Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Hello Joe, LPIH-China infrastructure play
$20M net income-3 X earnings, Cheap
Did Dave Gentry post this on twitter.com/RedTimes
May, 13th before his departure for LPIH's headquarters?
Dave Gentry leaving for LPIH's headquarters today per his twitter ......
http://twitter.com/RedTimes
Best Regards,
CS
Obama in 2012, after he fails to deal with Iran
Even now, in November 2012, it is hard not to think back with elation on Barack Obama's first year as president of the United States. In his first 100 days in the White House, the energetic president took a series of daring steps that extricated the American economy from its worst crisis since the 1930s. Immediately after that he put an end to torture, indicted Dick Cheney, convened a Middle East peace conference and made historic reconciliation visits to Havana, Damascus and Tehran.
Obama's economic and foreign policies were both based on a moral worldview that inspired Americans and non-Americans alike. After years of despair and cynicism, the 44th president proposed a new national and international agenda based on dialogue, demilitarization, justice and peace.
The first signs that something was wrong had already appeared at the end of that first year of grace. Nevertheless, Washington was astounded when, in the summer of 2010, Iranian President Mahmoud Ahmadinejad announced that he was expelling international inspectors and galloping full-tilt toward the production of nuclear weapons. The shock turned to horror on the eve of Christmas 2010, when Iran's spiritual leader, Ali Khamenei, stated that his country had its first three nuclear warheads - aimed at Riyadh, Cairo and Tel Aviv.
Spring 2011 was dramatic. First a mutual defense treaty and an agreement to
collaborate on oil exports were signed between Tehran and the fragile Baghdad government. Then Kuwait, Qatar, Abu Dhabi and Dubai bowed their heads and signed treaties that made them protectorates of the rising Shi'ite state. Saudi Arabia took the opposite approach: In May 2011, it announced that it had purchased nuclear weapons from Pakistan both for itself and for its ally Egypt. But Egypt's sudden nuclearization failed to appease the Muslim Brotherhood. Mass demonstrations forced President Hosni Mubarak to resign shortly after he suspended the peace agreement with Israel.
By Thanksgiving 2011, the situation was clear. Jordan's King Abdullah left for exile in London. Hezbollah took control of Beirut and a bloody war of attrition erupted between Israel and the Palestinians. The unrest in western Asia had repercussions on the rest of the international arena: Afghanistan went up in flames, Pakistan collapsed and Russia raised its head. In view of Washington's helplessness, some European states began to lean increasingly toward China. When the price of oil rose above $200 a barrel, the American economy plunged into another deep recession.
Obama had no chance in the snows of Iowa in 2012. So with Oprah Winfrey wiping a tear at his side, the most promising president ever announced he would not run for a second term.
What went wrong? Where did Obama go astray? In retrospect, the answer is clear and simple. In the summer of 2009, the president had to make the most courageous decision of his life: to prevent Iran from acquiring nuclear weapons. Granted, opting for confrontation would have been incompatible with the DNA of the liberal Democrat from Chicago. Ironically, however, only such a decision could have saved his legacy and advanced the noble values he believed in. Only that decision could have led to a comprehensive peace in the Middle East. If Obama had decided three years ago to impose a political-economic siege on Tehran, he would have changed the course of history. The Roosevelt of the 21st century would have prevented regional chaos, a worldwide nuclear arms race and an American decline.
Yesterday, immediately after television networks announced the sweeping Republican victory of November 2012, close friends gathered around the outgoing president. They found him sad but sober. Obama had no doubts: Had he known at the beginning of his term what he knows now, he would have made a different strategic decision about Iran's nuclear program. If only it were possible to go back, the pensive president told his humbled chief of staff, Rahm Emanuel. If only he could have made a different decision in the summer of 2009.
** BUBBLES and Bear Market Rallies - its been done before
Posted by: penny_ta Date: Saturday, May 02, 2009 10:41:14 AM
In reply to: None Post # of 9688 [Send a link via email]
I'm a strong believer in human psychology driving markets, so I figured that our current DOW 1982-2007 bubble deflating, should in some way resemble other bubbles of the past. After some digging, I found some VERY interesting stats, that you can check for yourself
1. DOW 2008-2009 - peak to bottom so far was (-54%, from 14.2k to 6.5k), and we've had a +28% rally off that. For those who think this was the bottom this year, consider this:
2. DOW 1929 - had a temporary bottom at (-60%), followed by a +28% rally. Result? Went on to make 5 more "new lows".
3. NASDAQ 2001 - had a temporary bottom at (-56%) followed by a +28% rally. Result? Went on to make 3 more "new lows".
4. CHINA 2008 - had a temporary bottom at (-51%), followed by a +27% rally. Result? Went on to make 2 more "new lows".
5. NIKKEI 1990 - had a temporary bottom at (-63%), followed by a +36% rally. Result? Went on to re-test that bottom 2 more times, and fresh new lows the following year.
Now that's 4 gigantic bubbles that had temporary lows in the -50% to -60% range, followed by +28% rallies in almost each case, followed by 2-5 "new lows" very quickly thereafter.
Maybe it means nothing. Or maybe investor psychology hasn't changed much in 100 years.
Its interesting that right now almost every trader and their grandmother is calling for a small pullback (fibonacci 38-50% like 800 or 780 on the S&P), then a run to 950-1000.
And if you're one of those, you have to ask yourself why you are running with the herd. Because there is no example in history that would support this kind of move. And no amount of shrewd Elliott Wave labeling is going to change that.
In fact, in every historical example that I could find...this is a key pivot point (this -55% drop, then a +28% rally), following which things tend to deteriorate quite rapidly - as the "hope" that drove the +28% rally evaporates and reality sets in
tons of traders and investors will be piling in around S&P 780-800, going for the "easy move to 1000"...so we'll get some sideways action there...but I suspect they will be like sheep being led to the slaughter house, thinking they're going on vacation.
And in the summer, after new lows hit, Elliott Wave experts will probably be furiously re-drawing their waves, to make reality fit the theory once again.
Just like they did last year. The data is on the link below.
http://xs539.xs.to/xs539/09186/0501-deflating-bubbles820.jpg
Martin Weiss: A Depression is Inevitable
Monday, April 13, 2009 5:06 PM
By: Greg Brown Article Font Size
Martin Weiss, president of Weiss Research and editor of the Safe Money Report, has some simple advice for anyone waiting to get into this stock market.
Just wait.
His new book is called “The Ultimate Depression Survival Guide,” and in an interview with Moneynews.com, he pulls no punches. A depression is “inevitable” and the really smart money will stay out of stocks until things settle down, way down, as in Dow 1,500.
The government-inspired rally of late is a trap, Weiss warns, one investors should avoid by holding on to their cash for now.
The government’s “position is that we can repeal the law of gravity and prevent investors from selling or markets from going down. That is not the case,” Weiss warns. “Right now there is a very powerful vicious cycle that’s operating and accelerating. That cycle is collapsing credit which depresses revenues.”
Those falling revenues make it very difficult for people and businesses to get credit.
”There is very little, next to nothing, that the government can do to prevent that. We have seen already the greatest financial failures in the history of this country,” Weiss says.
So far, the government has committed $14 trillion — a sum greater than the entire U.S. economy’s output in one year — to fixing the problem. And it won’t be enough, Weiss says.
“What this all boils down to is that the debt crisis is much too big for the government to handle and at the same time what they are already doing is much too big for those who are going to have to finance it,” Weiss says.
Interest-bearing debt, not counting leveraged toxic assets in the banks, is now “approximately double the level that it was before the 1929 crash and the 1930s depression,” Weiss warns.
Add in the leverage, which in the case of some major banks is $4 of credit exposure for every $1 of capital, and the risk now is huge to investors — one that implies a potential decline for stocks of 40 percent from current levels.
“Let’s assume that because of other offsetting problems that the crisis today, the depth of the depression, is only equal what happened in the early 1930s — not worse, just the same,” Weiss explains.
“In that scenario, if the same pattern plays out in the stock market then you would see the Dow Jones Industrials falling from its peak in 2007 around 89 percent to 90 percent to a low of 1,500.”
The right strategy now, he explains, and details in his new book, is to simply wait for assets to get cheap. And they will, Weiss says.
“You will be able to buy twice, three, four times as many times in your favorite stocks. So the value of your money in terms of how many shares of stock it can buy or how much it can buy in other assets is going up,” he says.
Weiss says that the investment instruments available today make a lot of what used to be “exotic” trading safe and predictable for even small investors, including:
• Inverse exchange-trade funds (ETFs), which act like stock shorts by rising when particular sectors decline, but without the same level of risk as from traditional shorting.
• Currency ETFs, too, which make it possible to ride the ups and downs of foreign currencies yet invest in stable and predictable ways.
• Recognizing opportunities in dividend stocks, once prices are realistic.
• When and why to buy gold, and how much is prudent.
• How to buy physical assets, like homes and luxury watercraft, once prices hit “rock bottom.”
• How to recognize the signs of a real bottom. Hint: The government will throw in the towel and admit it cannot fix the economy when the real bottom is here. So far, they continue to claim the situation is under control, which only prolongs the pain, Weiss says.
It’s not as bad a picture as the title of the book suggests, says Weiss. We will recover as an economy and as a country.
“A depression doesn’t necessarily mean the end of the world. There is a recovery that will ultimately come out of this and perhaps a very strong one,” he says.
Trick is, being in the position to invest at all once prices finally reset to reality.
CNBC: GM prepares for Bankruptcy...Dow to plummet 13-Apr-09 01:06 am
http://www.cnbc.com/id/30184869
Happy Passover and Easter WU Staff and Students!
EBHI Income Statement Released
Income Statement:
http://finance.yahoo.com/q/is?s=ebhi
EBHI Q4 revenues $370M/Massive 78% gain over Q3 revenues $270M!
"With a market cap of $12 million, we're golden, regardless of future dilution. EBHI has $60 million in cash and a $12 million cap. They also just reduced their LT-debt by $14 million".
EDDIE BAUER HOLDINGS, INC. Financials
EBHI Income Statement Released
Income Statement:
http://finance.yahoo.com/q/is?s=ebhi
EBHI Q4 revenues $370M
Massive 78% gain over Q3 revenues $270M!
"With a market cap of $12 million, we're golden, regardless of future dilution. EBHI has $60 million in cash and a $12 million cap. They also just reduced their LT-debt by $14 million".
EBHI Income Statement Released
Income Statement:
http://finance.yahoo.com/q/is?s=ebhi
The early bird catches the worm
Good Morning Professor Chart!!!
Meaning
Success comes to those who prepare well and put in effort.
Origin
This is first recorded in John Ray's A collection of English proverbs 1670, 1678:
"The early bird catcheth the worm."
jk21, Remember K.I.S.S.
Agreed, EBHI's plan when it comes together should crush resistance in the low .60's and then find itself at least at the .80 resistance level & perhaps $1.00 plus land.
