Ithaca Energy – Quarterly Production update due soon

I’ve got Ithaca pencilled in as due for a quarterly production update for Oct/Nov and Dec. This looks likely for next week based on previous announcements.

Due to workovers on Beatrice, I’m not expecting massive numbers as several days would have had shutdowns. But with oil averaging close to $90+ for last quarter, IAE will be generating very decent cash flow from a rough guide average of 5ooobopd.

Production increasing…
On the 29th Dec 2010, news was announced that the second work over had been completed…

Ithaca Energy Inc. (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited (“Ithaca” or “the Company”), an independent oil & gas company with exploration, development and production assets in the UK sector of the North Sea, is pleased to announce that stable production from the second workover well (A23) on Beatrice Alpha has increased by approx. 115% to approximately 560 barrels of oil per day (“bopd”) gross (280 bopd net to Ithaca), exceeding management expectations.

Activities will commence in early January 2011 on the third workover well of the campaign (Beatrice Alpha well A28).”END.

Earlier guidance was given along with a 2011 business update on 15th Dec for “Net production for 2011 anticipated to be between 5,500 to 6,000 barrels of oil equivalent per day (“boepd”).(production is ranged since it is subject to certain successful work programmes undertaken in the Beatrice area)” END.

Thus, with the second workover already a success, all eyes are on the 3rd workover which if good should push the average numbers up for 2011.

If Brent averages near $100 for the next quarter, then IAE are going to be generating significantly more cash flow than the previous quarter. Worth noting that Jacky will also be given enhancements and workovers to boost production in 2011. There is plenty of room for IAE to surprise on production numbers this year as they head towards the big introduction of the Athena licence which is planned to come on line in Q4 2011.

Ithaca also trades on the Canadian TSX exchange and is dictated largely by the volume traded across the pond as it is more significant than on LSE. Note the canadian market views link as follows. You can also get delayed prices through to the 9pm (uk time) close.

http://tmx.quotemedia.com/research.php?qm_symbol=IAE

Gulf Keystone Broker Note Update – Mirabaud.

A fair summary and as with Fox Davies note – Targets have been kept at 200p. If Seismics are better than expected – then I would imagine that some brokers may revise targets upwards. Although – until Politics/PSC’s are confirmed, GKP will trade at a significant discount based on their assets/resources/reserves. Goldman Sachs has a target of 160p but adds that this is 50% discounted due to their views/concerns on iraqi politics.

Mirabaud Oil Update
Mirabaud Securities – Energy Research
5 January 2011

Gulf Keystone
Shaikan-3 confirms significant oil volumes in the Cretaceous
“This morning, Kurdistan explorer Gulf Keystone Petroleum (GKP LN, Buy, PT 200p) announced that it had completed drilling and testing operations on the Shaikan-3 well. Located on the Shaikan block (GKP 51% fully diluted WI), the well is effectively a twin of the original Shaikan-1 discovery well, drilled to a shallower TD with a less powerful workover rig. Shaikan-3 tested the Cretaceous and Upper Jurassic intervals which had not been completely logged or evaluated in the discovery well, due to drilling difficulties. Two open hole and two cased hole flow tests were conducted in the Cretaceous, but no rate was reported.
As a result of log evaluations and recovered fluid samples, the company estimates that in-place P50 to P10 volumes of 220 million to 2.2 billion barrels of oil-in-place were discovered in the previously unevaluated Garagu interval (1060-1157m). The wide range of variation between the P50 and P10 figures results from uncertainty over the extent of the oil-bearing reservoir throughout the anticline structure. The lack of a test result suggests that the oil is likely to be heavy and viscous and therefore some form of heating may be required to mobilise the crude. The well has been completed as a second producer from the Sargelu interval (Upper Jurassic) to be tied back to the Shaikan-1 test production facility.

Comment:
The Shaikan-3 well has successfully demonstrated that the significant in-place resources at the Shaikan discovery extend into the shallower Cretaceous interval, and the well has again illustrated the scale of the resource potential across Gulf Keystone’s acreage in the Kurdistan region. The lack of a test result and therefore the likelihood that the oil contained in this interval is heavy is not out of line with expectations, but may be viewed by some in the market as a minor disappointment. Heavy oil fields can be developed with standard, proven enhanced recovery techniques such as steam-flood. Nevertheless, at this stage we have not elected to add the Garagu reserves to our Shaikan valuation model.
Gulf Keystone’s multi-well exploration and appraisal programme continues with the deeper Shaikan-2 and Sheikh-Adi-1 wells currently drilling, and Shaikan-4 due to spud in the coming months, while results from a 3D seismic shoot can also be expected. Overall, the company has a high-impact work programme for 2011 offering plenty of catalysts for the stock. Following the recent share price move towards 160p/shr we have a BUY recommendation with unchanged 200p/shr price target.” END.

New POLL – BOE Interest Rates Forecast

A new year and a new Poll to challenge your thoughts.

The recent FTSE 100 Poll was interesting as it picked a ‘finish’ point for 2011 which of course doesn’t tell the full story or explain the thinking behind investors choices. As explained in my earlier post, I see the FTSE doing well but possibly tailing off or cooling a bit as we enter Q4. This reflects my belief that we may well see one or two interest rates rises in the Second half of this year.

The bank rate was left unchanged at 0.5% at the last meeting in DEC 09. Unchanged now for almost 2 years.

Cpi inflation was up at 3.3% in November. The previous month was 2.9% which makes November the largest jump since records began in 97′. Hence, price pressure is building, and the BOE are a tad red faced after making some poor inflation target/predictions.

Reuters Poll’s have varied over the last few months with 0.75%, 1% and 2% all mentioned by the end of 2011.

Ultimately – it all comes down to how the global economies perform this year and I doubt the FED’s will be raising rates anytime soon. The question is… when will the BOE start to break the near 21 month unchanged run and by how much.

Poll closes on Jan 31st, so vote away!

Be careful – 1st trading day of 2011

The first trading day of the stock market year is notorious for being an interesting event as many investors start the year off with a flourish. The combination of newspaper tipsters and brokers tips all serve to drive early interest in specific / highlight stocks. The US Dow Jones was looking spritely at 100pts+ for most of yesterday in a quiet trading session, eventually closing up 93 pts.

Be careful of stocks with smallish share floats. Market makers often hold very low amounts of stock and thus become ‘short’ of stock at times of high demand. As a consequence, share prices in these stocks can move fast and be extremely volatile. So be careful to not get hoodwinked by some lofty entry points purely because it’s the first day of trading. There’s circa 250 days trading ahead in 2011, so plenty of time. As most will know, if you miss the bus, taxi or train – there’s always another one coming along shortly after – patience is the key and stick to your own trading strategy which should be based on your own personal circumstances.

Good luck and best wishes to everyone for a great investment year ahead.

FTSE Poll Closed – Results

Thxs to everyone that participated in the Ftse100 Poll. Results are in with a clear winner – 6500 (32%).

Worth noting is that 404 votes (66%) was between 6500 to 7000 for a 2011 finish. Just 18% thought Ftse would finish below 6000 level. Will be fun to see where we finish the year. I’m going with the mid point of the popular range and opting for 6800. I think there’s a strong chance the FTSE 100 will go higher during the year but feel we may see some gains eased off as we head towards Dec 31st Close.

Any budding statisticians out there – feel free to comment/offer a more detailed/mathematical insight.

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