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I am not familiar with BPRG so cannot comment on that, but any more detail that you have would be welcome.
As far as the share price, I am certain that it has been manipulated recently and forced down. One of the reasons suggested is in relation to the Form 8-K issued on 31st March 2006.
Weblink:
http://www.sec.gov/Archives/edgar/data/1164538/000114420406012880/0001144204-06-012880-index.htm
Extract as follows:
"On March 24, 2006, Centurion Gold Holdings, Inc. (the "Company") entered into an agreement with Laurus Master Fund, Ltd. (the "Amendment Agreement") for the purposes of amending certain terms of the Secured Convertible Term Note dated September 23, 2004 in the aggregate principal amount of $3,000,000 (the "Note"). The Amendment Agreement provides that the conversion price with respect to $750,000 of the Note be reduced from $.30 per share to 75% of the five lowest closing prices of the Common Stock during the 22 trading days prior to the date of conversion, subject to a limitation that the conversion price may not be less than $.05 per share. The balance of the Note (other than the $75,000) shall remain convertible at a fixed price of $.30 per share."
The last sentence has a typo and should read $750,000 and not $75,000.
When you look at the chart and the share trading since mid-March (before the 8-K was published, but at a time that Laurus Master Fund would have been aware of the revised agreement), it seems more than coincidental that the share price continued to drop to a price around $0.06 on 28th April 2006 and was held there for 5 days before the recent spike in volume and price:)
I've been watching this stock very closely and during that period I thought that the MM's were trying to force the price down irrespective of any buying pressure during that period, by inducing selling. The chart seems to support this theory....I think that was the bottom, a manipulated one at that. Now I think we are stabilising in a trading range around $0.07, whilst the stock finds it's bearings.....so I anticipate great upside potential from here:)
OT: Long on BIGN too, thanks for all your DD there:)
No probs:) I asked the PR company for some information regarding the IPO in an email dated 24th April 2006. The response from Dilek Mir (MCC Financial Services) was:
"Centurion cannot comment at this time because the Company is in a quiet period in the follow up to its intended listing/ IPO on the AIM exchange."
I replied asking if the 'quiet period' was for legal reasons or because they were too busy to respond. Dilek stated that it was for legal reasons.
I looked into this further and checked out the AIM website (London Stock Exchange). There are some guidelines there advising on the procedure to float on AIM, in a pdf document file. It actually states that between '2 months and 2 weeks' before the formal official announcement is made, concerning the proposed flotation, a news blackout is usually applied to the company. I can try and locate the text but the reason for this was twofold:
1) Maximise the effect of the flotation announcement,
2) To control all information until it is correct and finalised in the Admission Document, which forms a key component for the flotation.
I think this explains the lack of PR at present on this matter. With regard to the flotation date, I know the original target was for May 31st but not surprised it has slipped a little as the preparation for the flotation involves a lot of work. It will happen, just a matter of time:)
Jack-up rig/ Transportation to Alaska (response to post #338).
Further update from Mr. Josh Wilson at NMA Maritime with regard to the jack-up rig transportion program. I asked about the departure date from the Gulf of Mexico for the journey to Alaska. Program details still being finalised but he did say:
"Some details are still being worked out but we expect it to sail sometime during July."
Arrival in Cook Inlet in September 2006 (based on this current info).
Jack-up rig/ Transportation to Alaska (response to post #331).
Received an email reponse today from Mr. Josh Wilson at NMA Maritime with regard to the jack-up rig transportion issue. They contacted Escopeta, to gain approval, before confirming the information. Extract from email follows:
"...NMA Maritime/COSCO can confirm our fixed contract with Escopeta Oil to transport the Songa Tellus Rig to Cook's Inlet, Alaska....."
They did not advise on program. I will write again to see if any info is available.
Oil and Gas Permit Application for Kitchen Prospects, Alaska
The "Public Notice for Application of Permit" submitted by Escopeta Oil and Gas to the US Army Corps of Engineers, Alaska District, can be viewed at:
http://www.poa.usace.army.mil/reg/PN_Scanned/2006%20April/POA-2006-312-1%20Cook%20Inlet.pdf
Publication date: 5th April 2006
Comment close date: 5th May 2006
It outlines the proposed drilling program, location /lease area maps, jack-up rig sections as well as natural resource issues in the area.
Note: Drilling to commence in East Kitchen prospect on August 1st 2006 if everything proceeds as programmed.
Nothing further to add...except the 'mis-statement' you referred to in your email is in fact a direct quotation from Form 10-QSB, filed on 14th February 2006.eom
Cook Inlet Area Wide Lease Sales (May 24th 2006) - Preliminary Results
With reference to my earlier post #319, the preliminary results of the Cook Inlet area wide lease sales are now posted on the Division of Oil and Gas website:
http://www.dog.dnr.state.ak.us/oil/
Escopeta were successful in bidding for Tract no. 275 (5760.00 acres). This is located to the north, and also adjoining, the current 'Kitchen' prospects. We need to wait and see if, firstly, these results are confirmed by the Division and secondly, whether Tract no. 275 will be added to the existing leasehold agreement between Centurion (and JV partner Carbon) and Escopeta. Note: a second bid for a smaller area in the same vicinity was not successful (Tract no. 285, 2560 acres).
As an aside, the site is also interesting as information is available on the other leases secured by Escopeta in the Cook Inlet over the last 6 to 7 years. Two other possible 'plays', one to the west and one to the north of the 'Kitchen' prospects, have also been secured by Escopeta. As far as I am aware, there has been no mention of possible JV's between Escopeta and another party to date. This information, therefore, just indicates further possibilities which may, or may not, develop in the future.
Web-links for Jack-up rig/ transportation post #331 ..these should work:)
USA Office
http://www.heavylift.net/contacts.html
China Office
http://www.coscol.com.cn/
Jack-up rig/ Transporation to Alaska
Found some more information on the organisation involved in the transportation of the jack-up rig to Alaska. I called the China office of Coscol (see web-site at http://www.coscol.com.cn) and they advised me that the contact in the States is NMA Offshore and Maritime Contractors. They are responsible for the exclusive worldwide commercial management of COSCO' semi-submersible dockvessels.
Not been able to make contact yet, but person involved in the project management of the Tai An Kou heavy lifting vessel is:
Mr Peter Hansen (Director)
NMA Maritime & Offshore Contractors, Inc.
757 N. Eldridge Parkway, Suite 190
Houston, Texas 77079
U.S.A.
Office phones: 1-281-497 4300 (main)
Fax: 1-281-497 4381
email: nma@nmamaritime.com
(see website http://www.heavylift.net/contacts.html)
May be able to get some more information on the shipping program from this source. I will send them an email requesting information/ update and follow up after the holiday weekend.
Rather than get into a long debate.
1. There is a JV agreement between Centurion and Carbon Investments (60 Carbon/ 40 Centurion). The overall allocation of the rights to these leases, along with Escopeta Oil and Gas share (both before and after the IPO) is detailed in the iBOX above.
2. The original JV agreement, which indicated some dilution, was made public in the Form 8-K filed on 7th November 2005. This agreement granted Carbon a one-year option to purchase up to 20,000,000 shares of Centurion common stock at $.50 per share. See http://www.sec.gov/Archives/edgar/data/1164538/000114420405034078/v028413_8k.txt
3. This JV agreement was amended and as reported in Form 10-QSB, filed on 14th February 2006 (for the quarterly period ended December 31, 2005, which was issued Centurion paid, “$2,000,000 and issued 60 million shares of our common stock, valued at $12,000,000, to buy out an option owned by a company called Carbon Investments Ltd.("Carbon").” See http://www.sec.gov/Archives/edgar/data/1164538/000114420406006129/0001144204-06-006129.txt
4. The shares outstanding have always been updated on the OTCBB website as well as others sources, in a timely manner and in advance of formal press releases. Regardless, current O/S shares should always be checked with appropriate parties prior to purchase, anyway, as part of good DD (note: Current O/S 239,866,321 as per 5/18/06).