I survived the Crash of 2008 but my foolish mistakes in pinkyland, pennyland, believing lying CEO's, MM manipulation, etc. nearly caused me to throw in the towel due to alot of emotional & financial pain & disappointments it caused me.
Your plan of buying 5K-15K shares of stocks $.50-$5.00 is similar to Chartinator & WU students...Chart is an honest & hard working savvy player imo...no hidden agenda.
Take care my friend...I'm posting your plan for myself & others who may benefit from your stategy. GLTY jk21
CS
Here's the plan: Buy 5K to 15K shares of stocks that are over .50 and below 5.00 AND that can move anywhere from a dime to about 3.5 cents. The goal is to make only $500 dollars per trade. one thing i've realized over time is that you can't just put in a huge dollar amount and be able to get trades executed for any share/dollar amount i want when i want it. So i go with this low number which will be nearly guaranteed to get executed. in and out, simple. book gains. no trade should last more than a week. absolutely no need.
How many times per week would i need to do this? at least twice, which also seems pretty easy. One reason the number of times per week is so low is that I'll need to let the money settle on the trades before i just keep using it and recycling it. So, this is going to give me rent/mortgage money, plus leisure time. i won't be tied to a screen reading the latest ceo rumors or checking with Ta's to see if the o/s has gone up this week. Sounds like a good, simple plan. Remember K.I.S.S..
jk21, Remember K.I.S.S.
Agreed, EBHI's plan when it comes together should crush resistance in the low .60's and then find itself at least at the .80 resistance level & perhaps $1.00 plus land.
I survived the Crash of 2008 but my foolish mistakes in pinkyland, pennyland, believing lying CEO's, MM manipulation, etc. nearly caused me to throw in the towel due to alot of emotional & financial pain & disappointments it caused me.
Your plan of buying 5K-15K shares of stocks $.50-$5.00 is similar to Chartinator & WU students...Chart is an honest & hard working savvy player imo...no hidden agenda.
Take care my friend...I'm posting your plan for myself & others who may benefit from your stategy. GLTY jk21
CS
Here's the plan: Buy 5K to 15K shares of stocks that are over .50 and below 5.00 AND that can move anywhere from a dime to about 3.5 cents. The goal is to make only $500 dollars per trade. one thing i've realized over time is that you can't just put in a huge dollar amount and be able to get trades executed for any share/dollar amount i want when i want it. So i go with this low number which will be nearly guaranteed to get executed. in and out, simple. book gains. no trade should last more than a week. absolutely no need.
How many times per week would i need to do this? at least twice, which also seems pretty easy. One reason the number of times per week is so low is that I'll need to let the money settle on the trades before i just keep using it and recycling it. So, this is going to give me rent/mortgage money, plus leisure time. i won't be tied to a screen reading the latest ceo rumors or checking with Ta's to see if the o/s has gone up this week. Sounds like a good, simple plan. Remember K.I.S.S..
Hey jk21, Gotta Love EBHI Amended Term Loan ("the Amendment")
"Amended Term Loan (the “Amendment”), including adjustments in financial covenants through the first quarter of 2010 and an increase in interest rates, which Amendment will be submitted to the Amended Term Loan lender group for approval."
Great seeing ya again ole buddy,
All the Best,
CS
EBHI, "In my opinion only, I think it is a done deal".
The Company presently anticipates that the Amendment will be approved, but the Amendment will not be effective until that approval is formally received and the required legal documentation executed and delivered".
http://idea.sec.gov/Archives/edgar/data/1345968/000119312509057995/0001193125-09-057995-index.idea.htm
Thank you Chartinator for your confirming opinion.
I deeply appreciate your honesty and astute spirit.
Have a blessed day!
CS
Good Morning Professor Chartinator!!!
Regarding EBHI, I am following your Alert and bought 18,000 shares @ .46...but I have a question needing clarification.
Is it a rumor that they are going to find a way cancel their debt covenants or is it a done deal in your opinion?
I realize that the answer will be the outcome that should be released in the 10-k which comes out next week...but what are your thoughts/opinions regarding the rumor/fact?
Thank you Chart for your hard work & selflessly sharing with us at WU...the best of success my friend!
Best Regards,
CS
Short SqueezeComing!
Short Interest (Shares Short) 6,518,800
Days To Cover (Short Interest Ratio) 4.1
Short Percent of Float 3.56 %
Short Interest - Prior 6,404,300
Short % Increase / Decrease 1.79 %
Short Squeeze Ranking™ -14
% From 52-Wk High ($ 12.34 ) -1769.70 %
% From 52-Wk Low ($ 0.26 ) 60.61 %
% From 200-Day MA ($ 2.98 ) -351.52 %
% From 50-Day MA ($ 1.10 ) -66.67 %
Price % Change (52-Week) -95.00 %
Shares Float 183,260,000
Total Shares Outstanding 184,751,551
% Owned by Insiders 8.84 %
% Owned by Institutions 87.30 %
Market Cap. $ 121,936,024
Trading Volume - Today 12,888,840
Trading Volume - Average 1,572,900
Trading Volume - Today vs. Average 819.43 %
The Wall Street Journal Correction
"Conseco Inc. transferred the long-term care policies in its Conseco Senior Health Insurance unit to an independent trust in Pennsylvania last year. A Personal Journal article Tuesday incorrectly said that the unit was taken over by regulators."
davidam, thank you..."The Inverse ETF's which relate to the EAFE are EFU and EFZ"...
Eastern Europe has borrowed an estimated $1.7 trillion, primarily from Western European banks. And much of Eastern Europe is already in a deep recession bordering on depression. A great deal of that $1.7 trillion is at risk, especially the portion that is in Swiss francs. It is a story that could easily be as big as the US subprime problem.
It is not clear how it will all play out. But there is real risk of Europe dragging the world into a longer, darker night. Their banks not only have exposure to our US foibles, much of which has already been written off, but now many banks will have to contend with massive losses from emerging-market loans, which could be even larger than the losses stemming from US problems. Plus, they are more leveraged.GLTY
The Butte Highlands Project
* Development-stage gold project with historic (non NI 43-101 compliant) mineralization estimate exceeding 500,000 ounces and excellent potential for significant expansion.
* Joint-venture with Small Mine Development, LLC ("SMD") to begin mine development in summer 2009; Initial production targeted for mid-2010.
* Preliminary in-house financial analysis indicates the potential for robust economics at gold prices as low as $500 per ounce.
In July 2007, Timberline purchased the Butte Highlands Project, located 15 miles south of Butte, Montana within a favorable geologic domain that has hosted several multi-million ounce gold deposits including Butte, Golden Sunlight, Montana Tunnels, and Virginia City. The patented, royalty-free property was extensively drilled by Placer Dome, Battle Mountain, ASARCO, and Orvana Minerals in the 1980s and 1990s, and contains historic mineralization outlined by Orvana (not compliant with NI 43-101 or SEC Guide 7) exceeding 500,000 ounces of gold at a grade of nearly 0.3 ounces of gold per ton (oz/t). Past drilling highlights include gold intercepts of 50 feet of 0.65 oz/t, 31 feet of 1.06 oz/t, and 11.5 feet of 1.99 oz/t.
Butte Highlands In October 2008, Timberline announced an agreement to form a 50/50 joint venture with SMD at Butte Highlands. Under terms of the agreement, Timberline will be carried to production by SMD, which will fund all mine development costs and begin development this summer. Timberline's 50-percent share of project costs will be paid out of proceeds from future mine production. The partnership is mutually regarded by Timberline and SMD as a model for future opportunities in underground mine development and mining as Butte Highlands is considered a good fit for the current market environment and for the unique qualifications of both companies.
Highlights of a recent preliminary financial analysis, conducted by SMD, include production targeted for mid-2010 and a sensitivity analysis indicating robust economics at gold prices as low as $500 per ounce. The analysis assumes the successful confirmation of historic mineralization estimates, including tonnage and average grade.
The analysis considered a 1,000 ton-per-day operation averaging 0.287 ounces of gold per ton, yielding annual gold production of approximately 85,000 ounces per year over a 5-year mine-life. It forecast a 2-year development time, primarily to drive an exploration decline (which may also serve as a production ramp) at an estimated cost of $15-million to $18-million. Although there are suitable sites for an on-site mill and tailings pond on the property, they are not currently envisioned as custom milling capacity is available at existing nearby facilities. The resulting reduction in development lead-time, as well as in permitting and construction costs, will have a substantial positive impact on project economics.Butte Highlands
In 2008, Timberline completed the first four holes (6,757 feet) of a drill program designed to validate and expand the historic resource estimates, to obtain material for petrographic and metallurgical evaluation, and to assess 3-D control for planning and permitting the exploration decline and, ultimately, a producing mine. With the joint-venture agreement in place, a redesigned drill program will likely reduce surface drilling while increasing underground drilling as the exploration decline is advanced.
The most encouraging hole to-date, BH-DDH 08-03, was drilled 100 feet northwest of previously-tested mineralization boundaries. The hole returned several mineralized gold intervals, including 2.0 feet of 0.62 oz/t, 37.0 feet of 0.22 oz/t, 5.0 feet of 0.26 oz/t, 9.0 feet of 0.43 oz/t, and 35.0 feet of 0.14 oz/t. These results demonstrate the northwest extension of the Upper, Middle, and Lower zones, while the latter two intervals comprise a new discovery at depth, a potential offset portion of previously-identified zones. Both the extension and the discovery have the potential to increase mineralization estimates at Butte Highlands.
'valleyboi0',recent DD regarding TLR delisting procedures
"Timberline has been afforded the opportunity to submit a plan of compliance to the Exchange by March 13, 2009 that demonstrates the Company's ability to regain compliance with the listing standards of the Exchange by August 2010. If Timberline does not submit a plan, or submits a plan that is not accepted by the Exchange then it will be subject to delisting procedures in accordance with the Exchange's guidelines".
COEUR D’ALENE, Idaho, Feb 20, 2009 (GlobeNewswire via COMTEX) -- TLR | Quote | Chart | News | PowerRating -- Timberline Resources Corporation (NYSE Alternext US:TLR) ("Timberline") today announced that on February 13, 2009 it received notice from the NYSE Alternext US LLC ("Exchange") indicating that as of September 30, 2008 Timberline was below certain of the Exchange's continued listing standards due to Timberline's stockholders' equity not meeting certain minimum requirements.
Timberline has been afforded the opportunity to submit a plan of compliance to the Exchange by March 13, 2009 that demonstrates the Company's ability to regain compliance with the listing standards of the Exchange by August 2010. If Timberline does not submit a plan, or submits a plan that is not accepted by the Exchange then it will be subject to delisting procedures in accordance with the Exchange's guidelines.
