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AOS
I had the fortunate opportunity to meet with Sabir and Chad both of AOS at their office in downtown Calgary on Thursday P.M.. I had about a 30 min. meeting and was able to ask a lot of questions. First I am not a paid pumper of this or any stock, I am a retail investor who has a substantial holding in AOS both personally and with an investment club.
First regarding the issue of more land acquisitions. Yes they have acquired more land. They now have 85 total sections of bitumen mineral rights. I was able to see the maps as to where their land holdings are exactly. They have their crown jewel in between 4 working projects already, in the heart of the Athabasca Basin. They have one core hole that has been drilled on this property and that is how Ryder was able to do their estimate assessment. An official news release is forthcoming. Sabir stated that the reason they bought more land was to reduce their risk of not finding an economical project on their land. Risk has been reduced now that they have the rights to 85 sections.
AOS has Greg Hu working with them on the Geological side. He has personally been involved with most of the working projects in the vicinity of AOS’s crown jewel with other companies in the past. He has an unbelievable amount of knowledge regarding this Athabasca formation. An official release regarding Greg in also in the works.
As far as further developments, seismic is set to occur very shortly to determine core hole drilling program set for winter of 2007/2008. Some core holes may be drilled before Christmas.
Sabir stated to me that 10 years ago approx. 40% of oil sands land leases were bought by companies/individuals. Now after the last land auction there is now 4% left. 96% of all available land bitumen mineral rights have been bought up. They are done buying land. The only way they could increase their land holdings is through company mergers.
Private PLACEMENT will probably not happen until Feb.2008. It will obviously be at a higher value than the last offering.
There will be upcoming announcements regarding land now that the buying is completed. Sabir strongly feels that they have at least one major project on their land and possibly 2-3 in total. They are looking and are optimistic about there being a project on their 40 section parcel of at least 30,000 barrels per day over a 30 year period.
The 20 million they have in the bank will be used to fund seismic and core hole drilling and analysis on their 40 section parcel in Q1, Q2 of 2008. If they do an additional PP in Feb/08 they would hope to raise 30 million and that would be used to seismic and core hole drill their remaining 45 sections. Sabir stated that a lot can happen between now and Spring 2008 and their plans could drastically change. Mergers with other small Oilsands players was mentioned. Positive results from their first 40 sections could also change future plans.
I have a prospectus from the company that is up-to-date to the end of June and does not include the recent 20 million PP OR the recent land acquisition. It does include maps of their holdings and other valuable information. If you would like one I have about 30 of them, just email me your postal address and I will mail you one.
They assured me that there is still a lot in the works and that the next 3 months are going to be very interesting. Sabir is very upbeat and positive about what is happening with his company. Overall after seeing exactly where their first 40 sections lie it is in a very promising area. I cannot stress enough how good their 40 sections looks. It is just a matter of getting the core drilling completed. The stock price, once full disclosure to the public occurs regarding their land, will see strong upward movement. I have tried to list all the areas we discussed, but there was a lot discussed in a short time, so I may have missed something. If you have any further questions, please email me and I will try to answer your question or I will try to find out for you.
Regards,
Toonboy
NPE was recommended by an influential investor some months back along with another oil sands issue - STP. The two situations share similarity. Although STP is more advanced in identifying resources, the potential is quite smaller. NPE is perhaps 2 to 3 times larger than STP. Whether or not NPE & STP develop or sell the proven deposits, the share structure should be similar.
There were two analysis of STP from DeLaurentis which I carried further on the STP board under the post heading 'STP AN ASTONISHING VALUE'. This is not to promote the shares of STP which I still own, but rather to draw attention to the potential share value of NPE which has probably greater value. NPE is another chance to own an emerging Oil Sands situation that should ultimately equal or exceed STP's price performance.
NPE is very early stage with potential to identify 2-3 Billion B/O/E. Cashed up with 'Bought Deal Financing', activity should start shortly, but perhaps the 'Big Picture' is especially interesting:
+++ Over 400 Uranium exploration issues have flooded the resource market searching worldwide for Uranium. That cannot happen with Oil Sands. There is a limited area for development and relatively few participants.
+++ Uranium and other metals require intense drilling. Bitumen bearing areas are fairly well identified and the drilling task is less intensive to identify the depth and width of deposits. Oil Sands exploration may have less risk than traditional Oil / Gas drilling as well as Uranium exploration.
+++ Peak oil is coming up quickly or has already arrived and the focus will be upon development of Oil Sands resources. The current resale price for proven resources will rise dramatically as oil prices increase in the years ahead. Oil Sands are highly leveraged to the price of oil and thus holds enormous price appreciation potential.
You have to ask yourself.... Should I participate in this sector? How much should I own within my portfolio? The land mass is limited and 'Peak Oil' is coming up fast. The eyes of the World are focused on perhaps the last long lived oil resource awaiting exploitation. Oil Sands projects will be especially long lived.
This may be one of the last great opportunities to own a major Oil Sands situation at an entry price level before development. Think about it,
"30 solid reasons to consider BQI as a long-term BUY IMO:
- Norwest estimates will be higher then Mgt.'s estimates
- There is alot more oil under other townships = most under the 3 Alberta ones
- Seismic testing is directing mgt. exactly the areas to drill
- Big players have already inquired about BQI activities
- Knowledgeable Mgt. team following a step by step process to uncover more and more oil
- As peak oil hits, BQI is only major player in the entire province of Sask
- Excellent quality stuff - bitumen is of higher saturation than Alberta
- Top oilman in Hopkins - top mergers and acquistions specialist in T. Murray (helped by his consultants)
- Good relationship with locals as well as Sak Gov't (ie: try to employ locals and buy supplies from province)
- Permit lands are absolutely HUGE (acreage-wise) vs. major projects just across the border
- water not an issue near Axe Lake Discovery site (many lakes)
- Anything over $33 per barrel (break-even number) is pure profit for oilsands co's ...right now the per barrel price is some $40 over the breakeven point.
- Sask Gov't terms are going to be slightly more favorable than Alberta's
- Foreign companies are eyeing the oilpatch and making moves to book future barrels and acquire those companies that have found oil. USA must get movin
- Great news on the greenhouse gas emissions front for startups (3 year deal etc.)