I was aware of the JV with Carbon and the subsequent dilution before making any purchases in the Company. I suggest other interested parties carry out their own DD and form their own opinion.
You are right, without Carbon there would be no deal. Fortunately for Centurion, Carbon have the contacts and financial backing to help enable this project to proceed.
Good luck to all:)
Firstly, Dale Paul is no longer the CEO of Centurion or Chairman of the Board as announced in the press release of May 8th 2006. In fact he is no longer even with the company.
The mangement team has been changed with the introduction of Prof. Parsons as Chairman of the Board (He is a previous Director General of the South African Chamber of Business (SACOB). He is currently a Director of the South African Reserve Bank).
I do agree, however, that they should have mentioned the Carbon Investment deal in the press release of December 8th 2005. Whilst they were correct in their statement in the press release that the Escopeta deal was 'non-dilutive', they did not mention the Carbon Investments JV Agreement.
However, the Carbon Investments JV agreement was already in the public domain. It was issued in the Form 8-K on 7th November 2005. So Centurion shareholders were advised of the dilution well in advance and not as you have stated in your email "until the 4th quarter 10QSB was filed in February of 2006."
The clause states ......'OR' within 5 days of IPO flotation.
Clearly there is a choice concerning the payment to Escopeta which is based on the flotation date....which is still to be announced. As such, the date May 30th is not that significant.
Clause in full
"f) On or before May 30th, 2006 or within 5 days of IPO flotation
on the London AIM Market"...
Cook Inlet, Alaska Article
Recent article below mentioning Cook Inlet, Alaska. Note that annual area wide lease sales were held on May 24th 2006.
Escopeta and 'Kitchen Prospects' mentioned in the article.
Possible that they could also have been involved in bidding for additional leases in the area, which could make sense now the jack-up rig is secured. We will only know, however, when tender results are made public.
Petroleum News, Vol. 11, No. 16 Week of April 16, 2006
"ALASKA SHOW AND TELL
Lease sales include underexplored areas of North Slope Foothills, Cook Inlet"
http://www.petroleumnews.com/pntruncate/758095858.shtml
OT: NDOL: Big JV announcement just made...
Nord Oil / the North-West Oil Group to Create a Joint-Venture With Oil India, India's Leading Oil and Gas State Enterprise
Valuation/ estimate...
Just some thoughts on the valuation issue:
I think the 20% most likely refers to the % of the total assets used in the company's valuation.
Elsewhere I have seen a 10% figure of a company's total assets/ resources used to produce a quick ballpark figure by which to estimate the market cap, if fairly valued by the market (for both mining and for O&G Companies). A higher % is often used if the company is actively mining/ producing the resource.
i.e.
Total Resource ($) x 10% = Market Cap (estimated)
Market Cap divided by total shares outstanding = Target Share Price
In this instance they have selected 20% as they are currently in production or gearing up to be in the near future with the reserves indicated in their recent press release...
Just my 2c worth:)
OT: RU- have sent a couple of PM's so please check you have received ok.
Share dividend for IPO
The following is an extract from the December 8th 2005 press release. It has the normal caveat of the IPO not proceeding to protect the Company for legal reasons.
"Once the IPO has been completed, of which there can be no assurance, the Company intends to distribute to Centurion's shareholders shares of the new IPO. "
Until news is released I think it prudent to leave the iBOX information as it stands.
RU....Great job on the iBOX, looking good!
Checked on the figures from my earlier post regarding the leaseholder rights. Hands up, I made an error on my interpretation on the new agreement. Sorry for any confusion caused on that one, but I do post my info and opinion with references so that you can all check and carry out your own DD. Everyone should always check all posted info for accuracy before making any investment decisions.
Allocation of rights as follows:
IPO Shareholders 25%
Escopeta 18.75%
Centurion 22.5%
Carbon Investments 33.75%
The ratio of the JV between Carbon/ Centurion remains as 60/40 split.
This is still a large percentage of what is potentially a huge O&G find.
Still long and strong here:)
Good luck all:)
I guess a few billion dollars of oil and gas (which they commence drilling for this summer) and several million ounces of gold and platinum seems really 'lucky' to me:)
"Luck is what happens when preparation meets opportunity".
Elmer G. Letterman
"Diligence is the mother of good luck".
Benjamin Franklin
Major Oil and Gas potential in Cook Inlet, Alaska
Article below highlighting the Cook Inlet's O&G potential. This is supported by the findings of the U.S. Department of Energy’s report on the Alaska Cook Inlet (from which the Executive Summary is also attached below, following on from the main news article).
Original articles can be found at:
http://www.petroleumnews.com/pntruncate/123222605.shtml
http://www.cookinletoilandgas.org/
Petroleum News (Vol. 9, No. 35 Week of August 29, 2004)
ESCOPETA OIL'S SEARCH FOR COOK INLET 'MISSING GIANTS'
Independent shopping offshore Alaska prospects, using new seismic technology
The U.S. Department of Energy’s recently published report on Alaska Cook Inlet natural gas hypothesizes that there are missing giants — large oil and natural gas fields — that remain to be found in Cook Inlet. And U.S. Geological Survey scientists have theorized that only 4 percent of the oil which could have been generated by Cook Inlet basin source rocks has ever been identified.
Houston-based independent Escopeta Oil, one of the inlet’s largest state oil and gas leaseholders, thinks it has identified two of these missing giants in its Kitchen and East Kitchen prospects. Escopeta’s executives believe their two prospects contain substantial amounts of oil and gas and are looking for a partner so that Escopeta can bring in a jack-up rig and drill an exploration well.
Escopeta President Danny Davis told Petroleum News in July that the company hopes to have partners in place in time to begin permitting this fall and bring a jack-up rig to the inlet next year to drill the prospects, which are offshore the Kenai Peninsula, north of Nikiski.
The Kitchen and East Kitchen prospects are in 70 feet of water close to the Kenai industrial complex. They represent 10 years of work by the company, including studies by geologists with Cook Inlet experience and, more recently, the reprocessing of seismic by Houston-based Apex Metalink Inc. with its proprietary technology.
Prudhoe Bay happened
How could there be missing giants in Cook Inlet, a hydrocarbon basin which has been in production for nearly 50 years? A basin which sits on the doorstep of Anchorage, the oil company capital of Alaska?
“There were always a few questions that were unanswered when we were doing work in the inlet, in relation to the fields,” said Bob Warthen, a consulting geologist working with Escopeta. Warthen has worked the inlet since 1967, first for Union Oil where he was a regional geologist for 26 years, and then as a consultant.
“And after Prudhoe Bay was discovered, the inlet became a stepchild, so the working scenarios in the inlet were strictly a development-type scenario — develop the existing properties. Consequently very little exploration work has been done,” he said.
Geologists were reassigned and transferred away from work in the inlet, first to “Prudhoe Bay; then you had restructuring; then you had downsizing; then you had the oil problems in ’85 and ’86 — the oil price collapse; then more restructuring; then you had company mergers,” Warthen said.
“And all of this translated to people: people were transferred out; they were furloughed; some of them migrated to other professions — they weren’t coming back; some of them died. We’ve lost some significant talent in the inlet just because they passed away … Bob Levine … Charlie Selman. … I’m probably one of the few guys left working the inlet that started in the early days. There’s very few of us remaining and actively exploring,” he said.