The Exchange based their analysis on Timberline's September 30, 2008 financial statements which report stockholders' equity of $3.55 million. As of Timberline's interim financial statements for the three months ended December 31, 2008, Timberline's stockholders' equity had already increased to $4.62 million and Timberline's management believes that it will continue to make significant progress in the rest of the fiscal year towards meeting the requisite standards to ensure its continued listing on the Exchange. Timberline intends to submit a plan to the Exchange by March 13, 2009 outlining the steps the Company expects to take in order to bring stockholders' equity into compliance with the continued listing standards of the Exchange.
Timberline Resources Corporation has taken the complementary businesses of mining services and mineral exploration and combined them into a unique, forward-thinking investment vehicle that provides investors exposure to both the "picks and shovels" and "blue sky" aspects of the mining industry. Timberline has contract drilling subsidiaries in the western United States and Mexico and an exploration division focused on district-scale gold projects with the potential for near-term, low-cost development. The Company is forming a 50/50 joint venture with Small Mine Development, LLC at Timberline's 100-percent owned, royalty-free Butte Highlands Gold Project which is scheduled for development beginning in 2009. Timberline is listed on the NYSE Alternext US and trades under the symbol "TLR".
Nigeria reform 'hangs by a thread'
News wires
Nigeria's parliament is considering legislation that will drastically transform Africa's largest oil and gas sector, but years of political distrust and corruption are likely to delay passage for months if not longer.
President Umaru Yar'Adua in August sent parliament an energy reform bill that restructures state player the Nigerian National Petroleum Corporation (NNPC) into a profit-driven company similar to those in Brazil, Malaysia and Saudi Arabia.
The legislation, which has been in planning in some form for more than a decade, has been touted by the presidency as the answer to many of the sector's problems like funding shortfalls, domestic gas shortages and budget-debilitating fuel subsidies.
The bill's drafters, who include Petroleum Minister Rilwanu Lukman, wanted parliament to pass it by December last year to have the new NNPC in place by this summer, a Reuters report said.
But many within the government and industry believe that, even under the most favourable conditions, it will take many months before there is enough political support to pass such a bill. A few doubt the legislation will pass at all.
"This is a very serious bill so there is nothing to be in a hurry about," said Bassey Otu, chairman of the House of Representatives Committee on Petroleum. "But it will eventually be passed for the good of all."
The restructuring bill will break up NNPC into a handful of autonomous units and allow its new national oil company to raise funds by investing in capital markets, instead of relying on government revenues.
The reforms envisage a Nigerian oil company operating like former Brazilian oil monopoly Petrobras, Malaysia's government-owned Petronas, which has dozens of subsidiaries or Saudi Arabian state oil giant Saudi Aramco.
NNPC, as it is currently run, has been plagued by corruption for decades with billions of dollars of oil money going to a few well-connected Nigerians, while the rest of the country lives on less than $2 a day.
Many industry experts believe it will not be easy to sway these politically powerful and wealthy Nigerians to change the status quo.
"There are issues about the capacity of members to come to terms with the details of the bill and of pressure from vested interests to delay its passage and dilute its contents," Antony Goldman, head of PM Consulting, a London-based risk analysis firm specialising in West African energy, told Reuters.
"If the government can push the bill through this year, it will amount to a major achievement."
His critics say Yar'Adua, a northerner has given senior government oil jobs to northerners who will be responsible for implementing the reform bill should it pass.
There is an understanding among Nigeria's political elite that the presidency rotates between the north and south and that all 36 states have at least one minister in the government.
"We hope the president will subsequently make balanced appointments to reflect the concerns raised by various groups," said Otu, who is from the southern Niger Delta, where Nigeria's oil is derived.
The Niger Delta has been rocked by attacks on oil installations by militants agitating for more local share of the oil wealth. There are clauses in the bill that require oil players to hire locally, which could help appease local discontent.
Some experts warn the bill's ultimate survival will depend on whether Yar'Adua is able to serve his entire four-year term and keep pressure on lawmakers to pass it.
The 57-year-old Nigerian leader is known to have a chronic kidney problem and has regularly sought medical treatment overseas, the most recent in Saudi Arabia last August.
"By God if anything happens to Yar'Adua, the bill is dead. There is no consensus right now," said an oil industry executive working in Nigeria's capital Abuja.
Monday, 09 March, 2009, 13:47 GMT | last updated: Monday, 09 March, 2009, 13:47 GMT
Ambitious plans: Umaru Yar'Adua
Related articles
* Slow progress in Nigeria
Related companies
Litre Meter Ltd
Draka Marine, Oil & Gas Intl
MENCK GmbH
Marishan Company Ltd
view all
Deepwater Pathfinder charts Addax course
By Upstream staff
Addax Petroleum has lined up the fifth-generation, dynamically positioned drillship Deepwater Pathfinder for its planned drilling campaign in the joint development zone (JDZ) off Nigeria.
Addax said in a statement that the drillship should kick off the deep-water campaign by spudding a well on the Kina prospect in JDZ Block 4 in the third quarter of the year.
The Transocean drillship is capable of drilling in water depths up to 3048 metres.
Addax's contract with the US-based outfit will see the Deepwater Pathfinder drill four wells in total with a minimum commitment of 120 days.
Payments under the contract are based on a day rate charging structure and a day rate of $600,000 to be allocated pro rata to Addax Petroleum and its applicable co-contractor parties.
Wednesday, 11 March, 2009, 10:35 GMT | last updated: Wednesday, 11 March, 2009, 10:35 GMT
Too big to fail? 5 biggest banks are 'dead men walking'
By Greg Gordon and Kevin G. Hall, McClatchy Newspapers Greg Gordon And Kevin G. Hall, Mcclatchy Newspapers Mon Mar 9, 5:19 pm ET
WASHINGTON — America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.
Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.
The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.
The banks' potentially huge losses, which could be contained if the economy quickly recovers, also shed new light on the hurdles that President Barack Obama's economic team must overcome to save institutions it deems too big to fail.
While the potential loss totals include risks reported by Wachovia Bank , which Wells Fargo agreed to acquire in October, they don't reflect another Pandora's Box: the impact of Bank of America's Jan. 1 acquisition of tottering investment bank Merrill Lynch , a major derivatives dealer.
Federal regulators portray the potential loss figures as worst-case. However, the risks of these off-balance sheet investments, once thought minimal, have risen sharply as the U.S. has fallen into the steepest economic downturn since World War II, and the big banks' share prices have plummeted to unimaginable lows.
With 12.5 million Americans unemployed and consumer spending in a freefall, fears are rising that a spate of corporate bankruptcies could deliver a new, crippling blow to major banks. Because of the trading in derivatives, corporate bankruptcies could cause a chain reaction that deprives the banks of hundreds of billions of dollars in insurance they bought on risky debt or forces them to shell out huge sums to cover debt they guaranteed.
The biggest concerns are the banks' holdings of contracts known as credit-default swaps, which can provide insurance against defaults on loans such as subprime mortgages or guarantee actual payments for borrowers who walk away from their debts.
The banks' credit-default swap holdings, with face values in the trillions of dollars, are "a ticking time bomb, and how bad it gets is going to depend on how bad the economy gets," said Christopher Whalen , a managing director of Institutional Risk Analytics, a company that grades banks on their degree of loss risk from complex investments.
J.P. Morgan is credited with launching the credit-default market and is one of the most sophisticated players. It remains highly profitable, even after acquiring the remains of failed investment banker dealer Bear Stearns , and says it has limited its exposure. The New York -based bank, however, also has received $25 billion in federal bailout money.
Gary Kopff , president of Everest Management and an expert witness in shareholder suits against banks, has scrutinized the big banks' financial reports. He noted that Citibank now lists 60 percent of its $301 billion in potential losses from its wheeling and dealing in derivatives in the highest-risk category, up from 40 percent in early 2007. Citibank is a unit of New York -based Citigroup . In Monday trading on the New York Stock Exchange , Citigroup shares closed at $1.05 .
Berkshire Hathaway Chairman Warren Buffett , a revered financial guru and America's second wealthiest person after Microsoft Chairman Bill Gates , ominously warned that derivatives "are dangerous" in a February letter to his company's shareholders. In it, he confessed that he cost his company hundreds of millions of dollars when he bought a re-insurance company burdened with bad derivatives bets.
These instruments, he wrote, "have made it almost impossible for investors to understand and analyze our largest commercial banks and investment banks . . . When I read the pages of 'disclosure' in (annual reports) of companies that are entangled with these instruments, all I end up knowing is that I don't know what is going on in their portfolios. And then I reach for some aspirin."
Most of the banks declined to comment, but Bank of America spokeswoman Eloise Hale said: "We do not believe our derivative exposure is a threat to the bank's solvency."
While Bank of America advised shareholders that its risks from these instruments are no more $13.5 billion , Wachovia last year similarly said it could overcome major risks. In reporting a $707 million first-quarter loss, Wachovia acknowledged that it faced heavy subprime mortgage risks, but said it was "well positioned" with "strong capital and liquidity." Within months, losses mushroomed and Wachovia submitted to a takeover by Wells Fargo , which soon got $25 billion in federal bailout money.
Trading in credit-default contracts has sparked investor fears because they are bought and sold in a murky, private market that is largely out of the reach of federal regulators. No one, except those holding the instruments, knows who owes what to whom. Not even banks and insurers can accurately calculate their risks.
"I don't trust any numbers on them," said David Wyss , the chief economist for the New York credit-rating agency Standard & Poor's .
The risks of these below-the-radar insurance policies became abundantly clear last September with the collapse of investment banker Lehman Brothers and global insurer American International Group , both major swap dealers. Their insolvencies threatened to zero out the value of billions of dollars in contracts held by banks and others.
Until then, "we assumed everyone makes good on the contracts," said Vincent Reinhart , a former top economist for the Federal Reserve Board .
Lehman's and AIG's failures put in doubt their guarantees on hundred of billions of dollars in contracts and unleashed a global pullback from risk, leading to the current credit crunch.
The government has since committed $182 billion to rescue AIG and, indirectly, investors on the other end of the firm's swap contracts. AIG posted a fourth quarter 2008 loss last week of more than $61 billion , the worst quarterly performance in U.S. corporate history.
The five major banks, which account for more than 95 percent of U.S. banks' trading in this array of complex derivatives, declined to say how much of the AIG bailout money flowed to them to make good on these contracts.
Banking industry officials stress that most of the exotic trades are less risky — such as interest-rate swaps, in which a bank might have tried to limit potential losses by trading the variable rate interest of one loan for the fixed-rate interest of another.
In their annual reports to shareholders, the banks say that parties insuring credit-default swaps or other derivatives are required to post substantial cash collateral.
However, even after subtracting collateralized risks, the banks' collective exposure is "a big, big number" and a matter for concern, said a senior official in a banking regulatory agency, speaking on condition of anonymity because agency policy restricts public comments.