- Ext Axe Lake area (mgt's assessment (2.5 bil+)
- 3 contiguous Alberta townships (4.5 bil+)
- Areas outside of Axe Lake (3.0 bil+)
- consistent, coarse-grained sands (no thief zones)
- Base camp(s) in place...airstrip coming
- no shale intervals found / good porosity in Axe Lake Discovery
- thick continuous oilsands (30 - 45 meters thick)
- Average depth makes in situ a viable option (185-200M)
- numerous deep channels THICKENING to the west
- Excellent trading volume - getting noticed by many institutions and mutual funds
- By 2015 Canada will be the 5th largest oil producer in the world...and BQI has the most permit land acreage of any oilsands company in existance.
- BQI went to high schools to present job options/opportunities around what they will likely need over the next 8-12 years. (presentation is on website)
- Consistent in making sure they are in attendence at major oil conferences to rub elbows and get the word out
- Members of the mgt. team willing to chat/answer questions with the average shareholder (ie: JW4 chat's with Hopkins) He did leave his personal office number on one of the docs on their website
- Involved and very considerate of the Clearwater River Dene and the surrounding land (even passed out scholarships to locals)"
Patch International (PTCH)
In Vancouver I talked about 3 junior oil sands companies that I've mentioned in previous editions of the Big Picture Speculator, Southern Pacific Petroleum (STP.V), North Peace Energy (NPE.V) and Patch International (PTCH OTCBB). I also drew attention to Platform Resources Inc. (PFM.V) which will soon be known as Alberta OIl Sands Inc. I am revisiting this group because I see a nice relatively low risk opportunity in them at the moment.
One "big picture" comparison can be made with Oilsands Quest Inc. (BQI - AMEX) which currently sports a market cap of ~US$500 million. They have a management estimated resource of 1.25-1.5+ billion barrels (bbls) of oil in the ground. This works out to US$0.30/bbl. The going rate for oil sands reserves is closer to $1.00/bbl of recoverable oil (reserves carry a higher degree of certainty than resource estimates hence they sell for a higher price). If Oilsands Quest can convince an evaluation firm that they really have a billion and a half barrels of oil in the ground (through drilling and seismic work) for a cost of less than a billion dollars there will be some money made. I think there is even more upside in the following companies:
Southern Pacific Resources (STP.V, STPJF)
Closing Price $3.70
O/S Shares 43,595,096
Market Cap $161,301,855
We like this company very much because it has increased nicely from when we first mentioned it at the low low price of $1.47. More importantly we like the company even more based on recent announcements. This is a junior resource stock that you can take home to mom!
The big news coming from Southern Pacific Resources is the recent acquisition of an 80% interest in 76 sections of oil sands land for $16 million. The proposed $20 million financing to complete the transaction rapidly morphed into a 32 million financing. Southern Pacific was being valued at $130 million with their original 25 section oil sands landholdings. The market is valuing them close to their 156 million bbls of probable and possible reserves based on an August 31, 2006 reserve report. A new reserve report that will incorporate winter drilling is expected soon. Management was expecting the report in June and Stampede Week is looming. I rarely pound the table on stocks (my desktop is made of frosted glass) but this stock is still undervalued after doubling. Although many people suggest selling half of a stock that doubles and enjoying a free ride on the rest, in this case the "free" could cost you a considerable sum.
North Peace Energy (NPE.V, NPCEF)
Closing Price $2.13
O/S Shares 26,156,400
Market Cap $55,713,132
North Peace announced the acquisition of the remaining 30% ownership of its landholdings in the Red Earth area of Alberta. They are paying $20 million for a 30% interest in 2-3.1 billion barrels of discovered resource or under $0.02/bbl!. A bought-deal equity financing of $20 million is scheduled to close on or about June 28, 2007.
Patch International (PTCH)
Closing Price US$1.99
O/S Shares 33,400,000 (FD)
Market Cap US$66,466,000
Patch International has a DeGolyer and MacNaughton resource appraisal of 1.5 billion bbls in place based on data from 3 core holes and having 25% of their land explored. This winter they drilled 22 wells and acquired 60 miles of seismic data. This information will be incorporated into a new resource estimate. Their reserve estimates should increase significantly when this new data is incorporated into the estimate.
While we don't normally touch OTCBB stocks, I think this one will eventually move up the food chain and list on a more respectable exchange.
Yes,that looks pretty good to me but so far the punters seem to be ignoring it.I hope they can put out some more PR's and get more attention.
Sounds like you have never been in a forced buyout before.Eventually they will delist the stock.Then they will make you beg to take your stock.
I hate being screwed every bit as much as you.
I suspect they stole some of the gold production so that this stock never performed.
Its not looking like good advice.The share price is now below the compulsory buy out price.
Posted by: Rawnoc
In reply to: None
Date:7/8/2007 2:05:52 PM
Post #of 27113
ZYNX -- been reporting exploding sales and net income. I think this stock has 5-10 bags written all over it. It's biggest risk is finding a good entry as it's already up over 100% recently, but I think any level under $2 will prove to be an absolute steal. This is a medical device rental company (as such, reported an astonishing 97% in gross profit margins last quarter). ZYNX has a tiny float, small OS, tiny market cap, tiny debt levels, while fast growing sales and profits (with forecasts based on large increases in announced orders for more accelerated growth) with costs staying relatively flat. Due to the great success of their business model, they've recently juiced up the number of their sales staff, and I expected a further leap in sales & profits at a level that is a massive discount in relation to its currently tiny market cap. One thing that probably helps ZYNX a lot is that Medicare helps pay for a some of their customers.
http://www.investorshub.com/boards/board.asp?board_id=2696
TIC.V
Niche Oil Sands Player Positioned for Massive Upside
By David J. DesLauriers
30 Nov 2006 at 10:42 PM GMT-05:00
TORONTO (ResourceInvestor.com) -- Titanium Corporation [TSXv:TIC] which closed today at C$2.61 is a very special story. It is not the simplest situation to follow, so your correspondent will endeavour to give as many details as necessary in order to encourage a proper understanding of the situation, while at the same time sticking to the bottom line – where we believe the share price is heading.
The Business and the Benefits
Titanium Corp. has developed patented processes to produce zircon and titanium from oil sands tailings.
The company already has a contract with Syncrude and has, through its rigorous and time-consuming pilot testing (which is now behind us), patented processes, and superior technical team, put itself into a position to eventually sign on with every other oil sands producer.
