn out to be another Pan Orient or not, well that’s another story.
MARCH RESOURCES (V-MCF) $0.75 -0.05
There were two headline news features on Bloomberg’s financial services yesterday, that caught our eye, because they are in many ways inter related. The first was that China copper ore imports to rise 20 per cent Trafigura says, and it’s the company that supplies much of the copper for China and is expecting a huge increase in the country’s needs for everything from power, homes, factories and cars. That’s a huge increase and of course we noticed yesterday that copper prices hit new highs, that may also be factored in because of the second headline was “Chile power crunch may cut copper output and spur record copper prices.”
The article talked about the energy shortage in Chile and that what cuts in electricity supplies did for platinum prices in South Africa could spark a record setting rally in copper prices as well. The article pointed to reduced natural gas imports from Argentina and a drought that has cut hydro power, which may force Chile the world’s biggest copper producer, to ration electricity to mines owned by Codelco, Anglo American, and Angofagasta.
More that ever, this makes March Resources definitively one of the exploration plays of the day. They finished their drilling on Pica One and have been testing now for over 10 days and sometime in the next few days they will announce to the world that Pica has something ……… or not.
Scott Koyich, has pointed out to us the Chilean’s don’t seem to be getting along too well with the Bolivians and Argentians that traditionally supply natural gas and claim they don’t have enough themselves and Chile doesn’t like being held hostage to their neighboring countries…….as would any country. So if Pica does hit and Pica Two is expected to be spudded in the next week, this is definitively one of the exploration plays of the day which is the good news.
What has to be remembered is that they are up to 300 kilometers away from infrastructure so it would take time to actually to see cash flow from the project even with the country going way out of their way to make sure that the project is fast tracked as much as possible. The other thing is that March Resources has a 100 million shares outstanding and no other projects of note in their pipeline should this project fail. It’s the definition of high risk, high reward.
David Pescod's Late Edition April 11, 2008
GENERAL ELECTRIC (US:GE) $31.90 -4.85
DOW JONES 12325.42 -256.56
COASTAL ENERGY (T-CEN) $4.08 +0.05
These are interesting times in the markets and you’ll be able to tell your grandchildren about some of the horror stories you’ve experienced in the last few months. Who would have thought blue chip, major Canadian banks could lose 50%. Or how could decent oil and gas companies such as Oilexco, Antrim Energy and others, lose as much as 50%, when oil is around $100.00 a barrel?
Not a lot of it makes sense, but on a day like this, when General Electric, one of the world’s biggest companies that includes divisions from high-tech to finance, announces earnings as bad as they did, it’s telling you that there is a slow down going on.
Usually these eras offer opportunities, but you still need a plan. Our own plan is to follow Jeffrey Rubin, the deep-thinker at CIBC who over the years has had some pretty bold calls from time to time and has an uncanny knack of being right. For one of his most recent presentations this is the chart he drew of where he thinks the TSX is going to be over the next while and it shows you that we’ve still got a couple of months ahead of heavy lifting. But after that, he sees nothing but goodness and bliss and is particularly strong on oil and gas stocks with an emphasis on gas.
So our game plan? Well, there are a lot of gassy stocks that could see 50% gain between now and Christmas if Rubin is correct about the second half of the year.
If we could only buy one stock looking ahead for the next 12 months, we would have a long list of potential candidates, but the one story at this particular moment with their program so geared up for the next while, Coastal Energy would have to be one to be considered. Yes, we’ve been buying!
ANTRIM ENERGY (T-AEN) $4.43 -0.05
We owe Warren Verbonac, the oil guy with Calgary’s Octagon Securities a big Thank You for suggesting strongly that we be in Pan Orient energy, the Thai based oil and gas company, that had such a huge run last year and was one of the markets best performers.
For all those with Octagon and elsewhere that received his research we owe him a big thank you (and what have you done for us lately—hope he’s right about Petrolifera later his year!)
You might want to take in a listen to his appearance on Business News Network on Tuesday at roughly 4:25 pm when he takes a look at Antrim Energy and their current development of their Causeway and Fyne plays in the North Sea.