In their reports, the banks said that their net current risks and potential future losses from derivatives surpass $1.2 trillion . The potential near-term losses of $587 billion easily exceed the banks' combined $497 billion in so-called "risk-based capital," the assets they hold in reserve for disaster scenarios.
Four of the banks' reserves already have been augmented by taxpayer bailout money, topped by Citibank — $50 billion — and Bank of America — $45 billion , plus a $100 billion loan guarantee.
The banks' quarterly financial reports show that as of Dec. 31 :
— J.P. Morgan had potential current derivatives losses of $241.2 billion , outstripping its $144 billion in reserves, and future exposure of $299 billion .
— Citibank had potential current losses of $140.3 billion , exceeding its $108 billion in reserves, and future losses of $161.2 billion .
— Bank of America reported $80.4 billion in current exposure, below its $122.4 billion reserve, but $218 billion in total exposure.
— HSBC Bank USA had current potential losses of $62 billion , more than triple its reserves, and potential total exposure of $95 billion .
— San Francisco -based Wells Fargo , which agreed to take over Charlotte-based Wachovia in October, reported current potential losses totaling nearly $64 billion , below the banks' combined reserves of $104 billion , but total future risks of about $109 billion .
Kopff, the bank shareholders' expert, said that several of the big banks' risks are so large that they are "dead men walking."
The banks' credit-default portfolios have gotten little scrutiny because they're off-the-books entries that are largely unregulated. However, government officials said in late February that federal examiners would review the top 19 banks' swap exposures in the coming weeks as part of "stress tests" to evaluate the institutions' ability to withstand further deterioration in the economy.
Representatives for Citibank, J.P. Morgan and Wells Fargo declined to comment.
Hale, the Bank of America spokeswoman, said that the bank uses swaps as insurance against its loan portfolio — they "gain value when the loans they are hedging lose value."
She said that Bank of America requires thousands of parties that are guarantors on these insurance-like contracts to post "the most secure collateral — cash and U.S. Treasuries, minimizing risk roughly 35 percent." The collateral is adjusted daily.
Bank of America's report of an $80.4 billion exposure doesn't count the collateral and "also assumes the default of each of the thousands of counterparty customers, which isn't likely," Hale said. Counterparties are the investors on the other side of the deal, often other banks or investment banks.
In response to questions from McClatchy , HSBC spokesman Neil Brazil said that the bank closely manages its derivatives contracts "to ensure that credit risks are assessed accurately, approved properly (and) monitored regularly."
PLD Global Logistic Properties To Invest $1 Billion In China
Posted By mfrank On March 3, 2009 @ 11:43 am In Press Releases | No Comments
Global Logistic Properties will invest around $1 billion in China in the coming two years, GLP China President Mei Zhiming said.
The logistics company was formed in December after Singapore sovereign wealth fund unit GIC Real Estate Pte. Ltd. acquired U.S. warehouse developer ProLogis’ (PLD) Asian operations.
“We will continue to focus on mainland China’s first- and second-tier cities,” Mei told reporters on the sidelines of a press conference in Shanghai, without elaborating.
Prior to the acquisition by the property investment arm of Government of Singapore Investment Corp., ProLogis invested $300 million-$500 million annually in China, he said.
ProLogis entered the Chinese market in 2003, one year before Beijing deregulated the logistics sector under the terms of its World Trade Organization membership.
The company provided warehousing or distribution services across 18 Chinese cities for multinational companies, many of which export to and from China.
CENX..."Very oversold and undervalued"...$30 book value.
Probably one of the the top 3 most undervalued "value plays".
Thanks so much Chart for your advise.
All the Best,
CS
Century Reports 2008 Financial Results
Thursday February 19, 4:00 pm ET
MONTEREY, CA--(MARKET WIRE)--Feb 19, 2009 -- Century Aluminum Company (NasdaqGS:CENX - News) today reported a net loss of $700.2 million ($14.27 per basic and diluted share) for the fourth quarter of 2008. Reported fourth quarter results were impacted by a charge for goodwill impairment of $94.8 million ($1.93 per basic and diluted share), a tax charge of $522.9 million ($10.66 per basic and diluted share) related to the recording of a valuation allowance on deferred tax assets and an inventory write down to market value of $55.9 million ($1.14 per basic and diluted share).
For the fourth quarter of 2007, the company reported a net loss of $112.3 million ($2.74 per basic and diluted share). Reported results for this quarter were impacted by an after-tax charge of $147.7 million ($3.61 per basic share) for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting and by a tax benefit of $4.0 million ($0.10 per basic share) related to the increase in the carrying amount of deferred tax assets as a result of a state tax law change. The dilutive effect of the options, convertible notes and service-based awards would reduce basic EPS by $0.05 per share.
SEEKING ALPHA PART II 21-Feb-09 04:26 pm
5) Earlier this week, Bank of America actually paid back $402 million in a TARP dividend payment to the U.S. government. If this doesn’t show their commitment to repaying taxpayers I don’t know what would. CEO Ken Lewis has mentioned that his company will not need to borrow any more funds, that they are well capitalized and that his company had a good January. They were led by Countrywide who he described as being 'on fire' because of the boom in refinances.
6) The Fed will be purchasing $500 billion of mortgage backed securities over the next six months. Bank of America took one for the team by going through with their purchase of Merrill Lynch even when they had second thoughts, they did it at the request of the Fed and the Treasury who worried about a systematic risk if the deal were to fail. The Fed will be as friendly as possible to Bank of America in this repurchase program.
7) Bank of America will be the undisputed leader of the new economy. I’m excited about being invested in the largest retail brokerage (Merrill Lynch), the largest mortgage lender (Countrywide), and a bank who has been profitable for 17 years in a row, including 2008 (Bank of America).
8) Huge insider buying.
See you at $20.
Disclosure: Long 2011 $5 BAC Calls.
Eight Reasons Bank of America Is Going to $20
by: Jason Schwarz February 20, 2009 | about stocks: BAC
Jason Schwarz
Add to Your WatchlistAbout this author:
Profile & More Articles
Visit: The Economic Weather Station
Visit: Jason's Youtube Broadcast
Become a Contributor Submit an Article Font Size: PrintEmail TweetThis
We are experiencing an overreaction of historic proportions when it comes to the financial sector and specifically Bank of America (BAC). In case you haven’t noticed, these extreme overreactions are becoming the norm; a thorough understanding of the reasons for the overreaction are paramount to generating great investment returns. The market has gotten Bank of America terribly wrong in the short run as the ‘cloud of uncertainty’ has collided with the ‘sea of negativity’. Governmental uncertainty combined with the market’s negativity are the contributing factors for Bank of America plunging below $4 a share. After riding Apple (AAPL) calls to triple digit gains in 2007, and then riding oil puts to triple digit gains in 2008, I am making Bank of America my #1 holding for 2009. By next year this stock will be back to $20 a share. Consider the following:
1) The market is running wild on some hyped up article written in the Financial Times that claims Obama is considering nationalizing the banks. If you actually read the article you’ll notice the anti-American sentiment at the very beginning when they say that ‘nationalization has long been regarded in the U.S. as a folly of Europeans...’ Ok, I get it, Europe has been right all along. Whatever. Obama’s true feelings on nationalization came out in his ABC interview after Geither’s banking speech when he laughed out loud and said, “Sweden had like five banks. We’ve got thousands of banks...managing and overseeing anything of that scale...wouldn’t make sense. And we also have different traditions in this country."
2) Obama understands that the markets will determine his success. He has been very upfront in his stance that the success of this financial plan will depend on how the markets respond over the next few months. The idea of killing off current shareholders and taking Bank of America off the market during a nationalization phase is unthinkable.
3) Tim Geithner does not believe in nationalizing the banks either. Mr Geithner last week said: “Governments are terrible managers of bad assets.” He went on to outline a plan that will seek help from the private sector, will maintain a market for these toxic assets, and will increase transparency. Nationalization accomplishes none of these three.
4) Any talk of banks would be incomplete without the opinion of the woman who has been right all along, Meredith Whitney. Obviously she is not high on the banks but in her interview on CNBC Wednesday she was very careful not to include Bank of America in her criticisms. She told investors to sell Citigroup (C) but would not mention Bank of America. She also is against nationalization and advocates the use of non punitive capital to strengthen the system. Maria Bartiromo wanted to get her to say 'sell all the big banks' but she never said it, in fact she mentioned that JP Morgan (JPM) would be a survivor as they are well capitalized. I believe Bank of America is in a similar position.
Is There A Bottom?
Posted By: Vince Farrell |
| 18 Feb 2009 | 01:08 PM ET
Where oh where is the bottom ? Is there a bottom ?
The market is taking a look at the November low on the S&P of 740 (intraday) and trying to decide if it was a temporary low, or a bottom to be bounced off of.
A few thoughts to try and put the question in some perspective.
A bottom usually is a very lengthy, messy, and scary process.
Most bottoms take a year to establish themselves. One fact that lends some hope is that on Tuesday when the market breached 800 on the downside only 8% of stocks on the NYSE hit new 52 week lows. Last October when the market bounced off 840 - only to subsequently fall to 740- 93% of stocks hit 52 week lows. In November when the aforementioned 740 was touched, far fewer stocks hit new lows. And then yesterday only 8% as just mentioned. The rate of decline for the average stock has slowed and that is a good thing.
But if 740 is not to hold where do we then look. David Rosenberg of Merrill Lynch is a lot smarter than I am and has been correctly bearish. He has lowered his earnings estimate for 2009 to $46 for the S&P 500 and to $55.50 for 2010. He feels that the 2010 estimate should be valued at 12 times for a target of 666 (that's a bad number isn't it—sign of the devil or something like that ?) I would argue that with a very low rate of inflation a more appropriate multiple on depressed earnings would be more like 18 times, but, like I said, Rosenberg has been correctly bearish.
Another way to figure where a lower bottom might be is to look at the general correction of major bull markets. The bull market started at 105 or so on the S&P in 1982 and rose to over 1500 in 2007. A two thirds correction of that move would give a rough target of 650 or so as well.
There is now $4 trillion in money market funds which is almost 50% the value of the stocks in the S&P 500. At the last peak after the dot com bubble collapsed the number was 28%. I don't think this is stock market money but it's not money content to earn 0% either. I hope some of this will start to move to the bond market and credit spreads continue to improve. If credit spreads improve, stocks can stabilize.
Also, Doug Kass passed along the fact that 46% of stocks in the average yield more than the 10 year Treasury. That's four times the total in 2002 and compares to a long term average of 5%. There will be some more dividend reductions but it does seem to me that we are at an extreme in valuation.
Bank Nationalization: No Longer A Dirty Word
OT:Exxon Mobil posts biggest US quarterly profit ever
Thursday October 30, 12:23 pm ET
By John Porretto, AP Business Writer
Exxon Mobil shatters own record for largest profit from operations by a US corporation
HOUSTON (AP) -- Exxon Mobil Corp., the world's largest publicly traded oil company, reported income Thursday that shattered its own record for the biggest profit from operations by a U.S. corporation, earning $14.83 billion in the third quarter.