So why do oil sands producers want their tailings re-processed to extract these minerals, and how do they benefit?
First, it is estimated that about 5% of potential bitumen production is left behind, and goes into tailings. The TIC process recovers this bitumen, and in this specific case Syncrude should be able to add 5 million + barrels to its annual production figure. Bitumen in this form reportedly fetches about $35 per barrel.
Second, the brigade of greens, tree huggers and environmentalists of all stripes, along with the left-wing media are always looking for reasons to criticize major oil producers. This process really cleans everything up very nicely reducing toxicity levels substantially, while making money for private business. God bless win-win capitalism!
That is the essence of the business – the production of zircon and titanium along with the return of bitumen to the producers. But what about zircon and titanium, and what about the economics?
Titanium and Zircon
Both of these minerals have a wide variety of uses. The story with metals and minerals that RI readers are no doubt familiar with applies here as well - China has a huge demand for both titanium and zircon, and prices have been driving higher.
In point of fact however, the supply/demand picture for these two minerals looks as good as or better than that of many of the more widely followed metals and minerals tracked daily by interested sectoral onlookers. The suggestion is that there is much more room to run, but our analysis will be based around current or discounted prices.
A brief description of the supply/demand fundamentals of titanium and zircon, and the markets for each, can be found in Titanium Corp’s corporate presentation.
Upcoming Catalysts and Timeline
RI projects that Titanium Corp. will begin to cash flow in 2009, and at that time will trade at a multiple of its current price. Despite that, some readers may be wondering why they should start buying now when cash flow is two years away?
The reason is that in Q1 there are a number of news flow catalysts that we believe could double TIC’s share price.
1.
We expect TIC to finalize a feasibility study in Q1 which will take all of its testing into account, and serve as an update to its pre-feasibility study.
2.
With this in hand, TIC should sign a definitive agreement with Syncrude in Q1.
3.
In the first quarter, Titanium Corp. will likely sign an off-take agreement with a major buyer of zircon/titanium which could include a non-dilutive finance package.
4.
Other oil sands producers with whom Titanium Corp. is in discussions could come aboard in Q1.
The preceding four catalysts will likely give the institutions what they need to start taking positions in the company. That will drive the share price much higher.
The Economics and Long-Life Cash Flow
Resource Investor readers are familiar with their correspondent’s penchant for near-term production cash flow situations, but what really makes those great are short paybacks and the possibility of high multiples. TIC has both – in spades.
Baseline Scenario
For about $80 million TIC can build a zircon plant under its agreement with Syncrude which will produce about $40 million per year in cash flow.
With this type of plant the company could also stockpile titanium concentrate which we estimate would add another $10 million to the cash flow number, if sold.
Therefore, based on the timeline that we see therefore, TIC should be cash flowing $50 million in 2009.
Titanium Corp. currently has 55 million shares outstanding and C$22 million in cash. Exercise of warrants would bring in another C$30 million plus. Despite this, and the possibility of project finance by a major mineral buyer, we assume another equity financing to fund a portion of CAPEX, and use 75 million shares outstanding for 2009 calculations.
On that basis we arrive at 66 cents per share of cash flow in 2009 and believe that further agreements with other oil sands producers will see the building of a second plant for 2010, and a third for 2011. Thus, we see cash flow doubling in 2010 and up 50% from the 2010 level in 2011.
Given that growth, the long-life reserves that the company is working with, and comparables, we believe that a cash flow multiple of 15 times is quite reasonable, yielding a C$10 per share price target for TIC in 2009.
But that is the base case.
Upside Scenario
The upside comes from four things. First, the quality of both the zircon and titanium can be upgraded yielding much higher realized prices per ton. Second, our base case assumes that the titanium is not brought on at full-tilt. In reality, for another $40 million TIC could upgrade its zircon plant allowing it to produce titanium, delivering a 1-year payback.
Third, the spectre of shared profits on the bitumen has been raised. Fourth, TIC could easily bring on zircon plants more quickly than the one in 2009, one in 2010, one in 2011 model that we used above.
The upside scenario could see TIC with cash flows of two or three times the amount forecast in our base case. Of course, in that scenario, more dilution would probably be required, but cash flow per share would certainly be at least 50% greater.
In this case, the target would increase to anywhere from C$15 per share in 2009 to C$30 per share in 2011, all without the speculative risk that readers usually bear in the mining sector.
Conclusion
With a market capitalization of just C$140 million, Titanium Corp. is a very cheap piece of paper. At a minimum, a C$10 per share target price for 2009 seems easily justifiable in the base case. The reality is, though, with the machine that has been created here, this story could be as much as C$30 in the 2009-2011 period.
But, whether cash flow per share is 66 cents or C$1.50 in 2009 is not the point - at worst TIC is a quadruple multi-bagger, and at best more than a ten bagger from current levels. Even better, the risk to reward ratio is extremely favourable – and perhaps best of all, if TIC is not swallowed by a larger company, it will become a generational play, still delivering dividends to the grandchildren of those reading this article today.
Titanium Corp. is one to buy now before the catalysts of Q1 take it higher, and just tuck away. Next time you look, you will have not only a multi-bagger, but a share in a generational company that will be producing dividends for the next 50 years!
cut n paste
The resource upgrade in the Manto at Ketza River. The expectation was around 3 million ounces and reasonably near time for conversion to a reserve category. Lots of us think it will be higher resource than that, close to surface, easy to mill with upgrades to existing mill etc. Also big vast gold pot called Shramrock right next door all within eye's view. So that is in the pipeline. Always has been.
Nevada is possibly full of endless efficiencies if run properly starting with the $100 million revenue. And more importantly on exploration front full of endless gold within 100 square miles of the Carlin Trend.
Its not doing the limbo rock is it?
You are right!They would never lie!
lol
DEBKA?Those Israeli's wouldnt lie to us would they?
Mr. Orrico believes many Canadian oilsands companies aren't sufficiently valued in the market, but that is about to change as production expands and attention increases. Like Mr. Groppe, he believes high energy prices will continue. "As the world, and the U.S. in particular, wakes up to how valuable this asset is in Canada, we want to make sure that we don't give away these businesses too cheaply because it would be too difficult for us to replace them," he said, as has already happened in the case of companies such as Deer Creek Energy Ltd., which was bought by Total SA two years ago, or Shell Canada Ltd., privatized this year by its parent, Royal Dutch Shell PLC
Bob,my understanding is that the majority shareholder already holds enough shares to force the takeover.
