junior oilers dec 7 part 2

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    junior oilers part 2

    STO announced on Friday that operator was running wireline logs on Bilip 1 which had reached TD. Results should be known this week. CUE saved itself $500,000 by not participating in the deepening of the well but has the right to participate in any discovery by paying a premium for re-entry out of its share of oil produced. Company told me during the week that Wortel and West Anggur drilling originally scheduled for December had been postponed to mid 2003. CUE will run additional seismic over the prospects in the meantime. But it is likely Oyong partners will announce firm go ahead for development of Oyong discovery and details of production and gas sales agreements in the next couple of weeks. CUE is another undervalued oiler which IMO is good buying at current prices. I have added them to my portfolio this week.

    Karbine 1 should spud this week for COE and STU in the Cooper basin. Share price of both oilers were flat last week COE at 15.5 cents and STU falling from 44 cents to end the week at 42 but on no volume at all. STU’s share price gyrations of a week or so ago were quite odd. COE might see some price appreciation as Karbine gets under way but probably better now to wait until the results are known before entering. With its small number of shares on issue, its interests in the Sellicks discovery and cash in the bank COE would be a good buy on any weakness following a disappointment at Karbine. COE, STU and BPT seem set to make some good money out of the Cooper Basin.

    DLS jumped from 6.4 cents to 7 cents of Friday for no apparent reason. Volume was small and suggestions of a break out may be premature. But there is no doubting the excitement drilling in DLS’s South Bonaparte leases could generate. DLS is an illiquid stock having for example traded on only 6 of the last 15 trading days. It is also run on the smell of an oily rag despite revenues from gas in Canada and Queensland. Last time I looked it had only $139,000 cash in the bank so I have been expecting a capital raising at some point. I have traded this stock for small profits during the year but will sit on the sidelines for the time being. However those who entered it this week may have done the right thing with more drilling coming up on the Queensland leases.

    The failure of Argus hammered FAR’s stock price and it has yet to recover. It closed at an all time low of 5.1 cents on Thursday though the current bid is at 5.3 cents. I think FAR has been oversold and represents good buying at these prices (and not because I entered at 5.8 cents!!) FAR will shortly announce the commencement of production at Rainosek-3 and maybe also plans for further development of two existing producing wells on the lease, Rainosek -1 and Evans. Revenue for the December quarter should be in line with the $600,000 received in the September quarter if not more given recent higher gas prices. FAR has also farmed out one third of its interest in Banjo and is looking to reduce its interest further. Having pre paid for Banjo, FAR will be reimbursed by farminees for their interest. FAR is a well run stock, if a little unexciting, but one that should get back to a more realistic valuation in coming months. It also has an interest in the Beibu discovery off China and is carried for next year’s capital expenditure after farming down its interest to ROC.

    Petsec Energy went for a bit of a run during the week, up from 23 cents to 28 cents before ending the week at 25.5 cents. Apparently RR was spruiking it again. Volume wasn’t great so the interest was not sustainable. That said I think PSA will be one of the more successful juniors next year in terms of share price appreciation when the market understands what a good thing it has at West Cameron and Ship Shoal. By my calculations (and apparently RR’s according to a post on Stockhouse) PSA could be receiving a net $2 million in monthly revenues from next March. And PSA also has a number of other GOM leases to explore or farm out in areas close to where other discoveries were announced this week eg Main Pass. PSA has done everything right this year and is on the comeback trail. That data base it salvaged from the PEI Plan of Reorganistion has proved invaluable.

    Disclosure: I hold AWE, BPTOA, CUE, CVN, NWE, PSA, PCL, and FAR
 
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