John / Lateral Vector & Black Sea Energy
Permit me first to thank you for your comment. Also, if you haven't visited Kerm's Korner, do so. I think you will find it of value to you. If so, pass the word on the two sites to those who may be interested in the subjects.
Subject 10229
I know of these small junior oil's but must admit I'm not up to date regarding their activities.
One thing I can relate to immediately, these type companies are out of favor with the financial community and I believe they will be over the intermediate term. Both are international junior oil operators (Strike One). They are primarily involved with crude. (Strike Two) Black Sea was basically a Russian situation and that is definitely a no-no. In the same breath, China is in a region of unstable economics and that presents a problem also. On both counts, consider this as (Strike Three).
I thought Lateral Vector was a great speculation a couple years ago. The reputation behind the company was that the principals were good engineers. At the time they operated solely in Canada. The next thing I know is that they sold off their Canadian properties and are pursuing interests in China. I dropped coverage of the company at that time.
Black Sea was a company I began to follow soon after they went public. Gordon Capital monitored their activity. I know a couple of highly rated investors who invested into the company and in turn shared information with me regarding meetings and seminars the company participated in. In time, the company fell out of favor due to events occurring which effected their planning and activities. I will attempt to get an updated professional comment on the company for you.
In both cases, I will offer this. Unless they change the rules from three strikes and you're out, I think investment into a domestic operator (natural gas) would serve you better in the form of risk management. If you are currently holding shares, you will have to decide whether to sell or hold after learning a few details directly from the company.
These details would include extent of working capital available, current cash flow status and extent of current long term debt. This will give you an idea of how well they are working within their means and if further financing is required - which would present a serious problem. Ask what their price assumptions are for both oil and natural gas. Also ask what their internal estimate is for their Net Asset Value.
On the operations end, identify what average production is forecasted for this and next year, as well has the exit forecast for both this and next year.
Based upon what you learn, you will be in position to make an informed decision. I will comment on what you learn if you desire such. If a company can't present you with this information, consider it a red flag.
One additional point I want to offer is this. Over the next few months, I believe oil & gas companies will remain out of favor with investors. My viewpoint is to begin accumulating shares in these companies of your choice now, for the longer term is favorable for the industry. The objective of investing is to buy low and sell high and and the time to buy low is when a sector is out of favor.
For other people viewing this message, if you are familiar with the two subject companies, please offer your comments.
John, keep in mind that I am not on top of these companies and have just offered a general opinion and direction. Further, it's just one person's opinion, this time it was mine.
I'm sorry I couldn't offer you more. |