Is this not correct?
Largo has 43-101 compliant inferred resources for (ownership%)
508 Million Pounds of Tungsten. (100%) Norther Dancer
151 Million Pounds of Moly. (100%) Northern Dancer
452 Million Pounds of Vanadium (90%) Maracas
360,000 ounces of Gold (25%) Macuchi
Plus Largo continues to hold a 100-per-cent interest in the 60,000-plus-hectare Cotopaxi property (Ecuador), which covers a 60-kilometre strike length that may host the northern extension of the mineralized Macuchi belt. (Thats 15,000 acres).
Moly @ $30+/lb Vanadium @ $20/lb Tungsten @ $11/lb Gold @ $650/oz...... add it up.... Thats a lot of $$$$$ of course recovery rates concentrates vs ferroalloys etcc.... yada yada. Bottom line, this company has some MASSIVE deposits worth tons of dough and its trading at a pittance of where it should be IMO....
Still lots of data to come out on the Maracas drilling that could significantly expand the Vanadium tonnage of that already huge deposit plus incorporate the PGM (Platiunm Group Metals) Keep in mind that the 15MM tonne Vanadium resource was laid out before this latest drilling that is getting the long (72M) 2%+ drill holes. This is a very important statement out of the latest news release......
"The deposit as outlined from historic drilling on which the inferred resource is based, extends 325 metres in length to a vertical depth of 150 metres with true widths ranging from 11 to 100 metres with an average width of 25 metres. The current program has already extended the mineralized zone for a strike length of 400 metres to a vertical depth of 300 metres. Recent drilling results indicate that both the thickness and grade of the zone are increasing with depth."
What do we think that is going to do to the resource size????
Also Aur Resources is currently drilling on the Macuchi gold property and it "is open along strike, as well as at depth, and can be significantly increased by further drilling."
Keep watching, IMO there is some huge news coming down the pipe on the size of the Vanadium resource in terms of tonnage and grade.
508 Million LBS TUNGSTEN 151 Million LBS MOLY
....508,000,000 x $11 per pound = $5.6 Billion worth of Tungsten...
....151,000,000 x $30 per pound = $4.5 Billion worth of Molybdenum...
Option to earn 100% of the $10.1 Billion in the ground resource.
And then the Maracas project in Brazil....
"a current resource of 11.8 million tonnes of open pit material at a diluted mineral resource grade of 1.44 per cent V2O5"
.......11,800,000 tonnes x 1.44% = 169,920 tonnes x 1000 = 169,920,000 kgs of Vanadium....
169,920,000 kgs x $43/kg $7.3 Billion worth of Vanadium.....
Option to earn 90% of the $7.3 Billion resource = 7.3*.9 = $6.6Billion....
Total of $16.7 Billion in the ground metal between the two properties.....
LGO
Reasons:
- Largo has of the highest grade world class deposit of Vanadium & PGM play in the world. Resources is N43-101 compliant at currently stands at 15 million tonnes grading 1.37% Vanadium. Resource is open for expansion.
-Largo has 242 million tonnes of Tungsten-Molybednum located in Yukon, Canada. Almost 1 billion lbs of Moly.
- Solid Management with track record of creating shareholder value!
Currently trading below 0.75 cents. Institutions and management owns 65% of the company.
High upside and great buy for the long-term investors. Outstanding shares is 89.2 millions basic and 139 million fully diluted.
PTCH LGO
maris, the PE and EPS are totally irrelevant at this point and shouldn't even be looked at until they are in production and generating cashflow from operations, something that won't be happening until 2010. Right now just concentrate on the classification of their reserves (resource) and number of bbls....
They sold off their marginal production and are now 100% exploration at this point. I'm not worried at all about the share price right now. The sell in May crowd has put a damper on things but I think when this reserve report comes out and we get a better exchange listing PTCH will be at much higher levels....
off topic.... Jay Taylor doesn't hold a candle to my current pick, LGO.V Check out my last few posts on that thread. Its my largest holding now, with PTCH number two. I figure having a big position in the oil sands, and also one in strategic metals is the place to be. LGO is Moly, Tungsten and Vanadium.... and I'm talking huge deposit. 508 million pounds tungsten, 151 million pounds moly, 400 million pounds vanadium with the potential IMO to double that deposit.... all for an $86 million market cap. Its in the same boat as PTCH. Trading at a ridiculously cheap price compared to its resource base and its peers......
Cheers,
lurk
TORONTO, June 1 /CNW/ - Eurasia Gold Inc. ("Eurasia") (TSX: EGX - News) announces that Kazakhmys Gold Inc. (the "Offeror") and Kazakhmys PLC ("Kazakhmys") have rejected the request by the Board of Directors of Eurasia (the "Board") that the unsolicited all-cash offer of $0.85 per Eurasia Ordinary Share from the Offeror for all outstanding Ordinary Shares of Eurasia effective on May 15, 2007 (the "Offer") be increased to better reflect the Board's opinion of the value of the Eurasia Ordinary Shares. After receiving the opinion of the Special Committee on May 28, 2007, the Board authorized the Special Committee and its Advisors to continue the meetings and discussions with Kazakhmys and its advisors referred to in the Directors' Circular mailed to Eurasia shareholders on May 30, 2007. These have now terminated. The Special Committee has been advised that, after careful consideration, the Offeror is not prepared to increase the Offer price. Accordingly, the recommendation of the Special Committee and of the Board of Directors, as described in the Directors' Circular, that shareholders reject the Offer remains unchanged.
Just park your bag and put the light out when you leave.
Three oilsands juniors with vastly different charts
What follows is a twist this week in that we normally do not cover as a matter of rule specific companies outside of requests received for analysis. However, given the current rising crude oil price environment I felt it would be a good idea to see how three very different companies' share prices responded to this price increase. Secondarily, I began thinking about this after receiving an email from a reader who wanted to thank us for keeping them from buying Oil Sands Quest (AMEX: BQI, BullBoards) (see below) when the price was falling.
