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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Cal Gary who wrote (18355)	11/28/2011 8:13:19 PM
From: architect*	3 Recommendations Read Replies (2) \| Respond to of 24921

First Energy has a $16 / share price target on CZE, I don't think that's changed! I continued, again today, to accumulate C&C Energia shares on weakness. The sell-off is probably related to CZE's lack, or lull in exploration drilling. I reviewed CZE's September oil field production reported by Minimas, and saw production increasing at some fields, and stable at the others, so I rule out production declines. By comparison, Parex Resources and Gran Tiera have more aggressive exploration programs in Q4 2011 - Q1 2012. IMO C&C Energia is at that sweet spot self funding future operations and capital investment with existing working capital and cash balance increasing from $225 MM a year in OpEx cash flow. Its much easier to double the value of CZE with an EV of $380 MM, than to double PMG with EV of $2 billion. CZE's $225 MM in annual cash flow compares to PMG's $630 MM using 12.6 mmbo for PMG. Of the Colombian oil producers I follow CZE is the cash cow going forward, ie the lowest EV/ cash flow multiple. While, I know CZE hasn't revealed their 2012 capital investment program, I'm confident that as CZE's working capital increases they'll find lucrative ways to invest to increase shareholder value. CZE $75 MM in cash is 20% of their EV, so percentage wise CZE has a lot of cash for future investment. GTE has been selling off because Connancher announced today they've completed selling their 3.3 MM GTE shares and PMG's working capital was depleted in Q3 as PMG continued to buy back shares $85 MM worth and the $281 MM pipeline investment in Q3. Canacol at Capella and Pacific Resources at Rubiales have had security problems and labor union protests which are damping Colombian investment. Colombia's oil ministry has estimated Colombia's oil production will increase from 930k bopd today to 1500 MM bopd in 2015. Increasing oil production is the bottom line, the rest is just noise. Baytex's EV / cash flow multiple is what 9.5 compared to C&C Engergia with a cash flow multiple of 2. For C&C Energia production 10.5 bopd is 3.8 mmbo / year and using a $60 / bbl OpEx netback - CZE multiple of EV / OpEx cash flow is 1.68. That's dirt cheap. if you assume CZE's exploration wells cost $8 MM for seismic coverage and $4 MM in drilling cost, that means CZE is fully funded for 6 future exploration wells and with an 18% chance of success for finding 20 mmbo. An additional 20 mmbo in 2P reserves would add $700 2P NPV to CZE's current $380 MM Enterprise value. While CZE is not currently drilling exploration wells, the risk factor based on their working capital land package and industry chance of success on Putuamayo basin exploration wells makes CZE a low risk high reward investment at today's prices. My 2012 new years resolution is to trade the technical analysis (indicators I use) which are a combination of MACD 9, 12, 26 - Full Sto 20,10,5 - Relative strength 14 day, and pivot points / support and resistance. The price of oil and fundamental valuation metrics of individual small energy cap stocks doesn't seem to matter anymore. Carzy markets these days. All the stock movement in the US now occurs overnight in the US stock futures traded in Hong Kong while the US asleep. Hardly a fair game, but I continue to buy value. PS> GTE gave Commancher $9.60 shares in march when they sold Petrolifera to GTE and today Connacher finishing selling GTE at $5.35. PPS> I started to nibble on Crown Point Ventures. CWV announced a 24 well low risk development drilling program and a $13 MM PP for funding. CWV has sold off from a high of $2.50. CWV is producing 600 bopd and has 400 bopd behind the pipe. The three underwriters / analyst that cover CWV each have a $3 / share price target. You have to venture into the penny stock world to find a better risk to reward than CZE! C&C Energia's Sept oil production from Minminas. The numbers of a couple of fields needs to be adjusted for their 50% net interest, but the total should be 10.5 k bopd. Minminas notes the operator and gross oil production, so you have to reduce the numbers based on a company's net JV interest. Carrizales - 3,758 bopd Bastidas - 1,460 bopd Hoatzin - 3,892 bopd Zopilote - 1,503 bopd Ciriguelo - 1,038 bopd Matemarrano- 217 bopd Cachicamo-Andarios - 607 bopd Guacharaca - 556 bopd Heredia - 113 bopd Morpho - 66 bopd C&C Energia operator - 13,210 bopd.