Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Parkcrest Explorations Ltd. (PKC) Harken (HEC) partner -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (153)	6/18/1998 1:18:00 AM
From: Jeff	Read Replies (1) \| Respond to of 261

June 1998 PARKCREST EXPLORATIONS LTD. - ALBERTA: PKC Analysts: Charles M. Strain, CFA Michael V. Strain (ALL MONETARY VALUES ARE IN CANADIAN DOLLARS) We are reiterating our speculative buy recommendation (May 1, 1997) from the initial coverage report on Parkcrest Explorations. We began recommending Parkcrest for two main reasons: the common stock sold at a discount to its peer group and the potential to add significant reserves through exploration and development in Colombia. These observations are even stronger today than when originally reported. Since our last report, initial production testing at the Estero #3 well has been completed. As a result of the data obtained from the well, we have increased our estimates of the potential reserves of the Palo Blanco Field and our adjusted break-up value, or net asset value, of Parkcrest from C$1.34 per share to C$1.89 per share. In addition, we have increased our potential break-up value for Parkcrest on a risk-adjusted and fully diluted basis from C$3.81 per share to C$9.02 per share. Meanwhile, the price of Parkcrest common stock has dropped from C$1.12 to C$0.69. As a result, the common stock is selling at 36.47% of its adjusted break-up value, a much larger discount than we originally reported. For comparison, we calculate that the common stock for the peer group sells at a median value of 85% of the adjusted break-up value. The Estero #1 well was drilled in February of 1997 on the Palo Blanco prospect and encountered the Mirador , Guadelupe, and upper Ubaque formations. The upper Ubaque Formation was tested at a rate of 4,116 barrels of oil per day (BOPD) before activities at the wellsite had to be suspended for the rainy season. The Estero #3 well was drilled as a confirmation well in the Palo Blanco prospect in March of this year and recently completed testing. The upper and middle Ubaque formation were tested at a combined rate of 2,036 BOPD. Parkcrest and its partners recently announced that tests of the Mirador and Guadalupe formations in this well did not encounter commercial rates of hydrocarbon production. The disappointment of the failure to establish production from these two formations is offset by the fact that the well data indicates that the likely size and potential recoverable reserves of the field are possibly 200% to 400% larger. The geologic evidence indicates that the Ubaque formation is likely a barrier sand bar that could contain a field considerably larger than the fault trap fields that are typical of this area. A 3-D seismic survey was acquired over the Palo Blanco area and is currently being processed for interpretation of the data. This information should help to further delineate the potential size of the discovery. Plans are to begin trucking up to 1,500 BOPD from the Estero wells as soon as the wells can be completed for production. Construction of a pipeline to transport oil from this contract area could begin later this year and should be completed in stages over the next two dry seasons. The Canacabare #1 well was drilled and logged as an apparent discovery on the Anteojos Propsect in the northeast corner of the block earlier this year. Electric logs of the wells indicated significant pay in three formations in this well. However, the rains prevented complete testing of this well. A completion rig will be put back on the well at the end of the year and testing will be completed. In summary, we view the results of the drilling at both the Palo Blanco and Anteojos prospects as positive. Although the initial production tests at Estero #3 were less than those at Estero #1, we are encouraged by the data obtained from latest well. The indications are that the Palo Blanco prospect is of a different depositional setting than originally modeled. The implications are that the potential reservoir in the Ubaque Formation could be much larger than originally anticipated. a Copyright 1998 Strain Consultants, Inc