Last July, I wrote a column titled "Is the Bloom off the Rose?" dealing with declining share prices of some of the more prominent junior oil sand plays. At that point, I held an informal interview with a friend who also happens to be a well respected oil engineer who was a major planning partner of earlier steam assisted gravity drainage (SAGD)* projects as well as Hibernia and Syncrude. It was his feeling at the time that cost overruns were going to become a serious consideration and that, given the constraints upon materials and labor that no company was going to be immune despite assurances to shareholders to the contrary. Connacher Oil and Gas Limited (TSX: T.CLL, BullBoards) recently ran into this problem at a most inopportune time. The company had just announced a bought deal when cost overruns, although minor, caused the deal to be scuttled and the share price quickly declined from 4.43 to a low of 3.54 on June 11. We currently have a price target of $3.49, and are waiting for volume confirmation on a move down to $3.36.A new debenture deal emerged and the debate rages on the StockHouse BullBoard for the company.
Two other companies, each one-time high flyers have also seen their share prices severely chipped away. Oil Sands Quest has taken a nasty fall from a high of roughly US$8.00 in May 2006 to US$2.60 at the close of trading on June 11, 2007. The prices at the high end can be attributed primarily to optimism about the company's AMEX listing. As you can see, it was a purely speculative play which caught many investors at the highs. As a matter of note, we had a number of sell points on BQI with the latest being a move down to $2.34, and the low of that move has been $2.37. The call for $2.34 was made on March 6 and earlier (February 12, 2007), the call was $4.38 down to $4.03. So just over two months later, we came within .04 of the target price. During that time the sentiment of posters on two different bulletin boards was very bullish in that the lows had been reached. However, the market at large begged to differ and continued to sell the stock. As late as last Friday when there was a slight up tick, the feeling was a short squeeze was underway, which obviously has yet to materialize.
The other stock we have been following closely is UTS Energy (TSX: T.UTS, BullBoards) which is one of those stocks which loves a good rumor. During the latest round of buyout announcements the stock ran up hard from $5.19 to $5.82 before settling back down to $5.30 at the close of trading June 11. The company appears to have the benefit of being aligned with two major players with deep pockets, whereas Connacher has explicitly said that it is happier to go it alone, retaining 100% ownership of the Great Divide development where it's currently completing infrastructure. Connacher announced it would begin steam injection in August which, coupled with a new reserves estimate out in July, may give the stock a good boost. But we like to see the market accept the company's vision before putting our money down. For speculators, keep your eye on CLL. UTS seems to be the analyst darling but like any other company we comment on, we track what major money is doing rather than leading the charge.
At the time of the July 2006 article, we also felt that junior oil sands plays would be valued less for their ability to develop their reserves, but rather on the size of the reserves. With drilling and exploration costs still high, it would seem easier for an established producer to buy known reserves than to pay the costs of exploration. Shareholders can benefit greatly from that scenario as outside money comes in and is willing to pay a premium to take control of known assets. Depending on where you sit in terms of buying into the companies for the first time, you will either scream that the assets are being sold out from under the shareholder or earlier investors who have been holding at much lower prices will be more than happy to accept a buyout and move on. One thing for sure is that there is a distinct split between earlier and later shareholders. Connacher Oil and Gas is a great example and the debate rages long and hard on that message board. BQI is still very much in the exploration stage and even hard-core shareholders realize this is a very long term play and it is years away from development. The current strategy seems to be get in early, as traditional less expensive sources of oil dwindle away or become too politically unstable to rely upon, and wait to reap the benefits.
One comment that stuck in my head was made by a poster on the CLL message board. who felt they were at the mercy of the market and so they are powerless if the market makers decide to sell a stock off. That comment bothered me because if investors took the time to come to grips with the realities of the market place, they would be better prepared to deal with the downturns. As a rule, the markets run true to perceived value and of course, we all can quote exceptions to the rule, both positive and negative. Sobey's (TSX: T.SBY, BullBoards) gave shareholders a wonderful gift on April 26 opening at $38.00 and closing at $57.25 with the current share price being $57.85. This is the scenario investors in oil sands juniors are hoping for-The Golden Egg.
* The Blue Chip Investor: Editor Steven Check currently is allocating about 84% of his model stock portfolio to equities. Though that is lower than where this portfolio's equity allocation stood in late February, Check's market timing model continues to be on a buy signal. In fact, according to Check's market valuation model, stocks were not overvalued even before the market's recent correction.
* Bob Brinker's Marketimer: Editor Bob Brinker, in his latest issue, dated June 5, says that he believes that there is "no risk" of a bear market occurring this year (defined as a decline in the Standard & Poor's 500 index (SPX :
SPX1,507.67, +16.95, +1.1% ) of more than 20%). His model stock portfolios remain fully invested.
* The Chartist and The Chartist Mutual Fund Letter: Dan Sullivan, editor of both of these services, remains bullish on the stock market. Writing Thursday night, Sullivan argued that a pullback in the market should not have been a surprise, since one had been long overdue. In fact, he says that he expects the market to fall somewhat more before an "effective bottom" can be reached. The model portfolios in both letters remain close to being fully invested.
* Timer Digest: Editor Jim Schmidt bases this newsletter's market timing model on a consensus of the newsletters he calculates to be the top market timers. As of Wednesday night, his consensus of the top 10 based on performance over the past 52 weeks was bullish, with eight bulls, one bear, and one neutral. His consensus of the top 10 for performance over the past two years was also bullish, with all 10 letters bullish.
The bottom line? All five of these top performers are bullish. Only one of them has a lower recommended equity allocation today than then, and even so, it is only slightly lower. The other four remain just as bullish today as in late February.
To be sure, anything is possible in the stock market.
But, on the theory that the best long-term performers are more likely than not to be right, their bullishness in the face of this week's decline has to be a source of some solace right now. End of Story
Source Petroleum Inc.
(OTCBB: SOPO) http://www.standoutstocks.com Source Petroleum Inc. announced recently that production tie in for its gas discovery at Woking, Alberta has been completed and is currently producing gas in excess of 1.7 mmcf/day. Expected production from this well was estimated at an initial rate of 500-1000 mcf/day with NGLs of approximately 20 bbl/mmcf. Source Petroleum is very pleased to announce that production from the first Woking well has exceeded company expectations by well over 700 mcf/day. Source Petroleum's Woking property is a high impact gas play approximately 17 miles east of the Saddle Hills discovery, which has produced over 41 bcf (billion cubic feet) of gas from 4 wells since 2002. The property is anticipated to potentially contain up to 40 - 50 bcf of potential gas reserves from multi zones and in close proximity to existing infrastructure. It is expected that this production will ensure steady long term cash flow for the Company moving forward with tremendous drilling and production upside as well. Source Petroleum holds a 37.5% interest in the Woking discovery.