Yet numbers contained within the company's most recent financial report revealed production numbers that continue to sag, and shares slipped 3 percent in midday trading.
The Irving, Texas-based company has reported unprecedented back-to-back quarters, the end of the most recent coinciding with a rapid plunge in crude prices. Benchmark oil prices fell another $2.91 to $64.59 Thursday on the New York Mercantile Exchange, about 56 percent off record highs in July.
Exxon said net income jumped nearly 58 percent to $2.86 a share in the July-September period. That compares with $9.41 billion, or $1.70 a share, a year ago.
The previous record for U.S. corporate profit was set in the last quarter, when Exxon Mobil earned $11.68 billion.
Revenue rose 35 percent to $137.7 billion.
On average, analysts expected the company to earn $2.39 per share in the latest quarter on revenue of $131.4 billion.
Exxon Mobil's results got a boost of $1.62 billion in the most-recent quarter from the sale of a natural gas transportation business in Germany. It also took a special, after-tax charge of $170 million for a punitive damages award related to the 1989 Exxon Valdez oil spill.
Excluding those items, third-quarter earnings amounted to $13.38 billion -- nearly 15 percent above its previous profit record from the second quarter.
As expected, Exxon Mobil reaped massive earnings from its exploration and production, or upstream, arm, where net income rose 48 percent to $9.35 billion. Higher oil and natural gas prices propelled results, even though production was down from the third quarter a year ago.
Oil producers are coming off a quarter during which crude prices reached an all-time high of $147.27 -- and their profits have reflected it.
Royal Dutch Shell PLC, Europe's largest oil company, said Thursday its third-quarter net profit jumped 22 percent from a year ago, also despite falling production.
Crude prices have tumbled from summer highs, and the global economic malaise has raised questions about energy demand at least into 2009.
Some companies, especially smaller producers, are scaling back spending on new exploration and production projects because of the uncertainty, though analysts say that its less likely to happen at the well-heeled giants like Exxon Mobil.
"Our integrated business portfolio, strong operational performance and financial discipline continued to allow us to capture the benefits of the commodity price environment," Exxon Mobil investor relations chief David Rosenthal said on a call with analysts. "Despite recent volatility in the financial, commodity and credit markets, the fundamentals of Exxon Mobil's business remain strong."
A not-so-bright note was Exxon's output, which once again was below year-ago levels.
The company, which produces 3 percent of the world's oil, said production on an oil-equivalent basis was down 8 percent from a year ago -- a concern given it generates more than two-thirds of its earnings from oil and gas production.
Exxon cited disruptions caused by hurricanes Gustav and Ike, production-sharing contracts and increased maintenance activity. It said damage repairs and lower volumes from the storms is expected to reduce fourth-quarter earnings by about $500 million.
Earnings at Exxon Mobil's refining and marketing unit were $3.01 billion, up 50 percent from a year ago. Exxon saw margins improve on refined products, largely because of the drop in crude as the quarter progressed.
The company said it expects to spend about $25 billion on capital projects this year -- the lower end of previous guidance of $25 billion to $30 billion.
Exxon Mobil said it bought 109 million shares of its common stock in the quarter at a cost of $8.7 billion. Roughly $8 billion of that amount was dedicated to reducing the number of shares outstanding; the balance was used to offset shares issued as part of the company's benefit plans.
Setting U.S. profit records has become commonplace for the oil giant.
In fact, if one-time gains like bankruptcy settlements and spinoffs are stripped away from other companies, Exxon Mobil owns the record for the top 10 most-profitable quarters for a U.S. company, as well as the largest annual profit.
United Airlines' UAL Corp. reported first-quarter profit of $22.9 billion in 2006, but that reflected a bankruptcy settlement, not true profit. The airline would have posted a $306 million loss if those gains were stripped out.
Company shares fell $2.28 to $72.37 in midday trading. Their 52-week range is $56.51 to $96.12.
Freedom's Enemies
http://www.freedomsenemies.com/_more/Obama.htm
Here's a web site that tells the entire Obama story.
THE OBAMA FILE
click on this link below
http://www.theobamafile.com
Gold Market Comments - October 7, 2008 - Paper Gold & Silver Market Failure Pending? Massive Price Increase...
As noted yesterday, in late 2002, Dr. Bernanke remarked that the private Federal Reserve Bank might consider “unconventional measures" to stave off deflationary pressures. This morning a new radical measure was announced which invokes depression-era emergency powers to allow the Fed to buy massive amount of short-term debt/commercial paper, a roughly $1.6 to 1.7 trillion market of which around $1.3 trillion worth of commercial paper would qualify*. By buying unsecured debt instruments, we are approaching a more modern day Weimar Republic set-up which will lead to a further demise of the US Dollar by more aggressive monetization of debt. The digital printing presses around the world are injecting incredible liquidity into the system as the financial system continues to crumble.
Given the critical state of the global financial situation the paper gold and silver prices remain at very depressed levels. The true physical markets are showing very high premiums, as noted yesterday, over the paper gold and silver derivative products. I strongly believe that physical demand for gold and silver will very shortly set itself free from the paper market pricing structure resulting in an explosive move higher. A growing number of people are starting to accept this likely outcome.
Last night on CNBC, Jurg Kiener – CEO of Swiss Asia Capital – also makes a mention of the upcoming failure of the paper gold markets: “We have a two-tier market, paper on Wall Street where the bankers continue to gamble like with everything else and the physical market where the physical price is real hot and people cannot get it.” What does this mean? “Owning gold is the best thing you can have. This will put pressure on the paper market, in the LME and COMEX … and we are very close … what we will see are the paper contracts on precious metals defaulting. And with that we will get a massive price increase.” So when the paper market defaults, what kind of price spike will we see? “At least double the price in a very short period of time.” – I cannot add anything further to these comments since Mr. Kiener’s sentiments closely echo mine. The paper markets representing gold and silver are becoming fraudulent in their pricing abilities. The true market forces will prevail over this counterfeit marketplace.
We are witnessing once in a century, or perhaps longer, financial event where gold and silver offer the only real protection. The U.S. treasury debt market may eventually succumb to this crisis as well at which time gold and silver would move to levels difficult to imagine today as it returns to its true historical attribute as currency.
Gold and silver mining stocks continue to be directly influenced by the general equity markets. Of note, oil has returned back to $90 a barrel, commodity prices are dropping meaning that future margins should increase = higher profits. Production costs appear to be stabilizing if not decreasing in the coming months. This will become more evident shortly which will give another boost to the underlying fundamental case for mining stocks. With gold and silver set to skyrocket soon, it will soon become evident that many gold and silver companies are selling at incredible discounts. A flood of capital that is currently focusing itself on physical gold and silver will soon divert funds into gold and silver companies too. This may accelerate as well with the physical shortage preventing new capital from finding physical gold and silver and therefore mining equities will become even that more in demand. This is a relatively tiny market so it will take very little of the overall capital floating around to sharply rally these investments. Short-term caveat is downside risks remain with the general markets looking to take a further dive, but the ensuing reversal will likely be incredible. Also of note, in late August I produced a public report entitled, Is Your Portfolio Properly Positioned for the Next Move Higher in Gold and Silver? which discusses some strategies in selecting the right investments.
- Peter Spina, GoldSeek.com
Best- and worst-case economic scenarios
Will the Fannie-Freddie bailout work? It pays to imagine the possibilities
By Peter Coy
Business Week
updated 8:54 a.m. ET Sept. 12, 2008
O.K., we've finally wrapped our minds around the impossible: On Sunday, Sept. 7, in the name of preventing a financial meltdown, the conservative Bush Administration announced that it was seizing control of two of the nation's biggest and highest-rated (until recently) financial institutions, the mortgage giants Fannie Mae and Freddie Mac.
In short, pigs can fly, and hell really can freeze over. So maybe it's time to expand our sense of the possible and ask what other shockers are in store.
Will the 13-month-old credit crunch get even worse and drag down the entire global economy? Or are punch-drunk Americans due for an even bigger shock, namely some good news for a change?
The financial markets are grappling with just those issues — and gyrating between euphoria and panic. Stocks climbed on Sept. 8, the first trading day after Treasury Secretary Henry M. Paulson Jr. announced that he was placing Fannie and Freddie under federal conservatorship. The Standard & Poor's 500-stock index rose 2 percent. But the next day, fears that venerable investment bank Lehman Brothers might go under dragged the S&P 500 down 3.4 percent.
In highly uncertain times like these, scenario-spinning can be an excellent tool for making sense of conflicting data. It won't guide you straight to the right answer, but it will get you thinking about the right questions to ask.
Best case scenario
For a best case, imagine a virtuous circle of events that starts with a favorable market reaction to Paulson's putsch. Paulson promised to replenish the companies' capital by purchasing up to $100 billion in senior preferred shares in each, as needed, to make sure they retain a positive net worth. He also set up a secured lending facility that they can draw on if their private funding sources get too costly.
And he said Treasury itself will try to make mortgage loans more available and affordable by buying Fannie and Freddie mortgage-backed securities, starting with a token $5 billion but possibly going far higher.
Paulson's move made a big impression in foreign markets, which have been nervously eyeing the condition of American banks. On Sept. 10, at a conference in Germany titled "Banks in Upheaval," Deutsche Bank CEO Josef Ackermann argued that "we are in a period of stabilization in credit markets and in stock markets, although they still remain nervous." Ackermann added: "We believe that what we see is the beginning of the end of the crisis."
At the very least, Paulson's unprecedented move defuses one ticking time bomb. It decreases the chance that either Fannie or Freddie will default on its debts or credit guarantees, which was the doomsday scenario for global financial markets. Together, the two companies have about $1.7 trillion in outstanding corporate debt. In addition, they have guaranteed repayment on $3.7 trillion worth of mortgage-backed securities they've issued.
Those securities are held by risk-averse investors such as banks, pension funds, and central banks around the world. Asian central bankers, in particular, had pressed the Treasury Dept. for action in the weeks before the takeover. Technically, Treasury is not guaranteeing the twins' obligations, but the chance that it would tolerate a default has dropped from small to near zero.
As investors get comfortable with Treasury's terms, the hope is they will settle for lower yields on the mortgage-backed securities Fannie and Freddie package and insure. Indeed, yields on the companies' mortgage-backed securities fell the day after the announcement by about 0.4 percentage points. National average rates on 30-year, fixed-rate mortgages fell by an equal amount between the Friday before the announcement and the Wednesday after, to about 5.7 percent, according to daily surveys by Bankrate.
Unclogging Fannie and Freddie's pipeline could finally make effective the easy-money policies of the Federal Reserve, which has cut the federal funds rate by 3.25 percentage points since the start of the crisis, to a stimulative 2 percent.
