junior oilers 21/22 dec..a bit more

  1. 1,317 Posts.
    New Zealand Oil and Gas (NZO)

    NZO comes to life from time to time but has been comatose for weeks now. Didn’t trade at all on three days this week and only 908 shares went through the market on Friday. NZO has a lot going for it in terms of assets, including 19% of the Kupe gas field which owner and electricity generator Genesis says will be developed soon. It also has a significant stake in a coking coal deposit (Pike River) whose development is tied up in bureaucratic red tape. But the big ticket item is Tui which is scheduled to be drilled in February. Best to try and accumulate on NZ bourse where stock has greater liquidity. NZO attracted interest on the ASX when it drilled Hochstetter a couple of years ago running to 55 cents ahead of the drill and then dropping to 15 cents after it failed. (Another good reason not to hold though a drill. Hochstetter was regarded as almost a lay down misere). I think there are easier ways to make money than chasing NZO on the ASX and prefer PPP as the best leveraged enntry to TUI.. This week’s report on NZO’s Tabla well in the same lease as its revenue producing Ngatoro field doesn’t look too promising with one of two targets in the Mt Messenger formation being water bearing and the other containing a 10 metres interval of yet to be determined hcs which will take 4-6 weeks to test!!!. I don’t hold.

    First Australian Resources (FAR)

    FAR failed to follow through on last week’s show of interest and after closing at 6.2 cents on Tuesday ended the week at 5.6 cents. But volume barely registered on the richter scale. People with lots and lots of patience could accumulate with safety at below 6 cents because FAR has some reasonable assets in the US and China and will drill Banjo in the Carnarvon Basin in March /April. This quarter’s revenues should be up with US gas prices well above the $3.16 average FAR received in the September quarter. It’s a bit of a tortoise but you know what happened in the race with the more fancied hare. I hold a fair few having bought at 5.8 cents. Smarter people than I picked them up a bit cheaper.

    Pan Pacific Petroleum (PPP)

    PPP has held up reasonably well given the disappointing results from the Carnarvon Basin drilling program. Taunton 2, a well to confirm a discovery in Taunton1, was the only successful well and PPP now have 10% in a field that can be developed without any further drilling. Result had little effect on the sp. Montgomery1 the next and I think the last well in the current drilling program has been postponed to next year. Next drill for PPP is Tui . There should still be a little more upside left in PPP ahead of the drill but the clever people got in months ago. I don’t hold

    Cooper Energy (COE), Stuart Resources (STU), Beach Petroleum (BPT)

    Cooper was so excited about Karbine 1 that it agreed to meet the entire costs of the well for a 30% interest in the permit. Unfortunately for Cooper, the well has not lived up to expectations with the Namur formation, the highest target, being water filled. Well is drilling ahead to target depth after some mechanical problems but signs are not good. Epsilon and Patchawarra Formations yet to be intersected but well is only some 170 metres from target depth. It is not the end of the world for this newly listed company which had a success at Sellicks first up. Good buying on a retracement from current levels. Hit 16 cents during the week but closed at 14.5 cents on Friday. During the week Beach Petroleum announced a 6 well drilling program for the first half of next year but details of the wells are yet to be announced. Beach at 33 cents is also good buying IMO given its revenues, dividend and small but potentially very profitable prospects in the Cooper/Eromanga Basin. Stuart Petroleum makes up the trio of companies involved in this area and has lost favour over recent weeks. Maybe because at current levels it is probably fully priced . Karbine prognosis didn’t help the stock this week. STO gas agreement with AGL announced during the week has upgraded the potential of the Cooper Basin at the expense of the PNG to Qld pipeline. I hold some BPT OA.

    Essential Petroleum (EPR)

    Shares traded thinly this week in a range 0f 20.5 to 23.5 cents. West Koriot 1 is due to spud on January. This relatively newly listed company has yet to developa revenue stream but has some interesting assets particularly in the offshore Otway Basin and some reputable partners. EPR is well worth researching further. Bit late to accumulate ahead of next well but if it disappoints opportunity will be there to buy before Banganna is drilled in March

    Sun Resources (SUR)

    Argos and Ceres duster have hammered SUR though it recovered from a low of 6.6 cents two weeks ago to spend this week around 7.5 cents. But volume has been miniscule. Hard to see what next for SUR. It has been around since the early 90’s and apart from an initial skyrocket not long after listing it has been all down hill from there. It has some cash in the bank, but no revenue stream that I am aware of. Too risky for me

    Two gas stocks compared

    Amity Oil (AYO) at a price around 60 cents is capitalised at about $96 million. Petsec Energy (PSA), at 25 cents, is capitalised at around $25 millon. AYO is producing around 13 mmcfpd from the Gocerler field in Turkey while PSA will commence production from its West Cameron field in the Gulf of Mexico in January probably at around 15 mmcf pd. AYO hope to increase daily production at Gocerler to 20 mmcf, PSA has built a production platform at West Cameron to handle 30 mmcf. Amity has to find markets in Turkey for its gas while PSA can sell whatever it produces in the US market. In Turkey the price of gas is regulated , not so for gas from GOM. Amity has good reserves, an ambitious drilling program and interests in Whicher Range in Australia. PSA has two other prospects to develop at West Cameron, a 7% ORRI in the Ship Shoal lease which will become revenue earning in January, 3 other leases in the GOM and 25% of the Beibu field in China. To me when, PSA starts to earn money from its West Cameron leases it will be a far better buy than Amity. As Yogi has said, if PSA breaks through 27 cents on good volume watch out. I hold PSA.

    As usual the foregoing comments are intended to stimulate discussion only. Do your own research. I hold AWE, BPTOA, BUY (bought this week at 10 cents), CUE, CVN, FAR, GBG, PCL and PSA. Merry Christmas all and an exceedingly prosperous New Year. JBC
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