Taken from a news release by Oilsands Quest:
Indicated characteristics of BQI’s Axe Lake property include:
- Continuity of thick oil sands over 36 sections (23,040 acres)
- McMurray formation with oil sands thickness up to 30 meters
- Coarse-grained sands with very good porosity (36% to 39%)
- Oil saturation as high as 92%, averaging in excess of 80%
- Excellent permeability, both horizontal and vertical (greater than 5 Darcies)
- No shale inter-bedding, no top or bottom water
- Average depth of 185 to 200 meters
- Clay-rich layer overlying resource is expected to provide an effective seal
.
Taken from an August 17, 2006 article for InvestorIdeas.com by Michael Brush
“Go East With CanWest for Canadian Oil Sands Riches”:
In the best sections of Oilsands Quest’s (formerly CanWest) holdings drilled so far, the company has found bitumen saturation reaching as high as 18%. “Mineable grade is above 8%, and really good grade is 14% to 15%,” says Murray Gingras, an associate professor at the Department of Earth and Atmospheric Sciences at the University of Alberta, who has been following exploration in the region.
This agrees quite well with the Ryder Scott calculations for PFM’s Net Undiscovered Bitumen Resource from the first acreage: Net bitumen resource pay was . . . corresponding roughly to an 8 to 10% weight bitumen. It also agrees with data taken from Wikipedia for the overall Athabasca Oil Sands resource.
.
According to Wikipedia, oil sands represent as much as 66% of the world's total reserves of oil, with at least 1,700 billion barrels (1.7×1012 bbl or 270×109 m³) of OBIP (original bitumen in place) in the Canadian Athabasca Oil Sands. This is said to amount to at least 175 billion barrels (175×109 bbl) or 28 billion cubic meters (28×109 m³) of recoverable crude bitumen, which amounts to three-quarters of North American petroleum reserves. So again, 175 billion out of a total of 1,700 billion barrels amounts to a little over 10%. (Note that this figure differs very materially from the ratio we are talking about when discussing the Ryder Scott report for PFM, or the corresponding figures for STP, where we assume ratios of as high as 50% or so of recoverable reserves out of the entire OBIP resource.)
Looking now at the mining of bitumen please note, that the mineable area as defined by the Alberta government covers 37 contiguous townships (about 3400 square kilometers or 1300 square miles) north of the city of Fort McMurray. Only about 10% of Alberta's oil sands are buried close enough to the surface to mine. That’s approximately to a depth of 75 meters. So may this be a historic basis for assuming that a mere 10% of the OBIP will potentially be recoverable reserves?
At any rate, this 10% ratio may or may not be identical to Murray Gingras’ mineable grade which (by coincidence?) also tends towards 10%.
The good professor Murray Gingras speaks of bitumen saturation and at the same time, in the same paragraph of mineable grade and talks about mineable percentages above 8%, while good grades are said to be 14% to 15%.
It seems most likely to me that bitumen carrying oil sands are alternating with other areas of dirt, rock and stuff not containing any bitumen at all, or not in commercial quantities. On average the ratio here seems to be 10% (and sometimes up to 15%) of productive oil sands and most often 90% of other material or “waste”. Thus a statement like really good grade is 14% to 15%. I would assume that this relates to the percentage of thick pods pregnant with productive oil sands within the acreage in question. And to the necessity to do seismics and delineation drilling to find the thick layers, the good stuff and determine commercially recoverable quantities.
What exactly does Ryder Scott mean here: Net bitumen resource pay was . . . corresponding roughly to an 8 to 10% weight bitumen. Does this mean that the 8 - 10% good stuff is mixed in with the 90% waste? Or that only rarely will thick layers of oil sands be found, alternating with lots of areas below a thickness of 10 meters and thus not economic? So perhaps it is this what some writers refer to as bitumen saturation.
But this just has to be entirely different from what PFM and BQI are referring to when they talk of saturation rates of around 80%. What’s going on here?
I would have to conclude that the companies first have to try and find any net resource pay containing on the order of 8 to 10% bitumen weight and thus potentially commercial bitumen. And once found, the oil saturation in this material will have to be determined and a good resource may measure saturation rates as high as 80%, such as implied by PFM and released by BQI.
Thus, the term saturation seems to have been used loosely in the cited statements while referring to two very distinct and conceptually different phenomena. Hasn’t it? We start with a total of estimated 1,700 billion barrels of bitumen, think that 175 billion barrels may be recoverable where net bitumen resource pay is on the order of 8 – 10% of weight, find this material more economic if the saturation happens to be as high as 80%, and can recover somewhere from 30 – 50% of the bitumen with SAGD, or more than 90% with mining operations.
However, all of this still does make little sense. How can the Ryder Scott report talk of net resource pay of 8 – 10% of bitumen weight, and then go on and suggest that 50% or more of the OBIP may be recoverable? I can’t fit these two statements together.
Can anyone shed some light on this issue?
swing16
Do you think you will ever be able to afford caviar?
Which banks?I thought the europeans said they were done.
From McDep.com: "...meanwhile, Norweigan company Statoil (STO)'s purchase announced April 27 of non-producing oil-sand leases appears to value recoverable resources in the ground for a dollar a barrel".
STP: ~$171(US) mil mkt cap, 156 recoverable mmbbls yields a
current valuation of $1.10/recoverable bbl. Assuming the winter drilling program expands this to 500 mmbbls, this would yield a valuation of $.34/bbl.
PTCH: ~$103(US) mil mkt cap, 360 recoverable mmbbls (Dover only) yields a CURRENT valuation of $.29/bbl. A VERY conservative increase to 500 mmbbls, would value PTCH at ~$.21/bbl. Again, this excludes Firebag.
It would appear that PTCH has some catching up to do...
Following a $20 million financing, Patch International, Inc. (OTCBB: PTCH) began beefing its management with the appointment of a new CFO and COO. Now, investors are waiting on the results of drilling reports on two vast fields the company acquired late last year to assess reserves. Patch had indicated earlier that it intends on building a 25,000 barrel per day SAGD plant, which utilizes steam assisted gravity drainage to separate the oil from the sands. SAGD, while a new technology, is one of the proven methods being utilized in the Alberta oil sands.
