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The following is from Wheeler's newsletter. Subscriptions can be ordered by calling 1-800/433-1528.
Westfort: fizzle or sizzle? Westfort Energy (WT on Toronto, TSE) went on a wild and mostly downward roller coaster last month, and a lot of you are asking why. The reasons lie in the quirky way trades can be made, and haven't got anything to do with what is actually going on at the drill site - that is, they are technical and not fundamental. Once a stock goes over C$3 on the TSE it becomes marginable - so lots of folks bought it on margin. Then a number of crazy rumors started floating, perhaps spread by short sellers, e.g., that Westfort had hit a dry hole, or was even getting out of oil and was trying to make diesel engines! When the price went below C$3 it triggered margin calls and thus a downward vicious cycle all the way to C$1.70. In the meantime, at the Pelahatchie site, drilling was proceeding on schedule and under budget, with sidewall core samples showing 14 oil or gas rich zones at various depths on the way to the giant Norphlet zone. These are better results than previous best-case scenarios. The entire deep hole is cased down to 15,900 feet, and they expect to hit the Norphlet at 17,200 feet by the end of next week. Drilling for a second shallower well has been completed and will be in production this week. The bottom line is the price is back up to C$2.29, and if the Norphlet is a gusher hit, there'll be a buying frenzy. If it isn't, then Westfort won't be a rocketship ride any more, but at least they've already drilled into enough reserves for the stock to have a good solid run. |
