To: Ed Ajootian who wrote (81) | 10/3/2003 1:10:52 PM | From: DELT1970 | | | I've been searching the Canadian sheets lately, Ed, and entered True Energy today (TUI.TO and TUENF:OTCBB). They gave an interesting presentation at the Peters Conference Sept. 16 and reported Q3 yesterday at an exit rate of 3,600 boed. They gave a target of 5,000 boed in 2004 at Peters. They have a nice land position, including an oil and gas target within Nexen's CBM play in Alberta. newswire.ca click on archived events and scroll back to Sept. 16 at 3:30pm |
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To: DELT1970 who wrote (89) | 10/4/2003 3:40:43 PM | From: Ed Ajootian | | | Delt, Thanks, will try to look at that one. I've been considering looking at Canadian companies also but have not looked at many yet (other than ones that are operating in areas I'm otherwise familiar with).
I notice that many Canadian E&P companies trade at very low multiples of cash flow and EV/EBITDA. Not sure what would be a valid catalyst to get a higher stock price in Canada, although even at a low mulitiple I suppose if you are increasing your production as much as someone like True Energy believes they can, then your stock should go up. |
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To: Arktic who wrote (25) | 10/4/2003 3:45:50 PM | From: Ed Ajootian | | | Paul, I've slowly built up a pretty healthy position in FX Energy, see my latest tout on it at Message 19371527
Are you still holding? Should be interesting to see how high it goes before drilling results are out. The last financing included some warrants @ $3.60, I wonder if that will serve as a cap to the price. |
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To: Ed Ajootian who started this subject | 10/6/2003 12:26:39 PM | From: Ed Ajootian | | | KCS has done well during the first half and grew proved reserves by 20% over 2002’s year-end number of 196 bcfe. The company’s reserve life is now at nine years. The focus of the first half has been on cash-generating development projects. For the second half, KCS is drilling a number of high-impact exploration wells like the Ray George, 5-Mile Creek and SKA. If successful, we could see significant reserves addition at year-end 2003. • In addition to the exploration projects, the company’s low-risk “bread and butter” assets at Elm Grove, Louisiana, and Sawyer Canyon, Texas, continue to yield additional low-risk, high-return drilling locations. These two assets equate to 44% of KCS Energy’s proved reserves. We like the fact that KCS could have multiple years of drilling inventory in these “manufacturing” plays. • We think the company is firing on all cylinders. We are confident of our 2003E production estimate of 34 bcfe. If the drilling program continues to be successful during the second half, we would expect our 2004E volume estimate of 36 bcfe to increase. We reiterate our Buy recommendation on this gassy story with organic growth. Our 12-month price target is $8.00.
Company Profile KCS’s primary focus areas are the Mid-Continent region and onshore Gulf Coast. The company has key operations in the Anadarko and Arkoma basins, North Louisiana, West Texas and Michigan. Along the Gulf Coast, the focus properties are in South Texas, Coastal Louisiana and the Mississippi Salt Basin. With the financing of the $61 million Senior Notes completed in January 2003, KCS has been totally focused on the drill-bit, an effort that resulted in 50 bcfe of proved reserves for the midyear. The reserves are booked based on $27.00/bbl (WTI) and $5.17/mmbtu (Henry Hub). At a lower gas price assumption of $4.25/mmbtu, the reserves could swing by 5 bcfe to 6 bcfe. Of the 234 bcfe of proved reserves, 75% are proved developed and 80% are natural gas; KCS operates 80% of the assets. The reserve life is nine years. The geographic mix is 27% Elm Grove; 17% Sawyer Canyon; 25% Gulf Coast and 31% in other Mid-Continent Assets, the Rocky Mountains, Michigan and California. By mid-year, the company had drilled 40 wells with a 95% success rate, and each successful well opens up more prospective locations. We think the company has plenty of running room with this growing prospect inventory. The company increased its 2003 capital budget to $65 million from $55 million during the second quarter. We expect KCS to generate cash flow in excess of $88 million for 2003, which is sufficient to fund its new spending program and reduce debt. With a robust drilling inventory and strong commodity prices, we would not be surprised if KCS increased its 2003 spending plan again.
Be on the Lookout for High-Impact Drilling during the Second Half The company has begun its high-impact exploration program in South Texas. If successful, any of these prospects can make a meaningful impact on the company’s 2003 year-end reserves: Ray George: WI 50%, pre-drill target size of 40 bcfe (in progress). The prospect is located 200 to 260 feet updip of an old gas well, a fault-bounded structure. 5 Mile Creek: WI 30%, pre-drill target size of 20 bcfe (in progress). The prospect is located in the prolific Mission Valley area. It is a structural trap defined by 3-D seismic data, with amplitudes on the crest. SKA: WI 30%, pre-drill target size is 30 bcfe (in progress). Coquat Deep: WI 50%, pre-drill target size is 25 bcfe. This prospect is defined by 3-D seismic. The area is faulted with multiple pay zones. The main target is the Wilcox, and there are shallower zones supporting additional drilling locations. Austin Deep: WI 50%, pre-drill target size is 50 bcfe. This prospect is defined by 3-D seismic; the area is faulted with multiple pay zones. The well will likely be drilled in 2004. There are existing discoveries in shallower zones nearby, which lowers the risk for the Austin Deep prospect.