Patch's SAGD plant is scheduled to go online in 2010, according to information on the Company's website. That coincides with the Enbridge/ExxonMobil pipeline being completed
Reposted from Resource Investor. Interesting comment on PTCH
Posted by A. Geologist on 06 May 2007 @ 03:33 PM
Hi Michael, I am a Geologist working on oil sands projects for the worlds second largest oil company. This company is very bullish on oil sands potential and has recently made some high profile oil sands aquisitions. Just about every day I sit through `oil sands` technical reviews and discussions. Without fail the topic of conversation always swings to present / future technologies that have potential to drive down costs of these projects. Without fail, two company names keep emerging as maybe having the `golden bullet`. One is Petrobank (PBG.TO) and their `ARID` wellbore technology, the other is Lexington Energy Services (LXES.OB) and their new oil sands coring rigs. When a company worth several hundered billion $`s, starts talking about a company with a market cap of only $19mln as potentially having `game changer` technology, you just know that share price fireworks are a real possibility. So even though, I strongly believe that STP`s costs are very likely to be in the $400-500mln range, there is scope to significantly drive these costs down. As a side note - I have screened most of the oil sands juniors. To me the one that realy stands out is Patch International (PTCH.OB). See what you think. Keep up the flow of interesting articles
STP shares fully diluted 54MM
Share price $3.39
Market cap $182MM ($170MM USD)
Resource: 156MMbbls recoverable oil resource (probable and possible)
Trading multiple per bbl oil : US$1.09/bbl (market cap / bbls oil)
PTCH shares fully diluted 48MM
Share price $2.03
Market cap $97MM USD
Resource: 534MMbbls recoverable oil resource (probable and possible)
Trading multiple per bbl oil : US$0.18/bbl (market cap / bbls oil)
So where is the value at?? PTCH at 18 cents per bbl resource or STP at $1.09 per bbl resource. If PTCH was sporting the same multiple as STP we would be trading at over $12 right now. See where this will be once they get on a better exchange.
PRO.V.But I like these excerpts from the RI article:
"Silver Standard’s [TSX:SSO] market capitalization is equivalent to roughly $2/oz of silver in the ground. Right now PRO with only 31 million shares outstanding is trading at less than 50 cents per ounce in the ground.
As that reality begins to find its way onto radar screens, and drills begin to turn resulting in newsflow from 50,000 metres of drilling on other highly prospective projects in 2007, we expect that Pershimco shares could move sharply higher.
Based on the current situation we see fair value somewhere around C$2.50 to C$3, but if all Las Minitas ounces are converted to 43-101 and drill programs at the other properties meet with success, conservative comparables dictate that we could quite literally be looking at C$5, C$6, or C$7 per share in the next 12 months."
Robert Gies: How Shell First Tripped Over Saskatchewan's Oilsands
When I was only eleven years old, growing up in Hamilton, Ontario, I knew instinctively that I would have a career in the petroleum industry as a geologist. I know that sounds a bit strange but it turned out that way. I enjoyed hard rock geology and mineralogy. However, even Frank Beales' droning on in his lectures about "clean washed sandstones" never discouraged me from getting into the oil biz. Ruth and I were married in my fourth year at University of Toronto and upon graduation I chose a job as exploitation engineer with Shell. My interests were always on the technical side of the business and Shell was very much focused upon applied technology.
With Shell I had many interesting adventures and experiences throughout the industry and in many areas of North America. If I could relate just one interesting experience, it occurred in the early 1970s while I was involved with Shell's tar sands project. Shell had pioneered much of the early heavy oil technology at that time. One day I came across a short article written in 1954 by a professor with the University of Saskatchewan, the well-liked Walter Kupsch, in which he referred to the occurrence of large blocks of tar sand deposited in the glacial till near Peter Pond Lake. The article was entitled "Bituminous Sands in Till of Peter Pond Lake Area, Saskatchewan". It was published by the Saskatchewan Department of Mineral Resources as Report 12, I believe.
At that time there were no known tar sand outcrops in western Saskatchewan since the entire region is covered by glacial till deposits, and no drilling had ever taken place there. Having been involved in delineation drilling Shell's large and rich tar sand deposits now being mined near Ft. McMurray, I thought this was quite interesting. I decided to go and sample these blocks of tar sand described in the literature. After digging most of the day my assistant and I were unable to locate the tar sands using the map provided by the professor and were about to give up.
Late that afternoon however a thunderstorm was coming our way so we decided to move the float plane for protection to a cove across the lake to ride out the storm. While waiting there for the storm to pass, I spotted a man at the top of a hill and decided to go and talk to him about tar sands in the area. It turned out that he was a native Indian who was building himself a home. He claimed that he didn't know of any tar sands but he appeared worried about who we were. I told him I was with Shell and why I was there, and gradually gained his confidence. I really enjoyed listening to him talk about this area. He then took a tattered paper from his wife's purse which he claimed gave him the right to build a house there. I convinced the man that I was not going to turn him in or anything like that and then he took me out behind his home to show me a huge pile of tar sand that he had dug up while preparing the foundation for his house. It was a complete surprise!
Being familiar with the nature of the Ft. McMurray tar sand deposits I was able later to determine that these deposits were quite different and therefore they did not represent glacial transported blocks of tar sand from the Fort McMurray tar sand outcrops along the river as proposed by professor Kupsch, but they were evidence of entirely new and unknown deposits. For one thing, the clay clasts were calcitic whereas the clay clasts in the Ft. McMurray area are not.
The result was that Shell leased about two million acres along both sides of the Alberta/Saskatchewan boundary for less than $50,000. It was a big event at the time and was covered in Oilweek magazine and even announced in the provincial parliament that Shell was moving back into Saskatchewan in a big way. Old prospectors and local people contacted us to tell us about other oil indications in the area that they had observed many years ago. That winter Shell undertook a multi-well exploration drilling program.
The effort turned up fresh tar sand deposits on both sides of the border trapped in the same McMurray sands, as well as oil seeps. I thought at the time that the heavy oil was preserved in local basins created by dissolution of deeper salt beds associated with proximity to the up-dip outcrop. It is important to remember that the outcrop region of sedimentary basins represents the last a major barrier to updip oil migration because oil is not buoyant in the porous air-bearing sediments above the water table in the outcrop region. Updip oil migration stops at the water table. Hence the large heavy oil deposits associated with sedimentary basins is various parts of the world.