Developing prospects
After Warthen took an early retirement from Unocal in 1992, he began working all the available data on the inlet, including well information and seismic, and looked at rocks, trying “to get a better understanding of the intricacies of the formations.”
And he developed a basin map, “let’s just call it an idea map, or as Danny (Davis) calls it, our ‘play book’,” he said.
That idea map, in different iterations, identified acreage acquired by Escopeta, which began looking for opportunities in Alaska in 1993 and bought its first leases in the state in 1994. The company now owns some 128,000 acres of state oil and gas leases in the Cook Inlet basin (see map on page 9).
An early prospect that Escopeta was involved in, and subsequently sold, was at Cape Starichkof, where ConocoPhillips Alaska drilled the Hansen wells at the Cosmopolitan unit.
Because Escopeta has worked on a number of prospects in the inlet, it took several years to do the work and assemble the leases for Kitchen and East Kitchen. “We basically had other things that required our attention in the inlet rather than some of the ideas that I had,” said Warthen.
Reevaluating Cook Inlet
The work Warthen originated on the inlet was focused on the petroleum system and potential untested habitats and traps for hydrocarbons. In addition to Warthen, geologists Walter Wells and Frank Banar, retired from Mobil, contributed to Escopeta’s “idea map,” hiring on as consultants for Escopeta.
“Reservoir rocks are not a problem in Cook Inlet: every horizon has reservoir rocks with varying porosities and permeabilities that are basically reasonable,” Warthen said. “Trapping was not really a problem either,” since available seismic provides “a decent understanding of the style of traps and accumulation mechanisms.”
Walter Wells did a search for everything written on the petroleum systems in the inlet, Warthen said. “When we started looking at the three things that you need for a prospect — the trap, the reservoir and the charge — we started really focusing on the petroleum system, on the migration path, the generating area, and we looked at a lot of the seminal USGS reports from some of the real experts in that field, and even interviewed some of them.”
The theory on migration of oil, Warthen said, is that the migrating oil finds a path, and then travels along that path, not deviating from it.
“When it leaves the source area, it migrates up dip and fills the deepest traps first,” he said. “As these are filled the oil continues to migrate up dip filling the shallowest traps in turn.”
Only 4% of oil identified
U.S. Geological Survey geologists have theorized that only 4 percent of the volume of oil that theoretically generated from Cook Inlet source rock has ever been identified.
Some of the oil could have leaked out of the basin, Warthen said. And there has been a theory that the basin tilted and the oil remigrated. If the basin tilted, he said, some traps would be pretty well filled and others are going to be only 15-20 percent filled.
But the known traps are filled between 58 and 65 percent, except Middle Ground Shoal, which Warthen said was filled 80 to 85 percent.
The Escopeta acreage position at Kitchen and East Kitchen is “just to the east of Middle Ground Shoal and situated directly overlying the Tertiary/Mesozoic depocenter and we believe the early oil is migrating in an east-west direction,” Warthen said.
Because of the known migration path of oil in the inlet, it is believed that oil migrated into the Kitchen prospect traps, filled those, and subsequently migrated on to Middle Ground Shoal and then into other fields, and “that’s the reason why Middle Ground Shoal is about 80 to 85 percent filled and the rest of these (farther along the migration path) are less (filled),” Warthen said. “We believe that these prospects are among the ‘missing giants’ postulated by the U.S. Department of Energy,” he said.
Warthen said the Kitchen prospect got its name “because we kept referring to this area here as the area where the oil was ‘cooked’, i.e. being the ‘kitchen’.”
Reprocessing and remapping
Escopeta has not shot any proprietary seismic, but it has purchased existing seismic from a number of companies and used those lines to delineate the area, to look at the prospect from “a structural standpoint,” Warthen said.
Escopeta has had the seismic lines it acquired reprocessed and based on that reprocessing it has remapped the Kitchen complex area.
The southern part of the prospect that contains East Kitchen has never been identified, Davis said, “and this feature extends another eight miles beyond the original tested anticline.” The South Cook Inlet anticline has been remapped and is now “about 15 to 16 miles long and about three to four miles wide,” he said. The Shell SRS No. 1 well on the northern flanks tested 360 barrels of oil per day from a lower Tyonek sand, he said, however other prospective pays were never tested due to collapsed casing.
“The southern half of the anticline is what we’re calling our East Kitchen prospect, and it has never been drilled. In effect, it is a major anticline with demonstrated hydrocarbons that have not been adequately tested,” Davis said.
“We took 1980’s seismic data and applied some new techniques to it: reprocessing, petrophysical studies on the rocks, sophisticated log analysis on the logs … gravity magnetic data, to back up our regional studies,” Warthen said.
So what do the combined studies indicate to Escopeta about potential Kitchen and East Kitchen reserves?
Escopeta consultants estimate potential reserves at East Kitchen as 2.33 trillion cubic feet of gas and 457 million barrels of oil, Davis said. For Kitchen the numbers are 3.95 tcf of gas and 829 million barrels of oil.
A new processing technique
One very important thing Escopeta did, said Frank Banar, was to have the data reprocessed using a process called wavelet energy absorption, which has been used in Asia, West Africa and Siberia. In China, he said, the process was used in basins which have both coal and gas, and where the gas needed to be identified on the seismic.
Because Cook Inlet has both coal and gas, the process seemed appropriate, “and so we were the first ones to do that here in Alaska,” Banar said. In addition to the seismic processing for gas, Apex Metalink also have a process for fluids identification.
The wavelet energy absorption processing “showed some significant gas reserves on the Kitchen and East Kitchen structures, especially in the Tertiary section, where abundant coal beds have generated major dry gas reserves,” Banar said.
Current Cook Inlet production is from Tertiary formations: dry gas from Sterling, Beluga, and upper Tyonek; oil from the lower Tyonek and Hemlock. There is no production from the older Cretaceous and Jurassic in the upper Cook Inlet basin, although surface oil seeps are known from the Jurassic Tuxedni formation. The Tuxedni, said Warthen, has been identified by the USGS as the source rock for all of the oil present in the Hemlock.
Davis said potential deep gas below the Tertiary is a separate prospect. The objectives at Kitchen and East Kitchen are the major producing Cook Inlet formations, the Sterling, Beluga, Tyonek and Hemlock. Escopeta does not attribute any reserves to pre-Tertiary, he said, but considers them a very viable future target based upon present seismic interpretations.
Big structure south of old well
One of the things the Department of Energy report notes, said Davis, is that the inlet has been explored for structural traps but not for stratigraphic traps. “There was no concentrated exploration for stratigraphic-type plays or potential below where they’ve found everything in the Hemlock (formation).” East Kitchen is a structural trap, he said, while Kitchen is a faulted stratigraphic trap first proposed by the USGS.
Looking at seismic, Davis said, just a few miles south of the Shell No. 2 SRS, “we had a large anticlinal structure there, and we couldn’t figure out why it hadn’t been drilled.” One interesting thing about Kitchen, he said, is that seismically it looks very much like the Beluga River field.
Escopeta had Core Lab of Houston do a petrophysical analysis of the Shell South Cook Inlet No. 2 well, one and a half miles north of Escopeta’s East Kitchen location. This well was drilled in 1965, had numerous oil and gas shows and casing was set, however the well was suspended and never tested in 1965, Escopeta said. No core data was available from the well, but Core Lab said core was available from the North Cook Inlet Unit No. B-01 well, and a “porosity permeability relationship was derived and the model applied” to the Shell No. 2 well. The lab said “results indicate that the South Cook Inlet No. 2 well appears to indicate some hydrocarbon potential,” and estimated 252 feet of gas pay and 303 feet of oil pay which was bypassed.