Core Areas: Generating More Drilling Locations As of mid-2003, KCS drilled 40 wells, with 38 successful (95% success rate). During the first half, the company did most of its drilling in the Elm Grove area of Louisiana and the Sawyer Canyon area in Texas. Combined, these two areas contribute 44% of the company’s proved reserves. We like these plays, as the programs are repeatable, relatively low-risk and have quick payout periods. The Elm Grove Field in North Louisiana: (100% WI in 8 sections, 33% in 1 section). KCS drilled 9 wells by mid-year and expects to drill 9 more before year-end. The company is prospecting for the Hooston interval and the Cotton Valley group. The average well cost is $1.2 million and the initial production rate is 3 mmcf/d. The reserve potential is 1 bcfe to 3 bcfe. The company has 50 to 100 additional locations—at 20 wells per year, this could support a 2- to 5-year drilling program. This Elm Grove area is competitive, but KCS Energy has made long-term agreements with drilling and service companies to keep a lid on drilling and fracturing costs. These agreements and contracts enhance the economics of the Elm Grove Play. At the Sawyer Canyon Field, in Sutton County, Texas (90%-100% WI), KCS drilled 14 wells by mid-year, with IP averaging 370 mcf/d per well. The average well cost is $400,000, with reserve per well at 0.4 bcfe/well. The acreage can support 35 to 100 more well locations, and KCS plans to drill 20 wells per year in the Sawyer Canyon field in 2004 and 2005. Spacing is currently 80 acres; it could be down-spaced to 40-acres at selective locations if commodity prices continue to stay high. In East Texas at the Joaquin Field: (74%-100% WI), the company drilled 2 wells by mid-year and expects to do three more by year-end. Average well cost is $1.5 million, with an initial production rate of 1 mmcf/d to 3 mmcf/d. The reserve potential is 2 bcf to 4 bcf per well; the company has 5 to 10 additional well locations. At the Talihina Field in Oklahoma (30% to 100% WI), the Weyerhauser 2-22 discovery flowed 4.0 mmcf/d. The Weyerhauser 3-22 and Blake 11-21 are being completed. The company expects to drill 5 wells by year-end in this Arkoma Basin play. The well cost is $1.6 million, with an initial production rate of 2 mmcf/d to 4 mmcf/d. The reservoir is the Jackfork Formation (up to 200 to 400 feet thick). The structures are complex, with steep dips, and reserves per well average 2 bcfe to 6 bcfe. The company has 5 to 15 additional locations. The partners in this play are Chesapeake Energy (CHK/NYSE- $10.76; Not Rated) and Ward, which is private.
Valuation and Price Target In valuing our E&P companies, we use a price-to-cash flow multiple. We establish a reasonable range based on historic averages of a group of broad-based E&P companies, which includes twelve E&P companies with market capitalizations ranging from $900 million to over $11 billion. Our 12-month price target of $8.00 is based on approximately 4 times our 2004 cash flow per share estimate of $1.92. We used a low cash flow multiple to reflect KCS’s high leverage, which is currently about 93%. We are very encouraged by KCS’s drilling success and believe that, if commodity prices continue to be strong, the company could end 2004 with a debt-tocap ratio in the low-60% range. We also revised our net asset value (NAV) analysis for KCS using the company’s mid-year reserves of 234 bcfe. Using our 2004 price forecast of $26.00/bbl for oil and $4.75/mmbtu for gas, we arrived at $10 per share, net of debt. We reiterate our Buy rating on KCS. Investment Risks • KCS has a small market capitalization, a relatively thin float and light trading volume, which, under certain circumstances, could make the stock more volatile. • The company’s production mix is roughly 80% natural gas: with each $0.10/mmbtu change in Henry Hub natural gas prices, both 2004E EPS and CFPS could be impacted by $0.05 each. Also, with each $1.00/bbl change in WTI oil price, the 2004E EPS and CFPS could both be impacted by $0.03. • In addition, the high debt level makes KCS more sensitive to positive or negative moves in U.S. natural gas prices.
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Above is from Sanders Morris Harris report 9-5-03 |
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To: Ed Ajootian who wrote (91) | 10/6/2003 1:05:10 PM | From: Arktic | | | Yes, I'm holding in a big way. I picked up about 80,000 shares below $2.10 a share last year. I have a lot of confidence in management and their acquisition of the Fences I,II,&III properties is beyond amazing. This company is set to fly as far as I can tell. I think we'll all be very pleased with this stock during the next 12 to 24 months. If the first well with CE is a dry hole, the stock may temporarily tank. However, this is much more than a one hole game. |
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To: Arktic who wrote (93) | 2/27/2004 5:59:39 AM | From: Ed Ajootian | | | Arktic, Belated congrats on a phenomenal call here with FXEN. It took a lotta guts to build that large a position in this and you have been rewarded handsomely.