If mortgage rates keep moving lower, it should help some people refinance to avoid foreclosure while spurring sales by lowering the financial hurdle for people to buy homes. "I think this is a correct move. I think it will stabilize housing," says David Kelly, chief market strategist for JPMorgan Funds.
Stabilizing the housing market would be a confidence booster for the entire economy and the financial system. John Paulson of Paulson & Co., a $35 billion hedge fund that made a killing in 2007 betting against the U.S. subprime sector, told clients in a conference call days before the Treasury announcement that he's finally ready to make some tactical investments in financial firms that have gotten especially cheap, even though he thinks prices in the overall sector still have further to fall as foreclosures mount. His toe-dipping was first reported by the Financial Times.
If the housing market stopped sinking, or even rose, consumers might also spend more liberally, which would then boost employment and induce even more spending — the classic virtuous circle.
One optimist, James W. Paulsen (not to be confused with Henry or John), chief investment officer of Minneapolis-based Wells Capital Management, notes that the 94 percent of the economy that's not housing or autos has grown over 5 percent over the past year, while the 6 percent consisting of housing and autos has shrunk 20 percent. The implication, says Paulsen: "A quicker-than-expected turnaround is possible, since it would not require a broad-based recovery, but rather only a cessation of the collapse in two industries."
Signs of health in the U.S. economy would reduce the risk of a panicky pullout by foreign investors, ensuring that inflowing capital would help finance spending by American households and businesses. In fact, the dollar rose after the Treasury announcement, adding to a gain of 10 percent against six major currencies since mid-July.
The nightmare
So we're golden, right? Well, maybe not. In the vicious-circle scenario, Treasury's intervention ends up being a replay of Japan's ill-fated effort to prop up crippled banks in the 1990s. Increasing the availability of credit delays — but does not prevent — the full price decline needed to clear out the daunting overhang of nearly 4.7 million unsold existing homes as of July.
As the lender of last resort, the government throws good money after bad, first on housing and then on airlines, automakers, and other supplicants. All this against an undeniable backdrop of rising federal deficits: The Congressional Budget Office predicted this month that the federal budget deficit would remain above $400 billion annually from 2008 through 2010, up from about $160 billion in 2007.
In the nightmare scenario, the descent into quasi-socialism balloons the national debt and wrecks foreign investors' faith in the economy.
That's the vision sketched out by ultra-bears like Peter Schiff, president of Euro Pacific Capital, a brokerage in Darien, Conn. Schiff is passionate on the topic: "The dollar is going to go through the floor, interest rates are going to spike up, and we're going to have a complete financial meltdown. It's going to be the worst-case scenario."
A different school of pessimists says the housing market actually does need a big adrenaline shot from the government. But they say it's unlikely to get one from either a McCain or an Obama Administration because the risk to taxpayers from a much bigger commitment to housing would be deemed too great.
The only real beneficiaries of the takeover are the holders of Fannie and Freddie securities, who are bailed out of their bad investment choices, says Robert I. Kessler, CEO of Kessler Cos., a Denver investment firm. Says Kessler: "It's a great thing for the big banks. I don't see any benefit whatsoever to consumers."
Specifically, the Fan-Fred takeover does nothing to help homeowners who can't refinance a home loan because their property is assessed for less than they owe. It also may not be enough to draw in buyers, who are focused more on the risk of declining home values than on the upside of a slightly lower mortgage rate.
"I've sat in open houses, and you just can't get people to make an offer," says Edward Cudahy Spalding, a real estate broker in Fort Lauderdale. "You've got to reinflate values in the housing market. I don't know how you do that."
Without more relief for homeowners and consumers, the housing-led recession is likely to deepen. In this vicious-circle scenario, the housing slump depresses consumer spending, leading to job cuts and thus forcing even more foreclosures and bigger spending reductions — in other words, the mirror image of the virtuous circle.
Vulnerable sectors include finance; nonresidential construction, which tends to follow homebuilding downward with a lag; and retail, which has so far lost only a modest number of jobs nationally relative to the size of the sector.
Away from Wall Street, the mood is glum. Douglas S. Bartlett, owner of Bartlett Manufacturing, a maker of printed-circuit boards in Cary, Ill., says competition from China has forced him to cut employment nearly two-thirds since 2000, to 87. He hasn't felt any reprieve from the dollar's recent depreciation against China's currency. Says Bartlett: "Fortunately for us, there's been enough of our competitors going out of business that we're able to pick up their work."
In Sacramento, restaurateur Ali Mackani was forced to shut down his fashionable Restaurant 55 Degrees shortly after Labor Day because of slower-than-expected commercial and residential development in the area, which he had been counting on to produce customers.
Today's business failures ripple across the economy, triggering more failures. And when the financial system is crippled by losses, the hoped-for V-shaped recovery can flatten out into a wide-bottomed U, says Dan North, chief economist of Euler Hermes ACI, a North American unit of Germany's Allianz Group that insures accounts receivable. North says that because of business failures, the number of insurance claims processed by his company was up 80 percent in the first six months of 2008 compared with a year earlier.
Hedge your bets
It's easy to imagine either scenario unfolding, good or bad. And really, that's the whole point. Blind conviction has not served us well. On the one hand, the credit crunch has embarrassed optimists, like Federal Housing Finance Agency Director James B. Lockhart III, who averred on March 19 that Fannie and Freddie "will continue to be safe and sound" and called the idea of a bailout "nonsense."
In his new book, "The Subprime Solution," Yale University economist Robert J. Shiller says regulators suffered from an "inability to believe that there could ever be a housing crisis of the proportions we are seeing today."
On the other hand, it would be equally wrong to assume the worst and get into a defensive crouch, as some investors have done. Prices of some derivative securities are so low that they seem to factor in a complete collapse of the U.S. economy.
And yet investors who smell a profit opportunity in those assets are holding back because they worry their prices could go even lower before rebounding.
Ricardo Caballero, a Massachusetts Institute of Technology economist, wrote in the Bank of France's Financial Stability Review in February that "in today's market, uncertainty has led every player to make decisions based on imagined worst-case scenarios."
What to do? Whether you're inclined toward the virtuous circle or the vicious one, hedge your bets. Because as the Fan/Fred takeover shows, just about anything can happen.
Copyright © 2008 The McGraw-Hill Companies Inc. All rights reserved.
URL: http://www.msnbc.msn.com/id/26662761/
OT:Direct Hit: Hurricane Ike Zeros in on Facilities and Rigs
by Phaedra Friend
Rigzone 9/11/2008
URL: http://www.rigzone.com/news/article.asp?a_id=66545
The fifth hurricane in the 2008 hurricane season, Hurricane Ike is currently a Category 2 storm, according to the National Hurricane Center. As of 7 a.m. on Sept. 11, Hurricane Ike is located approximately 575 miles east of Brownsville, Texas, and about 270 miles south-southeast of the mouth of the Mississippi River (latitude 25.3 north, longitude 88.0 west).
With current sustained wind gusts of nearly 100 mph, the storm has the potential of turning into a Category 3 hurricane in the next 24 hours. Gaining strength over the warm waters of the GOM, the storm is expected to be its strongest when passing oil and gas fields and facilities in the central GOM. While the path of the storm has changed over the last couple of days, all measures have already been taken by the oil and gas industry to ensure the safety of its offshore personnel and facilities.
According to the most-recent report from the Minerals Management Service, personnel have been evacuated from 452 production facilities, or 63% of the 717 manned platforms in the GOM. Additionally, personnel have been evacuated from 81 rigs, accounting for 66.9% of the drilling rigs currently working in the gulf.
Production has, again, been brought to a standstill, just a week after the passing of Hurricane Gustav and subsequent production shut-in. The MMS reports that 95.9% of the oil and 73.1 of the natural gas produced in the gulf are currently shut-in.
Prepared and Ready
Always putting the safety of its people first, operators and contractors made the call to evacuate personnel in the GOM. Following the structural destruction of the 2005 hurricane season, the petroleum industry has reassessed and revised design and safety protocol to better withstand hurricanes. The success of this initiative can be seen by the minimal damage caused by Hurricanes Dolly and Gustav.
Diamond Offshore, which has a number of drilling rigs in the path of the storm, has begun following company standard procedures in the event of a major storm in the GOM, Les Van Dyke, director of investor relations for Diamond Offshore, told Rigzone. "We have secured all equipment and evacuated all of our rigs," Van Dyke added. "We'll stand by for the passage of the storm, get out there and evaluate as soon as possible – and get back to work."
In yesterday's direct-hit area, Shell's newly installed Perdido spar seems to have escaped the wrath of Hurricane Ike with expert's new projected path. Construction continues on the spar, and Shell's Global Media Relations Manager, Jaryl Strong informs Rigzone that all safety precautions have been undertaken and "the Perdido spar is storm-safe," adding, "all nine mooring lines have been installed by the Balder."
Like many operators and contractors with personnel working offshore in the GOM, Shell made the decision early to evacuate personnel from every offshore facility in the gulf, completing evacuations by Wednesday, Sept. 10.
According to data and maps obtained from GOMExplorer, the following rigs will weather the brunt of the storm over the next 24 to 48 hours:
Production Facilities in the Path of the Storm Drilling Rigs in the Path of the Storm
Chinook FPSO (under construction)
Shenzi (under construction)
Phoenix FPU (under construction)
Tahiti (under construction)
Atlantis
Holstein
Marco Polo
Neptune
Mad Dog
Front Runner
Allegheny Mini TLP
Brutus
A Prince TLP
Bullwinkle
Jolliet
Constitution Spar
Magnolia TLP
Red Hawk
Auger
Baldpate
Enchilada
Salsa
Cougar
Cottonwood
GB 236
Gunnison Spar
Nansen Spar
Snapper
Hoover
Boomvang
Falcon Nest
East Breaks 110
EC 373 Platform
GB 189 A
Semisubs
Ocean Endeavor
Noble Amos Runner
GSF Development Driller II
GSF Development Driller I
Transocean Marianas
Ocean Star
Cajun Express
Noble Paul Romano
Ocean Baroness
Ocean America
Ocean Victory
Noble Lorris Bouzigard
Drillships
Discoverer Deep Seas
Discoverer Spirit
Stena DrillMAX
GSF CR Luigs
Belford Dolphin
Jackups
Ensco 74
Ocean Spartan
Blake 303
Pride Missouri
Rowan Gorilla II
Rowan Gorilla III
Ocean Tower
Hercules 211
Rowan Anchorage
Hercules 350
Bob Palmer
Ensco 60
Pride Michigan
Hercules 250
Hercules 200
Hercules 152
Where's the ROO for Sinopec-Addax?
Good point Art, "Earning more revenue thru oil E and P could be an attractive alernative to "governmental mandated" losses in refining.
What's your take on BB's post?
