₪ David Pescod's Late Edition February 8, 2008
CRUDE OIL $91.85 +3.74
OILEXCO INC. (T-OIL) $12.80 +0.60
COASTAL ENERGY (V-CEN) $4.50 +0.17
CORRIDOR RESOURCES (T-CDH) $5.93 -0.12
BNP RESOURCES (V-BNX.A) $2.15 +0.32
Here we are in Mexico, contemplating (amongst other things) the state of some of the markets and one has to admit it’s not pretty. But at the same time, you still see the airlines flying and they need Avgas, you still see lots of cars running in California and in Mexico as well and one assumes there will be another eight million cars sold in China next year and six million motorcycles in India. They are all going to need fuel.
We ask ourselves here if we could only buy four oil and gas stocks considering the mess of the market, what would they be? Also, what kind of parameters are we thinking of when we decide to make this leap into the wild blue yonder. Our own thoughts are that in a year from today or let’s make that Christmas this year, that oil will be $87 a barrel or better and we’ll also assume that natural gas has now put in a bottom and we’ll see $8.50 next year.
With those kind of assumptions plus the fact that we assume the second half of this year will be better, our four picks start with Oilexco. Why take a big risk—one look at the correction Oilexco has already had and with so many analysts from Fred Kozak of Canaccord to Josef Schachter of Schachter Asset Management to Alex Squires of Brant Securities — all suggest Oilexco is one of their top plays, so why not go with it. All it has to do is go back to its old high and you have a decent gain. If it can go to the $24.00 target some people have, you have almost a double and with Schachter and others suggesting it could be flowing 100,000 barrels a day by the end of 2009, that $24.00 target just might look quite small.
Another story that we have some of our favorite commentators looking at that hasn’t corrected that much is Coastal Energy for their work in Thailand. Thailand seems to be one area of the world where they like having oil and gas people and they treat them okay. It’s also the home of one of the best performing oil and gas stocks last year in Pan Orient (POE) so this year, we will go with Coastal with their package of exploration and development work and if Peter Hodson is anywhere correct with his $8.00 to $10.00 calculation, we could be quite well rewarded.
Corridor Resources is a long time favorite of Andy Gustajtis is a gas play in New Brunswick of all places.
The stock is currently yours for half price. Currently producing over 40 million cubic feet a day, that number should be closer to 70 million by year end, which means it’s cheap. But the excitement happens over the next few weeks as they find out will their target many times the McCully is there ... or isn’t there, and that’s the Dawson Settlement.
We assume this stock is worth a lot more than it’s trading at and if the shale zone works and if the Dawson Settlement is there (and we’ll know soon) this stock could do a lot of traveling, particularly in a better gas market.
For our forth pick, we have to pick something with some adventure and while we could pick something like an International Frontier (IFR) which will shortly be drilling three high-risk/high-profile plays, or a Petrolifera Petroleum (PDP) with huge plays in Peru but that’s later this year, or a Bridge Resources (BUK) but it’s already getting expensive, we will simply go with BNP Resources.
Why don’t you take some time to read the Calgary Herald article on BNP which was published on Friday, November 30th, 2007 or go to Stockhouse and look at the Bullboards and give that one article a read. We own some.
TIREX RESOURCES (V-TXX) $2.92 -0.03
BANKERS PETROLEUM (T-BNK) $0.90 n/c
Bryan Slusarchuk is the affable and young guy behind Tirex Resources, the relatively new mining story that has got something and possibly quite significant in Albania. Slusarchuk jokes about the “Albanian Index”, meaning a combination of Tirex plus Bankers Petroleum.
Abby Badwi and his former Rally Energy team have gathered around Bankers again and it looks like they’ve got something between one and two billion barrels of heavy oil that they will shortly be attacking to see what they may have.
Meanwhile, Slusarchuk and his team at Tirex have put together not one or two small mines, but an entire mining district in Albania that will currently be using modern mining technology to find out what they may actually have. It’s a district that had a handful of small producing mines in the old Communist era, but what they may have using modern methods is open to debate and drilling has finally just commenced.
Bryan yesterday, e-mails us this comment from Albania that we should be sharing: “Hello Everybody, I am sending this email straight from Albania. It is sunny and mild here right now, and the beautiful weather is complimenting the real buzz that is being created over here due to the recent start up of our intense and aggressive drill program. People here are genuinely excited about the start up of this Tirex drill program because they realize, if successful, the District-scale ramifications of our exploration can provide a huge boost to the Albanian economy and can revitalize the Albanian mining industry.
Overall, Albania is an emerging and exciting place to be with a whole lot of activity. The country has NATO membership targeted for 2008, EU membership targeted for 2013, has just reduced their corporate tax rate from 20% to 10% and you wouldn't believe the amount of construction activity that is taking place all around the capital; new roads, new shopping malls, new car dealerships ….. every time I come here, there are new commercial and residential buildings to look at!
It's exciting to be a part of this emerging situation. Not only do I love working in Albania, but I also encourage you to take a look at this as a great potential country to visit during your next holiday. Due to our status as first-movers here, we were able to acquire a DISTRICT of projects rather than an individual project and we sure feel fortunate now that the country is moving ahead so quickly!
Onsite at Mirdita, things continue to move along at a rapid pace. In addition to our state-of-the art base camp located in Fushe Arres, we have also constructed a real top quality field camp for the guys working on the property, just steps away from where the drill is now turning at Koshaj. I thought you would find it interesting to take a look at this base camp and I have attached a picture for your perusal.
After a couple more nights here in Albania, I'm off to London for two days to continue telling the Tirex story to institutional investors. An opportunity to apply large scale modern exploration in such a highly prospective geological area for the first time, a DISTRICT of projects rather than an individual project, potential exposure to a basket of metals (copper, zinc, gold) rather than an individual metal, a healthy treasury, a drill turning, and an incredible technical team leading the way ... this isn't a hard story for me to tell and although I don't want to leave Albania, I can't wait to get into London!
We'll keep you posted as news flows from Mirdita as a result of the initiation of this drill program and I thank you for following Tirex's progress as we advance in Albania.” More later, Bryan Slusarchuk, CEO.
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