I left Shell in 1977 after 20 years and joined a small upstart oil and gas company named Canadian Hunter for the next 14 years. Then in 1992 I started my own consulting company which I still operate. It turned out that after I left, Shell decided to drop its Saskatchewan tar sand leases. (big mistake!).
Today the same area is under intense development in Saskatchewan by a company called Oilsands Quest. Inc. which appears to be having great success in delineating rich tar sands deposits. The company holds many townships of leases. There are no doubt other oil exploration opportunities in this subcrop region of the basin.
Robert Gies is a consulting geologist in Calgary (rmge@telusplanet.net)
What follows a stock market record? More of 'em. When the press discovers endless riches in the stockmarket, you pretty well it's all over. Or is it? From today's USA TODAY
NEW YORK — There is nothing, it seems, more liberating to a stock market shackled by doubt than a run to a new all-time high.
A fresh record, like the ones posted this week by the benchmark Standard & Poor's 500 index after a seven-year wait, is often followed by a string of records (it closed at a record 1530.62 Thursday).
Looking at data going back to 1942, S&P found stocks slump (-0.7%) in the month after busting into virgin territory. But the adrenaline returns. Stocks are up big six months later (+5.2%).
HISTORIC HIGH REACTION
In this bull market, it took the S&P 500 nearly three times longer — 57 months — to hit a new high than it did on average in the previous 10 bull markets. Following those 10 previous new highs, on average:
S&P change, next 1 month ... -0.7%
S&P change, next 3 months .. 2.1%
S&P change, next 6 months .. 5.6%
Time until next top ...................37 months
Source: Standard & Poor's
Perhaps most comforting to investors suffering acrophobia is the fact that, on average, the next market top does not form for roughly three years, says S&P. "Like they taught us in stockbroker school, new highs lead to new highs," quips Michael Farr, president of investment firm Farr Miller & Washington.
Recent stock market action drives that point home. The Dow Jones industrials have notched 47 record closes since October 2006. Those stats, plus the fact that any investor who owns index funds that track the S&P 500 are now in the black and have less reason to sell, suggest stocks have room to run.
With the S&P 500 trading at valuations that are in line with historical levels, signs of excess that could result in a major decline are absent, Farr says.
Typically, a string of records is fueled by a bullish mix of factors: newfound investor confidence; the conversion of market skeptics to true believers; and momentum buying by people who don't want to miss out.
Says New York-based money manager Michael Holland: "Psychology is so important. When the headlines tout new highs, people say, 'I want in!' "
But it will take more than psychology to sustain the rally. Potential drivers:
• Individual investors return. Last year, just $11 billion flowed into U.S. stock funds vs. $149 billion that went into foreign funds, says TrimTabs Investment Research. that trend may finally be shifting, which could provide a tailwind for stocks, says Charles Biderman, CEO of TrimTabs. The past two weeks, $3.4 billion went into domestic funds, boosting the May estimate to $11 billion, just $3 billion less than the full-month estimate for foreign funds.
• New leaders emerge. Market laggards, such as technology and health care, need to show some life. "You don't want to rely on the same old tired leaders," says Jeffrey Kleintop, chief market strategist at LPL Financial Services.
• Skeptics give up. There is nearly $12 billion, a record, betting that New York Stock Exchange stocks will decline. If shares keep rising, those players will have to reverse their bets, creating future demand for stocks, says Mark Arbeter, chief technical strategist at S&P.
Eurasia Gold Inc.'s Board recommends shareholders reject offer from Kazakhmys
Wednesday May 30, 3:37 pm ET
TORONTO, May 30 /CNW/ - Eurasia Gold Inc. ("Eurasia" or, the "Company") (TSX: EGX - News) announces that its Board of Directors is unanimously recommending that shareholders reject the unsolicited all-cash offer of $0.85 per Ordinary Share from Kazakhmys Gold Inc. (the "Offeror"), a wholly-owned subsidiary of Kazakhmys PLC ("Kazakhmys") for all outstanding Eurasia Ordinary Shares (the "Offer"). The Board of Directors has concluded that the Offer is inadequate, from a financial point of view, to Eurasia's shareholders. Eurasia's Board of Directors had established an independent director's special Committee (the "Special Committee") comprised of Graham Bevan to review the Offer. The Special Committee had retained Minden Gross LLP and Jennings Capital Inc. ("Jennings"), as its legal and financial advisors, respectively. Jennings has provided a written opinion to the Special Committee and the Board of Directors to the effect that the Offer is inadequate from a financial point of view to the Eurasia shareholders (the "Financial Opinion").
A copy of the Directors' Circular, which sets forth in greater detail the Board of Directors' recommendation and the reasons therefor, is being mailed to all Eurasia shareholders, beginning May 30, 2007. The Board of Directors' recommendation was arrived at after considering a number of factors, including:
- although Jennings was not retained to prepare a formal valuation in
respect of Eurasia, the financial analysis prepared by Jennings for
the purposes of delivering the Fairness Opinion indicated that the
Offer was inadequate, from a financial point of view, to the
shareholders of Eurasia. The Special Committee considered the
assumptions communicated to it by Jennings for the purposes of its
financial analysis to be reasonable or appropriately cautious;
- the Fairness Opinion is to the effect that the consideration to be
paid in respect of the Offer is inadequate, from a financial point of
view, to the Shareholders; and
- the opinion of the Special Committee.
Eurasia's shareholders are advised to read the Director's Circular as it contains important information about the Offer. Copies of same will also be available at www.SEDAR.com under Eurasia's SEDAR profile.
No stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein.
For further information
Baltabek Mukashev, President and CEO, + 7 3272 37 83 06, baltabek.mukashev@almaty.eurasiagold.com
Eurasia Gold Inc., (416) 504-2899, info@eurasiagold.com
My further thought is that it doesnt cost that much to drill onshore and EGY has the money.They dont need finance and they probably bought data on the property from shell.They should try to move a bit faster.A positive drill result from there could put a rocket under EGY.
No I am not back in,just watching.I think the next significant development will be onshore Gabon.And I fear that is quite a way off and the share price may wander lower.
I know how you feel.I have GPTC.
On shore Gabon.Off shore Angola.
They will try to get something going on anything but I suspect their properties are not worth what they claimed.I dont know anything about the uranium.Do you have any info you can post?