First partners, then a jackup
At one time, Davis said, Forest, ConocoPhillips, Prodigy and Escopeta were interested in working together to bring a jackup rig into the inlet. Collectively, “we had nine wells identified to be drilled with the jackup rig, unfortunately we were not able to move forward together.”
Escopeta doesn’t have any three-dimensional seismic, but Davis said that at this point, he wants to put money into drilling, rather than into 3D, “as 3D will not change the size of our structure, but will be an excellent tool for field development.”
Davis said that if drilling at East Kitchen confirms Escopeta’s interpretation, the plan is to set a production platform over the well so that the location could be produced.
Companies unfamiliar with Alaska
Davis said Escopeta needs partners to go ahead, however, he said, “finding partners for Alaska is a unique search.”
Some say the project is too costly, some want 3D seismic shot before they commit.
But most Lower 48 companies are just not familiar with Alaska, Davis said.
“They don’t know the potential. It’s not their operating backyard. They haven’t seen what I’ve been able to see through Bob’s, Frank’s and Walter’s eyes.”
What is the attraction for Escopeta? Cook Inlet has major reserves and an existing gas market.
“In my opinion,” Davis said, “there’s more current potential in what we have identified here than what some independents are pursuing on the North Slope.”
If they find gas on the North Slope, he said, they have no market, while in Cook Inlet, “it’s approaching a five-dollar market right now.”
Davis said companies also ask: “If we get up there, what else can we do?” If Escopeta is right about the reserves in the Kitchen and East Kitchen prospects, he said, “they’ll be drilling out here for the next 30 years. Because you’re going to set a platform on East Kitchen and probably two on Kitchen: that’s plenty for a company to do,” he said, referring to a map of the area.
“Plus, Bob (Warthen), Frank (Banar) and Walter (Wells) have other ideas, and we have other projects that we’re going to chase so there’s a lot, a lot more to do.”
Is there production to purchase?
One thing Cook Inlet apparently doesn’t currently offer, Davis said, is production that can be purchased. “One big independent in Houston said, ‘look, if you had some production we could buy up there, we’d buy the production and then we could combine that and we could drill your wells’.”
But, Davis said, “at today’s prices of $45 oil and $4.74 gas, it is time to drill wells, especially those that will lock up major reserves, and not buy production.”
What Escopeta is doing matches up with the Department of Energy report’s description of two-phase exploration history in mature basins, first exploration for structural traps like the company’s East Kitchen prospect, Davis said, and then a second phase focused on stratigraphic plays like the company’s Kitchen prospect.
“At this point in time Cook Inlet exploration is still in the structural prospect phase,” he said. “Few if any exploration plays have been pursued and drilled solely on stratigraphic trapping concepts. Based on exploration results in basins elsewhere, this implies as much as 50 percent or more of the basin’s reserve potential has not been investigated,” Davis said.
That’s what Escopeta is doing at Kitchen, he said, and the new seismic interpretation shows what the company believes is major oil and gas accumulations.
“Major companies have had success drilling behind WEA (wavelet energy absorption) and I think it works,” Davis said of the new APEX Metalink seismic processing technique. “We spent considerable money on processing and we’re the first ones to use that process here in the Cook Inlet basin chasing stratigraphic traps and that’s what we’re doing in the Kitchen prospect.”
Davis said Escopeta can take the results of the well drilled at East Kitchen, relate the logged oil and gas pays directly to the wavelet energy absorption and wavelet fluid absorption processed seismic anomalies “and get a very strong idea of what to expect at our Kitchen prospect, thus greatly reducing risk.” He said the East Kitchen prospect “is very similar to ConocoPhillips’ Cosmopolitan discovery. “We are drilling on an anticline up dip from actual tests for oil, 57 bopd at Cosmo and 360 bopd for East Kitchen with large upside potential for natural gas up hole.”
Davis said that Wells, Banar and Warthen’s “geological predictions were right on target for the successful Hanson well at ConocoPhillips’ Cosmopolitan prospect. I think we are getting ready to do the same exact thing again at East Kitchen, with the only difference being (that) the reserve potential at East Kitchen is almost three times as big.”
The Kitchen prospect, he said, is a 25,000-acre stratigraphic trap “that holds possible 3.9 tcf (of gas) and 829 million barrels of oil.
“I think there is plenty of oil and gas in our Kitchen prospects for any company large or small to be participating in for years to come,” Davis said. “Escopeta has been actually doing business in the Cook Inlet basin for over 10 years. We were in the right place, at the right time, with our own in-house geological studies and resources to build an exploration opportunity of a lifetime,” he said.
“Alaska”, said Davis, “is definitely the place to explore for world-class oil and gas reserves.”
Editor’s note: Kay Cashman, Petroleum News publisher and managing editor, and Kristen Nelson, Petroleum News editor-in-chief, conducted the interview for this story.
Excerpts from DOE’s Cook Inlet basin gas study
The following information was taken from the executive summary of the U.S. Department of Energy’s South-Central Alaska Natural Gas Study, which was released in June.
Summary conclusions
The Cook Inlet basin is the source for all of the natural gas used in south-central Alaska. This gas supplies the residential and commercial demand for utility gas and electricity generation and two industrial facilities, Agrium’s fertilizer plant and the ConocoPhillips/Marathon LNG plant, in Nikiski, Alaska on the Kenai Peninsula.
• The current remaining proven reserves represent about a 9-year supply at current demand rates.
• The estimated ultimate recovery for existing Cook Inlet gas fields is approximately 8.5 trillion cubic feet.
• Ninety-five percent of the gas was found before 1970 during exploration for structurally trapped oil.
• There was no gas-focused exploration until the late 1990s.
The Cook Inlet basin lacks numerous medium to large gas fields when viewed from the geologic expectation of a lognormal distribution of field size and reserves. A total Cook Inlet gas resource endowment of 25 to 30 trillion cubic feet original-gas-in-place … is postulated.
• The potential exists for an additional 13 to 17 tcf of conventionally recoverable gas in the Cook Inlet basin in addition to the 8.5 tcf recoverable gas already discovered. …
• These resources are expected to be largely biogenic gas in stratigraphic or combination traps.
• No exploration has yet occurred for stratigraphic accumulations. …
Proven reserves in known fields are forecast to meet demand until 2012 for the base case, which assumes the Agrium fertilizer plant shuts down in 2005 as a result of lack of sufficient quantities of low-cost gas and that LNG export ends when the current contract and export license expires in the first quarter of 2009.
A shortage will occur by 2009 unless new reserves are found and developed, or industrial use is curtailed. Large seasonal swings in demand and very limited gas storage could lead to seasonal shortages before 2009. …
New gas is being discovered and developed as a result of the stimulus being provided by higher prices and market demand. …
• Reserves growth is expected to occur in response to an increase in real prices. A recent contract has indexed prices to a 36-month average of Lower 48 reference prices (Henry Hub).
See DOE’s report on web site http://www.cookinletoilandgas.org/
Exactly:) Thought this recent article would be of interest, as it highlights some of the recent developments. The drilling of the first of four Alaskan prospects ('East Kitchen') commences this summer.