By: balance_builder from the RB board
21 Aug 2008, 08:57 PM EDT
Msg. 108721 of 108782
Jump to msg. #
R O O
Most importantly is the fact that Addax Petroleum has not lighted up at all on their call for an ROO to be drilling Q4 08. In fact, their presentation charts indicate as early as October 08.
Then you have Pup's posts on Ihub dated back in May 08 indicating we'll have R O O news before the end of Q-3 08 per his contact with one of the JDZ operators. Interestingly, Pup stated that it will be a rig sharing between 3 of the JDZ operators.
That is followed by Oilphants post of 7/31/08 and 8/8/08 indicating R O O news for ERHC.
Then, on 8-12-08 James Ledbetter very clearly told listening shareholders at the CC that they would not let the delay of the AA interfere with Addax drilling schedule and a R O O would be found...going so far to mention that it would be utilized within 2 to 3 months of finding it (I thought that comment was strange). Better yet, James indicated the consortium of JDZ operators would like to drill a well in all three blocks with slots from a R O O and then drill production wells with the AA when it arrives. Seems to match Pups much earlier call.
Now, most recently, respected post Spec on Ihub is hearing rig news before the end of 2008.
AP, Sinopec: 1H net profit down 77 pct
Sunday August 24, 11:09 pm ET
Sinopec says 1H net profit down 77 pct on refining losses
SHANGHAI, China (AP) -- Asia's biggest refiner, Sinopec, said Monday that its first-half net profit fell 77 percent from a year earlier due to losses in its refining business.
The company, whose full name is China Petroleum & Chemical Corp., said in a statement to the Hong Kong Stock Exchange that its net profit, according to international accounting standards, was 8.3 billion yuan ($1.2 billion) in January-June. That compared with 37.8 billion yuan in net profit in January-June 2007.
A gap between surging global crude oil prices and controlled domestic prices for processed oil products means China's refiners are losing money on any oil they refine. According to the official Xinhua News Agency, Sinopec said it lost 46 billion yuan ($6.7 billion) in refining in the first half of the year.
The company warned that it expects a year-on-year decline of more than 50 percent in net profit for the first three quarters of the year.
Sinopec said in its statement that it received government subsidies totaling 33.4 billion yuan ($4.9 billion) in the first half of 2008.
International crude oil prices surged more than 50 percent in the first half of the year, peaking at $147 a barrel on July 11. They now hover near $114 a barrel.
Sinopec processed 84.3 million tons of crude oil in January-June, up 6.7 percent from the same period of 2007, it said.
With the economy still growing at a rate of about 10 percent, demand for oil and oil products remains strong. Consumption of oil products, such as gasoline and diesel, rose 14 percent in the first half of the year compared a year before, while ethylene demand rose 2.5 percent, Sinopec said.
Form 10QSB for TIMBERLINE RESOURCES CORP
14-Aug-2008
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under "Risk Factors and Uncertainties" in our Annual Report on Form 10-KSB, filed with the SEC on January 14, 2008.
Overview
We commenced our exploration stage in January 2004 with the change in the management of the Company. From January 2004 until March 2006, we were strictly a mineral exploration company. Beginning with the management appointments of John Swallow and Paul Dircksen and our acquisition of a drilling services company, Kettle Drilling, Inc. ("Kettle"), in March 2006, we have advanced a new, aggressive business plan. Prior to our new business model, the addition of new management, and the purchase of Kettle, the Company had no reported revenues and accumulated losses.
Timberline Resources Corporation has taken the complementary businesses of mine development, contract mining, drilling and mineral exploration and combined them into a unique, forward-thinking investment vehicle. The Timberline business model provides investors exposure to both the "picks and shovels" and "blue sky" aspects of the mining industry. The "picks and shovels" aspect of our business includes the mining services provided by Kettle and the services which SMD will provide if the proposed acquisition is approved. We use the term "blue sky" to mean the potential of our exploration properties. Because of the nature of exploration for precious metals, a property's exploration potential is not known until a significant amount of geologic information has been generated. As the work progresses, the potential of the property becomes more and more clear. If the exploration results are favorable, the value of the property may increase significantly, and the term "blue sky" refers to the upside potential of that value. Our business model offers the opportunity to participate both the "picks and shovels" and "blue sky" aspects of the business-we can participate in the surging markets for precious and base metal mining without the degree of risk inherent to mine operation and/or sole reliance on speculative early-stage drill-plays. Following the closing of its proposed acquisition of SMD, we believe Timberline will be poised to become North America's premier vertically-integrated emerging resource company.
As we have announced previously, the Company's shares began trading on the American Stock Exchange (AMEX) during the quarter ended June 30. In addition to commencing trading on the AMEX, the Company was also added to the Russell Microcap Index during the quarter. We believe the Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for both passive and active investment strategies. These two events are significant milestones for the Company, as they both improve our access to capital markets and further validate our business model as a vehicle providing mainstream investors with exposure to the resource sector.
Kettle and its subsidiary, World Wide Exploration S.A. de C.V. ("WWE"), provide both surface and underground drilling services but specialize in underground, hard rock core drilling. Their clients include both mining and exploration companies in the United States and Mexico. For the second consecutive year, total revenues, both for the quarter and for the first nine months of 2008, increased approximately 100 percent compared to the prior year. Compared to the same quarter in the previous year, WWE showed an almost five-fold increase in net income before income taxes to $682,164 and an over 300 percent increase in net income before taxes to $1,451,322 for the nine months ended June 30, 2008.
Once again, we are pleased with our performance in Mexico and expect profitability to continue.
During the quarter we implemented our previously announced management transition at Kettle, which included severance payments to the previous management that resulted in a one-time charge of $1,880,590. As a part of this management transition, the Company undertook a detailed materials and supplies inventory analysis and determined that a charge to net income of $535,658 was appropriate to reflect the net realizable value of the materials and supplies inventory.
For the three months ended June 30, 2008, Kettle reported a net loss of $1,745,974. Without the one-time severance payments and adjustment to inventory, Kettle would have reported a net income before taxes of $670,274 for the quarter ended June 30, 2008 in addition to the net income before taxes of $682,164 realized by WWE in the quarter. In addition, we obtained a loan to repurchase and retire the majority of the outstanding Series A Preferred shares held by the previous owners of Kettle Drilling.
As a part of this transition, we have a new and more focused corporate culture at Kettle with an emphasis on improving the performance of the U.S. operations. During the quarter we hired Martin Lanphere as President of Kettle. Mr. Lanphere brings a hands-on management and banking background to the Company. In addition to Mr. Lanphere and a number of other personnel changes at Kettle, subsequent to quarter end we hired Reggie Montgomery as General Manager in charge of all drilling
operations. Mr. Montgomery was most recently with Newmont Mining and was Manager of Drilling Services. Newmont is a current customer of Kettle and our drilling teams worked directly with Mr. Montgomery in Nevada.
We believe that our new management team and ongoing focus from rapid growth to profitability will continue to improve our operating results. As previously announced, and based on the revenues reported by our drilling operations for the first three quarters, we are confident that, barring unforeseen events, we will achieve our 2008 drilling revenue objective of $30-million.
Subsequent to the end of the quarter, we announced the filing of our Definitive Proxy and Annual Meeting. The Proxy includes, among other items, our proposal to acquire Small Mine Development, LLC ("SMD"), one of the largest underground mine contractors in the United States. We believe that if we receive shareholder approval and complete the acquisition of SMD, this will provide us with the foundation to be a significant player in the North American mining services industry. We believe that our pursuit of SMD demonstrates our belief that a strong presence in both mining services and exploration is likely to provide excellent returns to our shareholders over the long term.
In our Exploration Division, during the quarter, as in previous quarters, we continued our exploration, permitting, and drilling activities. Our increased expenditures are representative of our commitment to ramp up exploration activity during 2008 on several of our properties. Subsequent to the end of the quarter, as announced, we mobilized a drill rig to the Butte Highlands property and drilling is currently underway on this project. Furthermore, we are moving forward with the permitting and planning necessary for additional drilling and exploration at Butte Highlands.
Also, as previously announced we received approval from Inyo County to proceed with exploration at Conglomerate Mesa and are awaiting final approval from the Bureau of Land Management for our planned road building and drill program. In preparation for our upcoming drill program, we conducted extensive mapping and sampling at this property, and we continue to build upon previous work performed by Newmont and BHP-Billiton as we explore and define this district-scale gold exploration prospect.
Results of Operations for the Three Month and Nine Month Periods ended June 30, 2008 and 2007
Combined Results - Timberline Corporate, Timberline Exploration, Kettle Drilling and WWE
For the three months ended June 30, 2008, we reported $9,703,813 in revenue compared to $4,798,748 in the same period of 2007. For the nine months ended June 30, 2008 we reported revenues of $24,525,265 versus revenues of $11,840,469 in the same period of 2007. Our revenues are derived entirely from our drilling subsidiaries and are comprised of $7,318,802 from Kettle Drilling and $2,385,011 from WWE for the three months ended June 30, 2008. For the nine months ended June 30, 2008, Kettle Drilling and WWE reported revenues of $17,983,223 and $6,542,042, respectively. Our revenue increase was primarily due to the growth in the number of drill rigs operating this year versus last year. Gross profit from Kettle and WWE was $1,271,632 and $784,544, respectively, for the three months ended June 30, 2008, and $3,664,286 and $1,929,783, respectively, for the nine months ended June 30, 2008.
Our overall after tax net loss for the three months ended June 30, 2008 was $2,615,278 compared to an overall net loss of $918,897 for the three months ended June 30, 2007. For the nine months ended June 30, 2008, our overall net loss was $5,096,026 compared to $2,279,947 for the same period in 2007. Our net loss for the three months ended June 30, 2008 is comprised of $1,325,486 for Timberline Corporate and Exploration and $1,745,974 for Kettle Drilling, offset by income of $456,182 at WWE. Our net loss for the nine months ended June 30, 2008 is comprised of $4,060,370 for Timberline Corporate and Exploration and $1,935,476 for Kettle Drilling offset by a gain of $899,820 at WWE. Kettle Drilling's net loss for the three months and nine months ended June 30, 2008 includes one-time severance benefits of $1,880,590 to former managers of the company.
Timberline Corporate and Exploration Division
The after tax net loss of $1,325,486 for the combined Timberline Corporate and the Exploration division during the three months ended June 30, 2008 is comprised of non-cash charges of $493,289, exploration expenditures of $167,098, and other general and administrative costs of $670,130, less other income of $5,031. A significant portion of other general and administrative costs during the quarter were related to legal and accounting costs associated with our proposed acquisition of SMD and our definitive proxy that was filed with the SEC subsequent to quarter end. Included in the non-cash charges are expenses related to stock options that vested during the quarter. Also included in the non-cash charges is $12,734 in Depreciation and Amortization.