Verbonac, as you will note, is one of the most aggressive of the analysts following Antrim, which as the chart shows has had its bounces in the last while, as it too has seen its stock halved by the current market malaise. If you are a follower of Antrim this is a must listen too. One point he makes is worth thinking about, “next year Antrim should be cash flowing more than it is currently trading at.”
We are a little envious, but it looks like Calgary is very much into the hockey spirit these days, particularly with the upset the Flames had in the first game. Anyway, while the Flames will be once again strutting their stuff on Sunday night, Joe Martin and the Cambridge House mining conference comes to Calgary this coming weekend, so for those interested in firsthand asking questions of some of the mining stories of the day, visit them at the Exhibit Hall.
We will be chairing a panel Sunday afternoon with Victor Adair, David Coffin, David Skarica and Pamela Aden asking those questions of what next for commodity prices and maybe even if there is a stock or two out there that you should own. See you there!
Pescod's Late Edition 4/7/08-4/11/08
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.
David Pescod's Late Edition April 7, 2008
BRIDGE RESOURCES (V-BUK) $1.18 -0.02
MARCH RESOURCES (V-MCF) $0.82 -0.03
CRUDE OIL $109.09 +2.86
NATURAL GAS $9.73 +0.417
One of the busiest guys in the oil and gas patch these days has got to be Dave Antony, who is both the President and CEO with March Resources and Chairman of Bridge Resources and both Companies will know what they have in significant plays...or not have in the coming weeks...certainly by the end of April. It’s hard for Antony to keep up, so it’s a good thing he’s got Scott Koyich as a side-kick and “PR guy to the stars.”
Koyich updates us today suggesting that Bridge Resources, which is currently working on what is hoped to be a development project on their Durango field in the North Sea, should have their final data by month end. The hopes are that this horizontal well being drilled should produce about $60 million a year in free cash flow for drilling a huge portfolio of projects in the North Sea, but one much later this year—the North Piper prospect, which could be as big as 400 million to 500 million barrels ... if it’s there.
Koyich tells us that they will know if the Durango works out as expected by the end of April and that production is expected with only 14 km of pipe needed by the last quarter of this year.
Meanwhile, March Resources should be perforating their Pica-1 play over the next eight to ten days and also within the next eight days, the rig will be moving to Pica-2 to drill 2000—2500 metres deep. Koyich mentions that it’s 500 metres up structure and there are some interesting geological implications.
Meanwhile, Koyich reminds us that the Chileans don’t like being held hostage by the Bolivians and Argentineans for their natural gas, so anything that can be done (if a discovery is made) will be done to get that gas on production quickly and efficiently, at least as far as the government officials are concerned.
HERITAGE OIL (T-HOC) $5.71 -0.12
It was one of those days when you are looking at your screen and all of a sudden, you see something that’s down $45.00 or thereabouts and it kind of creates a reaction...something like, oh my God, what went wrong here?
But actually it was more bookkeeping than something gone horribly wrong in Uganda. The company has decided they are simply not getting enough attention being listed on Toronto and has decided to split their stock 10 for one and get a listing in London, which is pretty well more so the headquarters for international oil and gas plays than Toronto is. They might get a little more respect there.
Malcolm Shaw in his report earlier this year looking at nine of the high profile/high risk/high reward plays, had Heritage Oil in his report back then and suggested that the Kingfisher play, which was a 70 km square structure along the eastern shore of Lake Albert, Uganda and tested 13,900 bopd from three zones, could have as much as 450 million barrels.
They also have a huge portfolio of high risk/high reward plays in Russia, Oman, Iraq and Mali, but Shaw suggested that the bulk of investor attention has been on Uganda and he makes this very interesting note that it has great geology, but tough politics and suggested that up to 2 billion barrels in Uganda net is possible down the road. He has a potential target of blue-sky potential of $150.00 a share, which of course was before the 10 for 1 split. That talked about great geology and tough politics though centers between the border dispute of Uganda and DRC as Heritage has interest on both sides of the border and that’s not a good place to be in the middle of a civil war.