Petroleum News, March 16, 2006 (Vol. 12, No. 15)
SONGA CONTRACTS WITH INLET DRILLING FOR JACK-UP CREW; ESCOPETA HAS AGENCY PRE-APPLICATION, UNIT MEETINGS FOR COOK INLET PROJECT
Greg Carter with Songa Offshore is headed to Alaska the week of March 19 to meet with Kenai, Alaska-based Inlet Drilling, which is supplying the crews for Songa’s Tellus jack-up rig that will be headed to Alaska this summer for Escopeta Oil to drill the Kitchen prospect in Cook Inlet.
Bob Warthen, a consulting geologist working with Escopeta, told Petroleum News today that some Inlet crew members will be sent to Port Arthur, Texas, to get familiar with the jack-up drilling rig. The Tellus is currently being refurbished in Port Arthur on the Gulf of Mexico.
Warthen has worked the inlet since 1967, first for Union Oil where he was a regional geologist for 26 years, and then as a consultant.
On March 15, Warthen and Escopeta’s permitting contractor, Entrix, had a pre-application meeting for the Alaska Coastal Management Program. Several government agencies were represented in the meeting, including the U.S. Coast Guard, U.S. Corps of Engineers, U.S. Fish & Wildlife, Alaska Department of Environmental Conservation, the state Department of Natural Resources’ Division of Oil and Gas, and the coastal district office of the Kenai Peninsula Borough, among others.
“We have met with all the agencies separately, but this was our first meeting with everyone in the same room,” Warthen said.
Escopeta, he said, has applied to join Cook Inlet Spill Prevention and Response Inc., better known as CISPRI, an inlet response contractor.
Warthen was scheduled to meet today with Division of Oil and Gas officials regarding unitization of Escopeta’s Kitchen prospect.
Agreed. Great, thanks for that and look forward to news as you receive it.
Don't get me started on valuations for CGHI, not today anyway:) Have carried out some number crunching on the various scenarios, but will save that one for another day:)
PS. Yep, CWPC was and still is a gem.......they are out there:)
Not enough time to shoot through your rubbish...so I won't lol:)
RUCrazy: Thanks for the nice comments:)
I am not sure how the Moderation/ ibox is managed and who updates it....obviously it's not been done for a while and doesn't reflect the current situation......any suggestions or do we just get in touch with the moderator to see if he is still around??!
Finance/ Share Holdings of IPO
Try and keep this one as short as possible:
Finance:
The numbers you mention for the cost of the O&G business are more or less correct. Some information is available with regard to the costs of the IPO listings under the relevant SEC filings covering the appointments of Consultants involved.
The latest finance figures/ project funding are not available but will be when the IPO is formally announced. This is a requirement under AIM regulations that a Company can float only when adequate finances are in place (worth going to www.londonstockexchange.com for listing requirements under AIM for more info).
In Form 8-K (released 7th November 2005)detailing the JV agreement between Centurion and Carbon Investments dated 28th October 2005 it was stated under items 2) and 3):
"2. Carbon has experience in introducing natural resource companies to listing on AIM on the London Stock Exchange and has contacts with Financial Advisers who wish to assist Centurion in listing the Rights on AIM.
3. Carbon also has access to third parties and investors who may be interested in financing the exploitation of the Rights."
The finance for the project needs to have some kind of perspective. I think a short term loan, of $14 million if needed, given the reserve estimates below and future revenues, should be fairly easy to secure to enable the project to proceed.
RESERVES
1. Independent petroleum engineers, Prattor Bett LLC,(see PR November 14th 2005) have estimated potential O&G reserves at the mid-level of:
OIL
246 million bo @ $70 barrel = $17.2 billion
GAS
1.2 billion cf @ $6.50 = $ 6.5 million
and at the high level:
OIL
933 million bo @ $70 barrel = $65.31 billion
GAS
3.2 billion cf @ $6.50 = $ 17.3 million
Note: These estimates allow for significantly less gas than as estimated by Escopeta (see PR October 21st 2005).
Share holding
The Newco will be a separate company from Centurion, with reporting separately as required under AIM rules. The IPO is for the spin-off of the Alaskan Oil leases only. The PR of December 8th 2005 states:
"Centurion is entering into an agreement with Escopeta to spin off the oil and gas assets in an IPO on the AIM market."
and,
"the Company intends to distribute to Centurion's shareholders shares of the new IPO."
The details of the allocation to Centurion shareholders is not released as yet.
Just returned back from a couple of days away. Thanks for the posts and comments and will try to answer them one by one. I haven’t mastered the art of the short email yet, but then I think we are discussing fundamental issues that need to be backed up by some facts and not just opinions. In the end, of course, I have come to my own conclusion based on what I perceive to be the weight of evidence in favour.
Whether I am right in my analysis and DD will be borne out with the test of time. Do we know anything for certain? I wish we could…..probably wouldn’t be here discussing this, but be on the beach instead:)
‘Failed’ Management Buyout in 2005.
I read a lot of the posts from the last year on different discussion boards and understand that a lot of investors bought on the basis of the proposed buyout at $ 0.60/ share, by Minmet, announced in the PR issued on August 1st 2005 (although Minmet not mentioned by name at that time for legal reasons).
The first PR date which mentioned a possible buyout (at $0.45/ share) was June 27th 2005. Subsequent press releases were issued on August 11th 2005 and August 22nd 2005, updating the public that the buyout was proceeding as planned (i.e. the Minmet acquisition).
The basis upon which the original buyout offer was accepted changed significantly when Centurion were offered the opportunity to enter into the Alaskan O&G deal with Escopeta. As a result, a PR was issued stating that the acquisition was moving forward under re-negotiation.
There follows an extract from that press release of October 3rd 2005,
“CENTURION GOLD ACQUISITION MOVING FORWARD UNDER RENOGOTIATIONS
Addition of new Oil and Gas assets and adjustments to prior assets drives new valuation for Centurion”
"We are very excited about concluding this transaction with Minmet. During the due diligence and acquisition process, Centurion has identified an Oil and Gas opportunity in Alaska, an asset that we feel will dramatically enhance our valuation. We are therefore moving forward with the Oil and Gas transaction simultaneous with our acquisition by Minmet. The increase in our asset base is changing our valuation and we are currently in negotiations to reach new terms with Minmet," stated Dale Paul, CEO and Chairman of Centurion Gold Holdings.”
The need to renegotiate the price based on the new O&G dimension to the equation would, therefore, seem entirely reasonable. Ultimately, the acquisition fell through as detailed in the Form 10QSB, filed 21st November 2005 (for the quarterly period ended September 30, 2005), as the following extract explains,
“We received an offer to acquire our business from Minmet Plc. a company incorporated in the Republic of Ireland, for $0.60 per share. Minmet did not agree with our valuation and we have been released from the irrevocable agreement we had with them. However we are still in discussion with Minmet, and its affiliate Lapplats, to sell one or more of our assets to them and to do a reverse merger of these assets onto an AIM-listed company in London where we believe value as well as capital will be available to develop these resource assets.”
I am not certain of the exact date the deal finally fell through, but estimate it was between early to mid October 2005 (based on the above PR dated 3rd October 2005) and mid-November (based on the extract from the Form 10QSB dated 21st November 2005)
I am sure if I’d bought shares at that time and lost money because of subsequent drop in share value on this news, I’d be less than happy to put it mildly. However, the question has to be answered from a business perspective as to why the deal fell through. I think it was for one of the following reasons. Either:
i) Minmet did not agree with the revised, and presumably increased, valuation incorporating the value of the O & G business and decided to pull out, or:
ii) The revised valuation by Centurion Management, including the new O&G deal, put the share value at a price that Minmet had no option but to pull out, because of insufficient funds, or:
iii) That upon DD, Minmet came to the conclusion that the metals resources and O&G business, were not worth pursuing further, and pulled out of the Centurion acquisition. This, despite the fact that the acquisition appeared to be proceeding smoothly at the agreed offer price of $0.60/ share, up until the point that the O&G issue was introduced into the equation.
