bunky.... re TGA. TGA is nice stock because they have big upside potential, great mgmt but multiple ways to boost revs and cashflow. Obviously I am biased since this is a big winner for me.
In the very near term, they are drilling for the basement in Yemen near Tasour. DNO is operator and has been a leader in finding the basement oil in Yemen. We should know by year end if they hit basement oil and how much. Unfortunately Block 32 discoveries only add 13.2% to TGA but I'll take it if it happens.
Q4, TGA is extremely busy in Canada. Something like 20 wells will be drilled before yearend. Mostly shallow ngas, which are quick and cheap to drill but are targeted exclusively towards ngas due to North American shortage. TGA has reported early success but is very close to the vest on their Canadian operations. They say that bragging about success jacks up the surrounding land prices that they may want to lock up so they say nothing except reporting results at earnings time. They never talk about individual wells.
Also interesting is that some of the wells are CBM. I think CBM is the coming thing in Canada and expect TGA to get their share. Low output but long lived. I think TGA would love to extend the life of their Canadian ngas reserves and CBM might be a good way to do it.
There are also plans for more exploratory wells in S-1 before yearend. TGA plans to further explore the new fairway they found at An Nagyah. The production was low but it was light sweet so even a few hundred barrels is probably worth it. Ross says they have two years of drilling left to do in S-1.
As far as near term upside, I think drilling for the possible oil rim at An Naeem could be a big one. We know there is a tremendous amount of ngas there(1tcf estimate) so there is a chance for significant oil as well. Before the buyout by Oxy, VPI was very interested in going back to An Naeem and trying again. The first attempt a couple of years ago missed but TGA wants to try again. This is much longer term but I have to believe that An Naeem will eventually contribute to the LNG plant that is being built nearby. The pipeline runs very close to S-1. 1 tcf of ngas has to be worth something!!!!
That's what I know about. Egypt and S-72 are late 2006 before the required exploratory wells are drilled. Seismics are being completed in Egypt before the targets can be picked.
TGA is a solid company with no debt. They have excellent mgmt that underpromises and overdelivers. Medium term, they will have challenges with production unless they hit something new in Tasour or S-1 fairly soon. Tasour is starting to decline. Luckily the low percentage of 13.2 works both ways. The decline in gross production looks bad but TGA's share is fairly manageable.
Canadian ngas production should add 1000boepd by spring. Some of that has already been discovered but needs to be hooked up. Total Canadian production should exit 2005 at 1500boepd and add good revs based on the rising price of ngas.
Good luck, Bobwins
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