For those looking for further updates on Heritage Oil, Fred Kozak of Canaccord has just put out a report and has a more conservative target of around $8.50. He writes, “the company had completed the Plan of Arrangement whereby the “new Heritage” has been formed. As a result, shareholders of “old Heritage” receive 10 ordinary shares (HOIL on LSE) of 10 exchangeable shares of Heritage (HOC on TSX and LSE). The exchangeable shares are due to start trading on both exchanges on April 3, 2008.
Kozak also makes the suggestion that by having the primary listing in London, Heritage will be eligible for the Index, which could create additional buying interest, around the end of Q2 2008. Kozak points out that the next catalyst should occur when Heritage Oil’s common shares are trading on the London Exchange. For a copy of Kozak’s report, e-mail Debbie at debbie_lewis@canaccord.com.
David Pescod's Late Edition April 8, 2008
There has been a long list of misses lately in the high risk/high reward oil exploration game and a reminder of the old rule of thumb that only about one in ten of them come in. Mind you, if you have the one in ten that comes in...it’s not too far off from winning a lottery ticket.
We thought we would run a copy from Josef Schachter’s latest work with Maison Placements to let you see his list of the high impact drilling watch list. Of note, and a reminder of the risk is that the Dahadinni well drilled by International Frontier Resources was a dry hole (This is from Schachter’s March 24th issue). Once again, a reminder of the risks involved in this game.
Having said that, don’t you notice how many times the name Sterling Resources crops up on this list? Notice that Schachter seems to specialize in the North Sea and Latin America, so his list is quite different from Malcolm Shaw of Wellington West.
For a copy of Schachter’s latest issue, e-mail Debbie at debbie_lewis@canaccord.com.
*If you want to see the tables included in this issue, email Debbie and ask for a copy of Late Edition dated 4/8/08.
David Pescod's Late Edition April 9, 2008
AURORA ENERGY (T-AXU) $3.88 +0.38
URANIUM ONE (T-UUU) $4.26 +0.26
CAMECO CORP. (T-CCO) $36.43 +1.45
How bad is it in the uranium sector these days? Well just take a quick look at the two year chart of Aurora Energy, which is one of the more successful uranium exploration companies, and that tells you all you need to know. The entire uranium sector was on a heck of a run just a year ago, as uranium prices over the last few years has risen from $10.00 to as high as $137.00. In the last year however, uranium prices have corrected from that high level to currently
about $70.00 per spot prices.
More importantly is that many projects around the world have had significant delays in their time tables and some moratoriums on their projects. Aurora Energy was one of those, as the Nunatsiavut government in Newfoundland and Labrador, passed a bill approving a three year moratorium. Some analysts believe the move doesn’t spell the end of uranium exploration and mining, but the market obviously didn’t like it, and Aurora had some projects that were in
fairly advanced stages. The whole uranium industry is interesting time however, as Australia long in the antinuclear, anti-uranium column over the past few years has dramatically changed that stance, and looks like they will be one of the world’s major suppliers. On the other hand, countries that you would of thought that would be quite positive for additional development, such as Canada and the United States have produced delay after delay. But, what next for uranium is a pretty good question.
Uranium prices have been heading no where but down, from the peak in uranium prices a year ago when utilities around the world were concerned about uranium availability and might be accused of panic buying, which forced prices to an extreme. But, if so many projects that were assumed to be coming on schedule over the coming years suddenly aren’t…..
The big news today for some uranium stocks was a significant tidbit out of the United States. Georgia Power said yesterday that they have reached engineering and construction deal with Westinghouse Electric for two eleven hundred mega watt nuclear reactors at the utility’s Vogtle plant south of Augusta.
If approved, the plant should come on line about 2016, and of course it has to pass regulatory approvals. But, the important tidbit is this could spell the comeback of nuclear power in the United States, particularly when one looks at coal prices going through the roof, and the concern about dependence on foreign oil. Estimates for the cost of the plant is somewhere between 4 and 8 billion dollars, and nuclear plants usually have high up front costs, but low running costs. This is the first plant, if it goes ahead, to be given the ok in the United States since the 1970’s, and maybe, maybe the first of many that could
change the perception for the uranium sector which is gone from in the tank to about as bullish as you can to right back in the tank. What next?