One can only guess at the possible reasons if item iii) is correct. However, if the resources were in fact ‘worthless’ as has been suggested by some, or not worth as much as originally thought, to justify the $0.60/ share price offer, you would have to seriously question the competence of the management of Centurion. That would, however, then raise questions concerning events in the business which occurred before, during and after acquisition talks with Minmet, which would need a rational explanation.
• Firstly, why Centurion purchased these metal and O&G resources with both equity AND substantial amounts of their own cash which they loaned the Company (For example: “……Most recently, management invested $475,000 of its own money toward securing the Escopeta Oil deal”, as detailed in the PR on December 8th 2005). This is taking on a large amount of personal financial risk by the Directors.
• Secondly, you would also need to rationalize why on September 15th 2005 the Company announced in the PR entitled, (noting that this was occurring during acquisition talks with Minmet)
“Management and Board of Directors Announce Their Intention to Buy up To 5 Million Shares of Centurion Gold Holdings”
“……announced today that the management and board of directors intend to purchase up to 5 million shares of Centurion Gold Holdings' stock in the open market. The management and board of director's decision to purchase additional shares for their personal holdings is based on the fact that they do not feel the value of the Centurion Gold is fully reflected in the price of the stock”.
• Thirdly, why the Insider Buying records back this up with Arthur Johnson (then the CFO) buying 2.0 million shares at a price of between $0.19 and $0.22 on 30th September 2005 (total cost $ 410k, increasing total holding to 4.5 million) and Andrew Paul (then the CEO) buying up 1.045 million at c. $0.18 share from 27th October through 1st November 2005 (total cost just under $194k, total holding 1.045 million). You will have to form your own conclusions on that one as to the motives of the Insider Buying i.e. The short term gain based on a successful deal with Minmet at $0.60, or higher, and/ or the longer term potential based on knowledge that the increased resource base of Centurion, with the recent O&G deal, would greatly enhance the Net Asset Value per share?
• Finally, why the independent analysis of reserves for the Alaskan O&G project carried out by Prattor Bett LLC, were indicating such large potential oil reserves (see PR November 14th 2005)?
The 10QSB (dated 21st November 2005) stated that they were still in discussion with Minmet to “sell one or more of our assets to them and to do a reverse merger of these assets onto an AIM-listed company”. This suggests to me that either item i) or item ii) are the more likely of the three, that the deal with Minmet finally fell through i.e. that Minmet were still interested in some/all of the metal resources Centurion held, but were unable, or unwilling, to buy out the whole Company including the O&G business.
Given the fact that the Alaskan O&G business has potential/ estimated resources (stated both by Escopeta and verified by independent petroleum engineers, Prattor Bett , LLC) to dwarf the metals side of the business, it is not difficult for me to understand and rationalise why the deal fell through. The Company (Centurion) that Minmet started out trying to buy in July/ August 2005, and the one that they were looking at in September 2005 had changed dramatically with the new O&G business added. Why, therefore, as a Director would you sell your Company off cheap for the sake of it, knowing full well that the future potential has suddenly changed enormously?
In my opinion, rather than sell out, the Management elected to retain control of the Company, float on AIM (assisted by the newly formed contact/ JV with Carbon Investments), raise finance to unlock the potential of the O&G resource and at the same time adding to their own personal share holdings.
These are my views and thoughts and I have tried to express them as best I can using the information available. I came to my own conclusion on these issues a while ago and I guess at some point if you are serious, or even interested, in Centurion, that you will have to do the same.
Good luck:):
O & G Project Overview, resources and comments on financing....
This has turned into a bit of an epic email:)...but if you are serious about the stock, it should provide some useful points for you to check further...
Worth checking out on their website (www.Centuriongold.com). Click on Investor relations, then Collateral Materials tab and then open the Corporate Presentation file. It gives a good overview of their sites and estimated resources (metals).
The chrome and tin form lesser reserves for Centurion. As stated in the above are 2.07 million tonnes for Chrome (Valued c.$100m when I carried out a check a month or so ago) and 5000 tonnes of tin (Valued c.$45 m…ditto).
With regard to dilution, there has been some in the past year or so, as they have bought mines in exchange for shares, as well as for raising finance and the O&G deal as detailed below. Worth noting, however, that the Directors have also loaned the Company significant amounts to contribute to purchases over the last year or so. Also, of late finance has been raised from shareholder loans (e.g. Daros Ltd.) as opposed to further dilution.
There follows an extract from the December 8th 2005 press release which outlines their initial strategy:
"The decision to purchase assets for equity was a strategic decision and one that protected shareholders from any possibility that the vendors were merely "cashing in." Effectively, the Company was able to secure that the interests of the vendors were aligned with Centurion's investors."
The extent to which further dilution is likely is really an unknown quantity. I think it will depend in part to the success of the IPO in raising finance for the O&G project and as to whether they proceed with any further resource acquisitions for the mining business side of things and how they finance that. It may be that the Company strategy changes now that the new Chairman, Professor Raymond Parsons, has been appointed (see my post #198).
At present the shares O/S are 210.82 million.
*************Alaskan O&G Project Overview*******************
I thought it might be useful to outline a summary of my findings with regard to the O&G project, the parties involved and how the project has evolved over the last few months since being announced in October 2005……it may help to provide a framework from which you can carry out your own DD.
First a brief overview of the main players and history of the Alaskan O&G Project:
1) Escopeta Oil Co. (“Escopeta”): A non-listed independent O&G Company, which initially held 100% of the rights to the Cook Inlet, “Kitchen Prospects”. They then entered into a JV agreement with Taylor Minerals, LLC (“Taylor”), whereby Escopeta held rights to 75% and Taylor 25%.
2) Centurion Gold (“Centurion”): No introduction necessary:)
3) Carbon Investments (“Carbon”): A Venture Capital Company, registered under the laws of the Turks & Caicos Islands with company number E35160 whose registered office is at Gretton House, Pond Street, Grand Turk, Turks & Caicos Islands, British West Indies.
Centurion were originally introduced to Escopeta by Carbon. As a result of this Centurion and Carbon agreed to enter into a JV agreement, to purchase rights to 75% to the “Kitchen Prospects” leases from Escopeta (and by default, Taylor, who had a separate JV agreement with Escopeta). Refer to Form 8-K (Filed: 07-11-2005), for details;
The breakdown at that stage of the project in terms of the allocation of rights to these leases is as follow:
• Escopeta (and Taylor): 25%
• Centurion: 30% (i.e. 40% of the 75% agreement with Carbon)
• Carbon: 45% (i.e. 60% of the 75% agreement with Centurion)
As consideration to Carbon for introducing Centurion to Escopeta and the O&G opportunity, Centurion paid Carbon $2 million and issued 60 million shares of common stock (this superseded a previous one-year option agreement with Carbon to purchase up to 20,000,000 shares of Centurion common stock at $.50 per share). In order to finance this deal, Centurion arranged a loan from one of their largest shareholders, Daros Limited, bearing interest at 12% per annum (see also Form 8-K, Filed: 07-11-2005). The loan allocation is detailed in the extract as follows in the Form 8-K:
“Daros has advanced sums totalling US$2,475,000 to Centurion to fund the payment by Centurion of the following:
1.1 to Carbon Investments Limited the sum of US$2,000,000 being the initial cash consideration due and payable to Carbon as consideration for the acquisition of the Rights under the Escopeta Agreement; and
1.2 to Escopeta the sums of $125,000 and $350,000 being the initial cash sums pursuant to the Escopeta Agreement.”