The after tax net loss of $4,060,370 for the combined Timberline Corporate and the Exploration division during the nine months ended June 30, 2008 is comprised of non-cash charges of $1,332,222, exploration expenditures of $1,166,818, and other general and administrative costs of $1,661,188, less other income of $99,858. A significant portion of other general and administrative costs for the year to date were related to legal and accounting costs associated with our proposed acquisition of SMD and our definitive proxy that was filed with the SEC subsequent to quarter end. Included in the non-cash charges are expenses related to common stock issuances for consulting services, stock based compensation, and for stock options that vested during the year to date. Also included in the non-cash charges is $139,724 in Depreciation and Amortization.
Kettle Drilling and WWE
For the three months ended June 30, 2008, Kettle Drilling had revenues of $7,318,802 as compared to $3,855,351 for the three months ended June 30, 2007.
WWE had revenues of $2,385,011 for the three months ended June 30, 2008 as compared to $943,397 for the three months ended June 30, 2007. The increase in revenues is attributable to the growth in the number of operating drill rigs at each company.
For the three months ended June 30, 2008, net loss before taxes from Kettle was $1,745,974 while net income before taxes at WWE was $682,164 as compared to a net loss of $395,071 for Kettle and net income of $135,005 for WWE for the three months ended June 30, 2007. At Kettle, the current quarter loss is attributable to one-time severance expenses incurred as part of our management transition at the Company, while the net income at WWE grew substantially compared to the corresponding quarter in 2007 due to the increased activity and number of drill rigs in Mexico.
For the nine months ended June 30, 2008, Kettle Drilling had revenues of $17,983,223 as compared to $9,351,425 for the nine months ended June 30, 2007.
WWE had revenues of $6,542,042 for the nine months ended June 30, 2008 as compared to $2,489,044 for the nine months ended June 30, 2007. The considerable increase in revenues is attributable to the growth in the number of operating drill rigs at each company.
For the nine months ended June 30, 2008, net loss before taxes from Kettle was $1,935,476 while net income before taxes at WWE was $1,451,322, as compared to a net loss of $1,044,406 for Kettle and net income before taxes of $415,526 for WWE for the nine months ended June 30, 2007. At Kettle, the increased loss from last year is attributable to one time severance expenses incurred as part of our management transition at the Company, while the net income at WWE grew substantially due to the increased activity and number of drill rigs in Mexico.
Financial Condition and Liquidity
At June 30, 2008, we had assets of $23,722,439 consisting of cash in the amount of $2,922,345; accounts receivable, net of allowance for doubtful accounts, in the amount of $4,594,657; inventories valued at $2,048,350; property, mineral rights and equipment, net of depreciation of $9,785,525; and other assets of $4,371,562. The Company believes that its cash and cash flow from continuing operations will be sufficient to fund our operations for the next twelve months.
Off-Balance Sheet Arrangements
We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.
Critical Accounting Policies and Estimates
See Note 2 to the financial statements contained elsewhere in this Quarterly Report for a complete summary of the significant accounting policies used in the presentation of our financial statements. The summary is presented to assist the reader in understanding the financial statements. The accounting policies used conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
Our critical accounting policies are as follows:
Exploration Expenditures
All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized. If no mineable ore body is discovered, previously capitalized costs are expensed in the period the property is abandoned.
Revenue Recognition
Generally, the Company recognizes drilling service revenues as the drilling services are provided to the customer based on the actual amount drilled for each contract. In some cases, the customer is responsible for mobilization and "stand by" costs when the Company deploys its personnel and equipment to a specific drilling site, but for reasons beyond the Company's control, drilling activities are not able to take place. Usually, the specific terms of each drilling job are agreed to by the customer and the Company prior to the commencement of drilling.
Intangible Assets
Intangible assets from the acquisition of Kettle Drilling, including employment contracts, and customer drilling contracts, are stated at the estimated value at the date of acquisition. Amortization of employment contracts is calculated on a straight-line basis over a useful life of three years. Amortization of the drilling contracts is calculated on a straight-line basis over the life of the contracts (typically one year or less). The value of employment and customer drilling contracts will be periodically tested for impairment. Any impairment loss revealed by this test would be reported in earnings for the period during which the loss occurred.
Inventories
The Company values its inventories at the lower of average cost or market, using the first-in-first-out (FIFO) method. Allowances are recorded for inventory considered to be in excess or obsolete. Inventories consist primarily of parts, operating supplies, drill rods and drill bits. The value of inventory previously used in drilling and still considered useable, is valued at 25-90% of cost depending on remaining life expectancy.
Review of Carrying Value of Property and Equipment for Impairment
The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the asset. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors.
Goodwill
Goodwill relates to the acquisition of Kettle Drilling. In accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," at least annually goodwill is tested for impairment by applying a fair value based test. In assessing the value of goodwill, assets and liabilities are assigned to the reporting units and a discounted cash flow analysis is used to determine fair value. There was no impairment loss revealed by this test as of September 30, 2007.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments, we use the Black-Scholes option pricing model to value the derivative instruments.
Certain information contained in this "Management Discussion and Analysis" constitutes forward looking information and actual results could differ from estimates, expectations or beliefs contained in such statements.
Timberline Questions
From the Yahoo board
There appears to be some incredible disinformation spreading around this rumor board regarding Timberline. Although this is a medium of information exchange I traditionally stay very far away from, I would like to offer those with concerns regarding TLR the opportunity to submit questions to me. I may be contacted via the 'Contact us' at www dot goldseek dot com (the link is located at the top of goldseek)
Due to very limited time and obligations, I may not be able to return all requests. I am also not going to be responding questions posed on this message board directly. If you wish to receive a response, please contact me at the link above. I may post responses on this public forum.
Timberline Resources is my largest position because I believe in the business model and more importantly in its seasoned management. I am a shareholder for many years and have been a content buyer during this pullback. The company is one of dozens of paying advertisers on precious metals websites I am a proprietor of; I am biased and not afraid to disclose my true identity and full disclosure, unlike other anonymous posters here.
I could not be more excited by TLR’s future prospects; the SMD acquisition is going to dramatically enhance shareholder valuations. Having watched the business model develop over the past few years has been very exciting. The success of TLR is being noticed by other mining service companies and there is at least one upcoming IPO that looks to also take advantage of this lucrative business model as well. I also do believe that the true market valuation is multiples above the current market price upon completion of the SMD acquisition. I also believe the current market set-up is temporary in nature and the reversal could be vicious. This will be further detailed in my upcoming public reports.
Sincerely,
Peter Spina
President, GoldSeek dot com
silver 100,
Thanks for sharing your thoughts. Agreed, TLR is ridiculously undervalued. Here are the Historical Prices since AMEX. GLTY!
CS
"NO idea how much more selling can come if any. I’d love to call the bottom right here and now. But I am not omnipotent. I’m just a shareholder who believes this company will continue to deliver like they always have ever since I bought them years ago. I’m not selling anytime soon, and will look to buy more if I find profits to take elsewhere. Be right, sit tight. Be patient. Our value will be realized. Take a fundamental look for yourself and if you think we are ridiculously undervalued like I do, then you should sleep as soundly at night as I do knowing of what will happen in the days to come.:
Historical Prices
Date Open High Low Close Volume Adj
Close
2008/07/22 2.45 2.45 2.25 2.25 25,600 2.25
2008/07/21 2.50 2.50 2.41 2.45 53,800 2.45
2008/07/18 2.47 2.50 2.40 2.50 16,500 2.50
2008/07/17 2.45 2.50 2.40 2.49 28,050 2.49
2008/07/16 2.40 2.49 2.40 2.49 13,550 2.49
2008/07/15 2.50 2.50 2.40 2.50 23,100 2.50
2008/07/14 2.49 2.54 2.46 2.54 25,355 2.54
2008/07/11 2.55 2.55 2.41 2.50 29,235 2.50
2008/07/10 2.70 2.70 2.50 2.59 50,692 2.59
2008/07/09 2.99 2.99 2.65 2.70 24,250 2.70
2008/07/08 2.75 2.79 2.65 2.75 21,520 2.75
2008/07/07 2.61 2.92 2.61 2.75 25,155 2.75
2008/07/04 2.77 2.77 2.77 2.77 - 2.77
2008/07/03 2.89 2.89 2.75 2.77 16,625 2.77
2008/07/02 2.80 2.89 2.76 2.76 16,800 2.76
2008/07/01 2.93 2.93 2.75 2.81 48,575 2.81
2008/06/30 3.09 3.10 2.91 2.99 50,750 2.99
2008/06/27 3.05 3.18 2.90 3.03 127,05 3.03
2008/06/26 3.08 3.35 3.04 3.08 54,227 3.08
2008/06/25 3.08 3.10 3.00 3.08 17,078 3.08
2008/06/24 3.20 3.30 2.93 3.15 41,277 3.15
2008/06/23 3.01 3.30 2.90 3.25 89,967 3.25
2008/06/20 3.30 3.32 2.65 2.65 71,474 2.65
2008/06/19 3.32 3.35 3.11 3.30 60,529 3.30
2008/06/18 3.29 3.34 3.27 3.28 11,600 3.28
2008/06/17 3.34 3.50 3.20 3.30 47,800 3.30
2008/06/16 3.33 3.38 3.21 3.28 17,185 3.28
2008/06/13 3.35 3.40 3.33 3.38 5,135 3.38
2008/06/12 3.35 3.39 3.26 3.35 87,655 3.35
2008/06/11 3.45 3.45 3.26 3.39 21,470 3.39
2008/06/10 3.53 3.53 3.37 3.45 16,879 3.45
2008/06/09 3.70 3.70 3.52 3.60 6,050 3.60
2008/06/06 3.70 3.74 3.60 3.72 14,076 3.72
2008/06/05 3.68 3.68 3.50 3.65 13,500 3.65
2008/06/04 3.55 3.74 3.50 3.66 26,420 3.66
2008/06/03 3.70 3.70 3.49 3.66 12,625 3.66
2008/06/02 3.71 3.71 3.51 3.69 26,737 3.69
2008/05/30 4.11 4.11 3.74 3.78 10,700 3.78
2008/05/29 3.85 3.85 3.71 3.79 19,500 3.79
2008/05/28 3.93 3.97 3.74 3.90 21,316 3.90
2008/05/27 4.19 4.19 3.90 4.00 56,102 4.00
2008/05/26 - - - - - -
2008/05/23 3.85 3.95 3.76 3.95 10,135 3.95
2008/05/22 3.95 3.97 3.85 3.89 43,550 3.89
2008/05/21 3.90 4.05 3.89 3.95 61,010 3.95
2008/05/20 3.94 3.94 3.75 3.89 42,400 3.89
2008/05/19 3.90 4.10 3.76 3.97 118,825 3.97
2008/05/16 4.13 4.14 3.60 3.90 146,620 3.90
2008/05/15 4.00 4.40 3.85 4.13 148,050 4.13
2008/05/14 3.57 3.99 3.46 3.99 257,705 3.99