Meanwhile, back to Aurora, and with the government decision on the moratorium the broker’s aren’t happy. Blackmont has moved their targets on Aurora from $15.85 to $10.00. Dundee from $21.00 to $14.00, National Bank from $11.50 to $5.50, RBC $12.50 to $8.00 and Canaccord has moved it from speculative buy to a sell.
ITHACA ENERGY (V-IAE) $2.82 n/c
Ever since the Alberta government raised its royalties, many oil and gas analysts had to spend a lot more time on the road, as they try to find the biggest reward in the oil patch in a suddenly bigger world. The trips are no longer up to Fort McMurray, or High Level, but they are to places like Colombia, Thailand, in search for the big play.
So, we caught up to Fred Kozak, yesterday in the Toronto airport, off on a yet another trip around the world to catch up on his stable of stories. Why we wanted to know was Ithaca Energy suddenly having a nice pop yesterday, when there wasn’t any news scheduled out on any of its various plays? Fred credits yesterday’s pop in Ithaca Energy for the simple reason that brokerage biggie RBC Capital Markets has started coverage, and they had represented much of yesterday’s buying. It was a small piece analyst David Mestres Ridge wrote, and he is based out of England, but apparently it was enough to appeal to some good folks.
He wrote, “North Sea Minnow ready to Grow and the only tidbit he wrote was undervalued company with assets in the UK North Sea and in exclusive negotiations to develop its portfolio further. Large exploration portfolio in both the CNS and the SNS, a number of which five should be drilled in the course of 2008.”
That has put five plays in one year is quite an interesting number, don’t you think? Several of which did would have big potential. Ridge gave this stock a top pick status with above average risk, and a target of $4.00 a number we have already seen it’s recent past, and we suspect that would be one of the stories worth following in the coming year.
David Pescod's Late Edition April 10, 2008
PAN ORIENT (V-POE) $11.05 +0.25
COASTAL ENERGY (V-CEN) $4.03 -0.02
It was Octagon analyst Warren Verbonac that suggested we had to follow the Pan Orient story in Thailand through much of last year and was he ever right! It was one of the success stories of last year until it, like everything else, got caught up in the recent market malaise. Needless to say, one is always looking for another story just like that, that could be just as good.
Which gets us to Coastal Energy, which more than a few analysts are following and hoping for the same kind of results. In the last few days, Coastal has announced a very ambitious drilling program that tells us they are going to have lots to talk about for the rest of the year.
According to the news release, they have announced a drilling program for the G5/43 block in the Gulf of Thailand where they hope to drill 16 to 20 wells in the block with drilling scheduled to commence in late Q2 of 2008.
The news release tells us that drilling will commence with three or four appraisal wells on the Bua Ban field using a Swiber Jack-Up-1 rig. And yes, it’s nice to know that you are dealing with a company that has actually lined up the equipment. One should take a few minutes to read the details about their ongoing program, but the Company’s Executive Chairman Frank Inouye comments, “I am extremely excited about the upcoming programme that will see the Company drilling continuously offshore for a minimum of 12 months.”
This is quite different from the North Sea where a company seems to have one well every six or 12 months. And then you wait for forever (it feels like) and when things get quiet, stocks stagnate. Getting things done seems to take forever.
For those looking for a story that’s going to have constant news flow over the next year, this may be your story. Whether it will turn out to be another Pan Orient or not, well that’s another story.
MARCH RESOURCES (V-MCF) $0.75 -0.05
There were two headline news features on Bloomberg’s financial services yesterday, that caught our eye, because they are in many ways inter related. The first was that China copper ore imports to rise 20 per cent Trafigura says, and it’s the company that supplies much of the copper for China and is expecting a huge increase in the country’s needs for everything from power, homes, factories and cars. That’s a huge increase and of course we noticed yesterday that copper prices hit new highs, that may also be factored in because of the second headline was “Chile power crunch may cut copper output and spur record copper prices.”
The article talked about the energy shortage in Chile and that what cuts in electricity supplies did for platinum prices in South Africa could spark a record setting rally in copper prices as well. The article pointed to reduced natural gas imports from Argentina and a drought that has cut hydro power, which may force Chile the world’s biggest copper producer, to ration electricity to mines owned by Codelco, Anglo American, and Angofagasta.