The details for the payments due to Escopeta are fully detailed in the Form 10QSB, filed 21 November 2005. However, this original agreement dated October 17, 2005, and amended November 15, 2005, was cancelled and a new agreement was detailed in the recently filed Form 8-K, 31st March 2006. Under this new 2006 agreement Centurion (and Carbon) agreed to purchase the 25% rights to the leases held by Escopeta (and Taylor):
The breakdown then to the current allocation of rights to the leases is as follow:
• Escopeta (and Taylor): 0 %
• Centurion: 40% (i.e. 40% of the 40/ 60 agreement with Carbon)
• Carbon: 60% (i.e. 60% of the 40/ 60 agreement with Centurion)
Escopeta are retained as the Operator for the project, which is to be financed by Centurion and Carbon, with costs apportioned in accordance with their 60/ 40 JV agreement.
The agreement states and records that:
Pursuant to the 2006 Agreement, the Company has made the following payments to Escopeta:
(i) $125,000 for the right to enter into the transaction (Note: as covered by the loan mentioned above);
(ii) $350,000 for expenses associated with permitting three of the Kitchen Prospect wells (Note: as covered by the loan mentioned above) ;
(iii) $375,000 for expenses related to the State of Alaska rental payments and additional permitting;
(iv) $500,000 on behalf of Songa Drilling Company as a down payment on the Songa Tellus jack-up rig ( Note: as covered by a loan from Daros Limited, as detailed in the press release of 27th February 2006); and
(v) $252,000 for general IPO costs related to the Kitchen Prospects leases.
The agreement goes on to state that:
The 2006 Agreement further provides that the Company will pay an additional $12,875,000 to Escopeta and Taylor to purchase the assets upon completion of the IPO. The 2006 Agreement further provides for payments of $5,000,000 to be made by the Company to Escopeta conditioned upon the discovery of economically viable oil and gas wells in the Cook Inlet Basin ( Note: actually, I think this may be a typo as it states $8 million further on in the Form 10QSB, dated 12th February 2006).
The Company also paid the following:
(i) $431,000 to Coscol Investment & Development Co. as a down payment on a heavy lift vessel and
(ii) $75,000 to Gaffney, Kline for an engineering report on the East Kitchen Prospect.
Project finance is detailed under Form 10QSB, dated 12th February 2006, from which the following extract is taken:
“ 6) Payment for Drilling of #1 East Kitchen Well. Centurion, or its assignee, shall pay an additional $17,000,000 on or before August 1, 2006 in accordance with the provisions set forth in the Authority for Expenditure ("A.F.E.") attached hereto as Exhibit "B". These funds will be used for the drilling, testing, and suspension of the #1 East Kitchen well. Escopeta will thereafter use commercially reasonable efforts to pursue with reasonable diligence as a reasonable and prudent operator the operations and arrangements necessary to allow commencement of actual drilling on the #1 East Kitchen Well in the spring of 2006 or 2007 (note: as the rig is secured and on the way to Alaska, it will be 2006). Once drilling commences, operations will proceed with reasonable diligence until the well is successfully completed or has been properly plugged and abandoned in accordance with all applicable rules and regulations. If the costs for drilling and testing the #1 East Kitchen well are more than the attached A.F.E., Centurion agrees to pay all costs associated with the #1 East Kitchen well.”
In addition, to the financing the agreement sets out the share Ownership of Escopeta Oil of Alaska……. “Out of the shares issued in Escopeta Oil of Alaska, Centurion shall allot or cause to be allotted the shares as follows: (a) approximately 25% of the issued shares to the IPO investors; (b) the remaining 75% of the issued shares shall be divided and issued 25% to Escopeta and Taylor, and 75% to Centurion (Form 10QSB, dated 12th February 2006).” Escopeta, therefore, although no longer having rights to the leases directly, has a vested interest in the project by way of the share allocation.
O&G Resource estimates:
Various estimates have been made both by Escopeta’s in house geologists and by Prator Bett, LLC, petroleum engineers. Escopeta have estimated the potential resources as follows (Press release of 21st October 2005):
1) East Kitchen (Probable Offshore 2.7 TCFG, 457 MMBO) Spring of 2006
2) North Alexander (Probable Onshore .512 TCFG) Winter of 2006-2007
3) Kitchen (Probable Offshore 3.9 TCFG, 829 MMBO) March 2007
4) South Kitchen (Probable Offshore 1.6 TCFG, 125 MMBO) July 2007
Prator Bett, LLC, were independently appointed by Centurion, as Consultants to carry out a check on the resource estimates, based on the survey information supplied by Escopeta, prior to entering into any formal agreement with Escopeta. They came up with a more conservative sum estimate for all the above mentioned lease areas, which down-played the possible gas resources (Press release 14th November 2005):
1) Mid-level estimate: potential of 246 million barrels of oil and 1.20 billion cubic feet of gas, which is considered to be conservatively valued.
2) At the high level, this is substantially more at 933 million barrels of oil and 3.20 billion cubic feet of gas
These are still very significant amounts and any upside on gas discovery would greatly increase the resource value of the project.
The IPO plans to raise c. $26.5 million, to assist in the financing of the project. Once drilling is underway and assuming O&G are discovered, the project should become self financing from revenues. The IPO was originally mentioned for launch as May 31st 2006, although this date may slip. Drilling to commence in or around July/ August 2006.
Ok, hope this helps, please check all the details for yourself and any comments thoughts are welcome:)
Good luck:)
No problem, I am happy to share info and bounce ideas and receive any new info you come across.
As I see it, this is a pure Value play. The Company has been putting the assets together over the last 2 to 3 years. As you know, the O&G element is new to Centurion, only announced in October 2005. That's what is exciting....it is both an Oil and Gas play and a Gold/ Platinum one (I see you are in AURC so you know all about the potential there...I am in too:). That's two of the hottest commodity sectors in one stock. I don't think the market has realised the O&G element yet, because of the Company name......hence the spin-off of the O&G business as an IPO on AIM, as well as to raise funds. This stock has, therefore, been flying under the radar. I think people also look at the current chart, the lack of Gold production to date, past earnings etc. and pass on CGHI. But it's the future earnings I am looking at here, and thats why it's a Value play right now. The price is cheap at present for building a large position. When I did my DD on this stock I came to the conclusion that I would buy this stock just for the O&G business alone. If they never produced an ounce of gold, it would still be worth buying. As and when they get the metals business going, that will be the icing on the cake:)
The upside potential is large, relative to any downside.....as is also the case with AURC (just been reading Graham's 'Intelligent Investor' so the phrase 'Margin of Safety' is buzzing in my head at the moment). I have built my position in both now, and am just going to sit back and wait for the ride. It sounds like you are doing the same thing too. The share price will bounce around a bit as technical traders and momentum traders flip. As you say, there will be buying opportunities when it dips. I feel relieved now that I have my position, cause although it may drop a cent or two, I am focussed now on the long term and am certain at some point this year it will take off......good to be already on board:)
Ok, good luck to you and look forward to making that journey with you:)
Thanks for the update...nice to get some current news/ feedback..this board has been a bit quiet...think this is the 'quiet before the storm' though.....here are some of my thoughts/ findings...
I've been following this Company very closely too over the last few months. I think it has HUGE potential and is as yet almost unnoticed. The IPO was originally mentioned for launch on May 31st 2006, and if that is the case news should be coming out soon, as the drilling in Alaska is due to commence this July/ August. I think the formal press release for the IPO, must happen in the next 4-6 weeks......if not sooner..