Looking forward to hearing news of the next well soon. |
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To: Ed Ajootian who started this subject | 2/27/2004 6:00:53 AM | From: Ed Ajootian | | | Contract Feb. 23 Week's Feb. 23 Month p/therm High/Low $/MMBtu Mar. '04 21.39 22.00/21.32 4.01 Apr. 19.25 20.00/19.25 3.61 May 18.30 18.70/18.25 3.43 Jun. 17.85 18.25/17.82 3.35 Jul. 17.90 … 3.36 Aug. 18.54 … 3.48 Sep. 17.90 … 3.36 Oct. 23.73 … 4.45 Nov. 28.66 28.95/28.00 5.38 Dec. 30.72 31.14/30.17 5.76 Q105 31.08 … 5.83 Q205 19.68 … 3.69 Q305 18.88 … 3.54 Q405 27.80 … 5.22
Prices are based on delivery to National Balancing Point, within Transco's transmission system. Quotes for specific dates are settlement prices. Week's High/Low reflects intra-day trading.
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Above are UK gas futures, wrt ATPG. |
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To: Ed Ajootian who wrote (94) | 3/4/2004 12:12:53 AM | From: Arktic | | | Hi Ed: Thanks for the feedback. FXEN has dropped back but I view it as a healthy correction. I'm in this one for 3-5 years and believe that under Hartman's competent guidance, this company will do phenomenally well. Time will tell.
Paul |
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From: Ed Ajootian | 3/21/2007 4:58:09 AM | | | | Alcan May Buy Gas From Rift Oil for Australian Plant By Angela Macdonald-Smith
March 21 (Bloomberg) -- Alcan Inc. signed an initial accord with Rift Oil Plc that may result in the world's second-biggest aluminum producer buying natural gas from a field in Papua New Guinea for an alumina refinery in the far north of Australia.
The company needs 40 billion cubic feet a year of gas for 20 years for the Gove plant and London-based Rift still needs to prove the Douglas field is big enough, Stefano Bertolli, an Alcan spokesman in Brisbane, said today. Rift's Douglas field is one of several potential supply options being considered, he said.
An agreement Alcan had earlier to buy gas for Gove from Exxon Mobil Corp.'s proposed $5.5 billion project to pipe gas from Papua New Guinea to eastern Australia lapsed late last year after the group that was to build the line decided the project was uneconomic. That prompted Alcan to study alternative options, including coal-seam methane and liquefied natural gas.
``We signed a non-binding MOU with Rift and they're going to explore to see if there are enough reserves there, and if there are then we're going to have to see how it moves forward,'' Bertolli said in a telephone interview. ``There are many options on the table and this is one of them.''
Last October Alcan agreed to start studying a gas-to-liquids project with Arrow Energy NL that would use coal seam gas from Brisbane-based Arrow's fields in Queensland. The study was to study gas-to-liquids against other options available for energy supply to Alcan's Australian operations.
Arrow said earlier this month the initial studies showed a plant costing about A$1 billion ($802 million) and producing about 20,000 barrels a day of diesel, naphtha and liquefied petroleum gas may be economic.
Pipeline Plan
Should a final agreement be reached with Rift, it would require the construction of a $1 billion pipeline to take gas from the Douglas field in Papua New Guinea's Western Province to Gove in the Northern Territory, the Australian said today, citing Ian Gowrie-Smith, chairman of Rift Oil. The pipeline would be shorter and cheaper than Exxon's proposed line as it may only supply Gove, the newspaper said.
Alcan, based in Montreal, isn't considering investing in the pipeline at this stage, Bertolli said. The company is spending $2.3 billion on expanding the Gove refinery and wants to switch fuel supply at the site to gas from fuel oil because it's more economic.
Rift will explore at Douglas over the next 12 months to see if there are enough reserves and the companies will then decide whether to seek a final gas sales agreement, with the possibility of gas deliveries starting in 2010 or 2011, Bertolli said.
Foreland, Austral
Rift's Foreland Oil Ltd. unit owns 65 percent of the PPL 235 exploration permit in Papua New Guinea, which holds the Douglas-1 and Langia-1 gas discoveries, which may also contain condensates, Rift said in a March 20 statement on the initial accord with Alcan. New Zealand's Austral Pacific Energy Ltd. owns the rest of the permit.
Planned work in the permit ``is expected to be completed by mid-2008 and aims to provide sufficient information for the parties to proceed to a binding agreement to supply natural gas to Gove,'' Rift said in the Regulatory News Service statement.
Wellington-based Austral said in July the Douglas field may hold ``several hundred billion cubic feet'' of gas across an area of 40 square kilometers.
Rift and Austral are also equal partners in an adjacent permit, PPL 261, which lies within about 100 kilometers (62 miles) of the Juha and Hides gas fields and the Moran, Mananda and Kutubu oil fields.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net .
Last Updated: March 21, 2007 01:48 EDT |
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