More that ever, this makes March Resources definitively one of the exploration plays of the day. They finished their drilling on Pica One and have been testing now for over 10 days and sometime in the next few days they will announce to the world that Pica has something ……… or not.
Scott Koyich, has pointed out to us the Chilean’s don’t seem to be getting along too well with the Bolivians and Argentians that traditionally supply natural gas and claim they don’t have enough themselves and Chile doesn’t like being held hostage to their neighboring countries…….as would any country. So if Pica does hit and Pica Two is expected to be spudded in the next week, this is definitively one of the exploration plays of the day which is the good news.
What has to be remembered is that they are up to 300 kilometers away from infrastructure so it would take time to actually to see cash flow from the project even with the country going way out of their way to make sure that the project is fast tracked as much as possible. The other thing is that March Resources has a 100 million shares outstanding and no other projects of note in their pipeline should this project fail. It’s the definition of high risk, high reward.
David Pescod's Late Edition April 11, 2008
GENERAL ELECTRIC (US:GE) $31.90 -4.85
DOW JONES 12325.42 -256.56
COASTAL ENERGY (T-CEN) $4.08 +0.05
These are interesting times in the markets and you’ll be able to tell your grandchildren about some of the horror stories you’ve experienced in the last few months. Who would have thought blue chip, major Canadian banks could lose 50%. Or how could decent oil and gas companies such as Oilexco, Antrim Energy and others, lose as much as 50%, when oil is around $100.00 a barrel?
Not a lot of it makes sense, but on a day like this, when General Electric, one of the world’s biggest companies that includes divisions from high-tech to finance, announces earnings as bad as they did, it’s telling you that there is a slow down going on.
Usually these eras offer opportunities, but you still need a plan. Our own plan is to follow Jeffrey Rubin, the deep-thinker at CIBC who over the years has had some pretty bold calls from time to time and has an uncanny knack of being right. For one of his most recent presentations this is the chart he drew of where he thinks the TSX is going to be over the next while and it shows you that we’ve still got a couple of months ahead of heavy lifting. But after that, he sees nothing but goodness and bliss and is particularly strong on oil and gas stocks with an emphasis on gas.
So our game plan? Well, there are a lot of gassy stocks that could see 50% gain between now and Christmas if Rubin is correct about the second half of the year.
If we could only buy one stock looking ahead for the next 12 months, we would have a long list of potential candidates, but the one story at this particular moment with their program so geared up for the next while, Coastal Energy would have to be one to be considered. Yes, we’ve been buying!
ANTRIM ENERGY (T-AEN) $4.43 -0.05
We owe Warren Verbonac, the oil guy with Calgary’s Octagon Securities a big Thank You for suggesting strongly that we be in Pan Orient energy, the Thai based oil and gas company, that had such a huge run last year and was one of the markets best performers.
For all those with Octagon and elsewhere that received his research we owe him a big thank you (and what have you done for us lately—hope he’s right about Petrolifera later his year!)
You might want to take in a listen to his appearance on Business News Network on Tuesday at roughly 4:25 pm when he takes a look at Antrim Energy and their current development of their Causeway and Fyne plays in the North Sea.
Verbonac, as you will note, is one of the most aggressive of the analysts following Antrim, which as the chart shows has had its bounces in the last while, as it too has seen its stock halved by the current market malaise. If you are a follower of Antrim this is a must listen too. One point he makes is worth thinking about, “next year Antrim should be cash flowing more than it is currently trading at.”
We are a little envious, but it looks like Calgary is very much into the hockey spirit these days, particularly with the upset the Flames had in the first game. Anyway, while the Flames will be once again strutting their stuff on Sunday night, Joe Martin and the Cambridge House mining conference comes to Calgary this coming weekend, so for those interested in firsthand asking questions of some of the mining stories of the day, visit them at the Exhibit Hall.
We will be chairing a panel Sunday afternoon with Victor Adair, David Coffin, David Skarica and Pamela Aden asking those questions of what next for commodity prices and maybe even if there is a stock or two out there that you should own. See you there!
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