If even a quarter of the assessed oil and gas is found, this will put the Company in totally different league. The fact that they are floating on AIM will also really help with their credibility, as well as separating the O&G business from the Metals/ Mining side of things. This in turn should enable it to release the full potential of the O&G business. The fact that they have a JV partner (Carbon Investments) on board is also part of the reason I think, that this project has moved forward so quickly over the last few months i.e. with the preparation for the flotation, as I understand that Carbon Investments have the finance/ connections to make things happen. I know that the Legal, Brokerage and Accounting teams have all been appointed, so work must now be at an advanced stage for the IPO. The jack-up rig is also secured for the next 1 to 2 years aided by the financial support received from the recent shareholder loan. It seems that any perceived financial constraints are being overcome...
Any views on the recent purchase of the Escopeta Oil share of the JV by Centurion? As I see it, the fact that Escopeta will receive shares in the Newco from the IPO, as well as the cash payment, and that they also remain as the operator of the rig gives me confidence that the deal was a good one for Centurion, as Escopeta are still tied into the project and therefore, have a vested interest to ensure that it succeeds......any thoughts?
I also found out on the web that this years Government Tender for the new Alaskan Cook Inlet leases takes place on May 24th 2006. Given Escopeta's long experience in this area, I am certain that they will be involved in bidding for new leases. Call it coincidence, but they now have a lot of cash at their disposal from the recent deal with Centurion, to bid for these leases. Maybe getting ahead of myself, but I wouldn't be surprised if Escopeta are successful in gaining rights to new leases in the Cook Inlet which could lead to further opportunities for new JV's between Centurion and Escopeta in the future...after all the rig will be there. Centurion have also recently purchased a new shell Company which is being name changed to Odyssey Oil and Gas Inc. Centurion have transferred into it, their 10% working interest in the BBB Area, Wharton, Texas Oil exploration project (in which Escopeta is also involved). They have stated that this 10% interest is of little financial significance.....so this is just the start and Centurion are obviously looking to expand their O & G operations in the future. Any new JV's with Escopeta, or others, could then be handled through the newly set up Odyssey Oil and Gas Inc.
The metals side of the business has been slow and I think this is largely due to the current focus on the O&G IPO, but that should change soon. They have already secured major resources over the last year which is half the battle. The next step is to receive all the necessary Government licenses and then prepare the formal reports on resources, which I understand has already started for some areas. That will consolidate the information of probable resources aleady stated on their website. The fact that they have already indicated 6.5 million oz/ gold and 2.6 million oz/ platinum together with chrome and tin suggest that the potential is there, just needs to be unlocked by suitable finance or a JV. With precious metal prices as they are, the current climate couldn't be better for that to happen.
The recent management change, Professor Raymond Parsons as Chairman, seems a real coup. I checked out his resume on the web...and here are a few selected highlights I came across....
"Few people in South Africa can claim to have the combined knowledge, experience and wisdom that Professor Parsons has gleaned during his diverse career as a prominent economist in the country. A former Governor of the SA Reserve Bank, Gerhard de Kock, described him as 'an economist and analyst of world class.'...also noted that he is also a Director of the SA Reserve Bank and a previous Director General of the South African Chamber of Business (SACOB).....this guy is not going to put his name and reputation on the line with Centurion, unless he saw huge potential in Centurion, both home and abroad. I think this new appointment can only help Centurion's credibilty, assist in the successful development of the Company with the connections that he no doubt has to both influential people and finance.
Ok, will stop there:).....just needed to put all this down in writing and share it as I've been working away on this one by myself for months.....was beginning to wonder whether I'd finally 'lost' it....nice to see you and other people are out there who also see the potential:)
Good luck:)
Found this link below where you can attach there metal real time price charts etc to your webpage.....don't ask me how you do it though:)
http://www.kitco.com/charts/
2create....glad you found the link ok. I've just returned home, been away for a couple of days, so just catching up on the posts and mails now. Thanks for your positive comments and from other members on this board too....love the teamwork here.....so good luck to you all...onwards and upwards:)
Some interesting Valuation Comparisons.....
I came across a survey on the web of 60 Gold Stocks, carried out Gold Stock Analysts (dated February 2006). These companies ranged in market cap from $50 million to $26 billion (Newmont).
An assessment was carried out find the relationship of Proven and Probable Gold Reserves (P/P)to Market Cap. Based on the gold price at that time of $562/oz, it was found that the average market cap for these gold companies could be calculated by multiplying the P/P gold reserves in Oz by $213.00.
i.e A company with P/P of 5 million Oz/ Gold should have a market cap of $1.065 billion, if fairly valued by the market, based on this average $/Oz figure of $213.00.
With the increase in Gold price to $650.00 this figure is now c. $245.00. This benchmark figure can be used to assess if a company is overvalued or undervalued in relation to the average price per Oz. Basically, it gives a simple guideline as to what the current market cap should be if 'fairly' priced by the market (all else being equal)
I looked for comaparable companies in the survey, with similar P/P reserves as AURC.
Agnico Eagle (AEM-NYSE)
P/P= 7.9 m/ oz
O/S= 106.7 million
Current Price= $36.75
Market Cap = $3.92 billion
Market Cap per Oz of P/P Reserves = $496.20/Oz (suggests gold reserves are over-valued when compared to the market average)
Eldorado (EGO-ASE)
P/P = 7.09 m/oz
O/S= 301.9 million
Current Price= $5.24
Market Cap = $1.58 billion
Market Cap per Oz of P/P Reserves = $222.85/Oz (suggests gold reserves are near to fair value when compared to the market average)
Randgold (GOLD- NASD)
P/P = 6.58 m/oz
O/S = 68 million
Current Price= $ 24.24
Market Cap = $1.64 billion
Market Cap per Oz of P/P Reserves = $249.24/Oz
suggests gold reserves are near to fair value when compared to the market average)
Then carrying out the same exercise with AURC:
AURC
P/P = 7.1 m/oz
O/S = 113.4 million
Current Price= $ 0.33
Market Cap = $37.4 million
Market Cap per Oz of P/P Reserves = $5.27/Oz (No comment!!!)
Based on current Gold prices and an average of $245.00/ Oz of P/P reserves the market cap should be valued at:
Market Cap = $1.74 billion
Share Price= &15.34
(Note: The above calculation does not take account of the silver and other reserves held by AURC)
Obviously, there other factors which need to be considered as well in such a valuation such as company financials, trading history, management, exchange etc. and I haven't gone into any DD of each of the above mentioned comparative examples to see if there are other factors that may affect their valuations.....but my conclusion based on this evidence is this must be one of, if not the most, undervalued gold company out there....
Good luck:)
marcg: Share Count/ Valuation
I am holding 275k at present and no plans on selling for a long time.....
My current valuation based on the information available at present, agrees with the others on this board at $4.50 to $5.00 per share....info gathered from various sources concerning the price of gold suggest a doubling of the price is certainly a distinct possibilty....if so, we are looking at $9.00 to $10.00.
I am certainly factoring this into my decision making i.e. if gold continues the bull run as many anticipate....the previous high of gold was $850.00 in 1980....when the 1980 valuation of $850 is adjusted to reflect a 2006 valuation, taking account of inflation, the figure has been calculated to come out at $2176.00....I am long on this one and may be really long if the above scenario unfolds:)
Been following the board, read nearly every post now, thanks for the DD from everyone and the high quality posts of a lot of the members here, learning a lot from you guys:) ....this is my first post on IH, should probably join up now:)