₪ David Pescod's Late Edition November 7, 2006
PACIFIC ENERGY RES. (T-PFE) $1.45 -0.05
STERLING RESOURCES (V-SLG) $1.59 +0.12
It was a while ago that we had a bet with Josef Schachter on a
little stock picking contest between the two of us and we
smoked him...We left him so far in our dust...oh well, I guess
there’s a certain analyst we owe a big thank you to, but that’s
somewhere down the road.
Schachter phones up again, ready to give it another go as we
had suggested whenever he thought the time was right and he
had a pick—we would be certainly ready to give it another go.
He is betting on Sterling Resources and suggests that as
Oilexco comes out with more information on what that well at
Sheryl might actually have, he expects material changes in Sterling’s
prices. He also suggests that Sterling has several additional
targets in the North Sea to be drilled over the next while,
one of them the Breagh play, he suggests could add $4.00 to
$5.00 in asset value. One of the problems he reiterates, is the
availability of rigs.
Meanwhile, for those who would like a report on Sterling, the
good folks at Canaccord just gave the company a write-up. Just
contact Sandra at Sandra_wicks@canaccord.com.
Meanwhile, that means we have to come up with a pick and
we have to admit, we were a little intimidated with the bottle of
wine Schachter sent us to pay off the last bet. Heck, it wasn’t
just a bottle of wine, just the container it came in...kind of impressed
one, but as our man suggests, “don’t worry about the
bottle of wine you may have to get, why don’t you just win the
contest again.” It has to be an oil and gas stock, best performing
between November 1st and June 15th, 2007 to get the bottle
of wine from the other.
There’s nothing like a bet to make you concentrate, which
was what we were doing today, trying to figure out what next for
oil and gas. We just figure that with going into winter, oil should
stay in the $55 to $60 range, which is an excellent price for any
good operator. Spring is usually a weak time for oil and gas
prices, but then we go into summer.
Meanwhile, while we see front-page reports expecting the
American economy to weaken, we just look at China and are
reminded that the country 30 years ago, had something like 25
private cars and now has an additional 7 million cars a year hit
the road. Demand for oil in India and China is going to continue
to grow and we wouldn’t be surprised to see oil at higher prices
the summer of next year.
But what stock to pick? We were thinking on Connacher
Oil & Gas (CLL) because drilling this winter should tell us
whether they’ve got one Pod or maybe two or maybe three or
four Pods that could be producers down the road. Also as
they get closer to production, you would expect a different
type of investor to take a peek.
While what’s happened with Income Trusts has definitely
confused the market, anyone who wants in on the oil sands in
a way, and wants cash flow quickly, Connacher is a target.
Analyst Andy Gustajtis gives Connacher only a 50%
chance of being around by June 15th.
Or there’s Rally Energy (RAL) which continues to come up
with big discoveries in Egypt and has some high profile plays
in Pakistan. Or TG World Energy (TGE) with a very high profile
play in Niger or just stick with Corridor Resources.
Instead, we end up going with Pacific Energy, a junior with
probably too many shares outstanding, currently doing about
1500 barrels a day, onshore and offshore California, with a
rate that’s probably going to double and additional drilling
that could increase that even further. But we are in this because
of the high risk play in Wyoming, about 30 miles southeast
of the Jonah Field, which spuds on or around December
1st, with 60 to 70 days to drill and test.
Like we said, it’s a Jonah look-a-like and for those who
followed the Ultra Petroleum success story, you know what
that means. Seismic suggests that if it’s there, the target
could be 4 Trillion Cubic Feet and 40% of that, would be worth
an awful lot of money...if successful. High Risk!
CORRIDOR RES. (T-CDH) $6.60 -0.10
This is the stock that won us the “stock picking contest”
with Josef Schachter and we got to admit, though,
that it was a bit of a lucky pick!
While natural gas prices tanked from last Christmas
when it was almost $15.00 an mcf to recent levels that are
a third if that – most natural gas companies saw their
stock drop 40%, 50%, 60% and some companies saw
even more.
Corridor Resources has tripled in that time frame and
exciting things are about to happen, so we catch up with
Norm Miller, the President of Corridor Resources. “Right
now we are clearing the right of way for the pipeline”
Miller tells us, as they hope to get pipeline construction
underway. There is welding of some pipe being accomplished
as we speak and he hopes to see commissioning
on the pipeline sometime around late winter.
They are also preparing the pad for the drilling of their next
well and it’s going to be a big one, which should be spudded
about mid-November and will take about 70 days to drill and
test.
They do have a bail out zone in the Hiram Brook and then
they keep going down to what could make Corridor one of the
stories of the day. Underneath the Hiram Brook is the huge
target called the Dawson Settlement formation, which will finally
be tested to see if its there…or not!
Meanwhile, Miller also suggests that “yes” they have been
quite successful on their fracing program to date – increasing
three of their last four wells almost 50%. He also suggested
that they’ve used an awful lot more sand in their fracs and it has
suddenly paid off! They hope to see even more improvement
on their next round of fracing results, which should be sometime
next summer.
Obviously, one story that we have been watching and it’s
going to be even more important to watch over the next two to
three months. |
