Fox Davies Broker note – Max Petroleum

Good summary.

http://www.fox-davies.com/media/288681/maxflashnote6jan2011.pdf

Sp was eager out of the block this am touching 27.5p only to be hit by a wall of sellers and to end the day down 1p to close at 21.75p. Yesterday saw an increase of nearly 25% so perhaps much of the gain for UTS result was already in that rise – The Sun appeared to have the rumour story which suggests trading yesterday was far from insightful!
As I mentioned earlier today – the prospect of the next 3 wells which mirror the same structure as the successful UTS well – are due to be drilled in the next few weeks. MXP might be testing 25p+ ranges again by the time they spud the first one. Not long.

Upcoming Oil Conferences – Diary watch

3 hotlist stocks are featured in upcoming conferences next week – if you would like to attend, best hurry up as spare seats could be thin on the ground. Fortunately Proactive Investors conference and the Oil barrel conference are both in London and nicely timed so you can attend both. Awfully kind of these guys to confer!

Oil Barrel 40th Conference – 13th January 9.30am to 1.30pm (next week) Gulf Keystone and Xcite are presenting among others.
http://www.oilbarrel.com/oilbarrel_forums.html

and Proactive Investors – 13th January 6pm to 8pm (next week) CAZA oil are presenting among others.
http://www.proactiveinvestors.co.uk/register/event_details/98

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

Hatrick! – MXP hit a possible 135mmbls

What a fantastic start to 2011 for the Hotlist oilies. Nautical struck on Tuesday, Gulf Keystone struck on Wednesday and now Max Petroleum confirmed a massive find this morning after doing numerous tests on its Uytas well.

This is a huge result for MXP and very significant for a company with a market cap of just over £100mln. Investors should turn a keen eye to the next 3 months as MXP continue to drill 3 further quick shallow wells on the same licence area and more importantly – all 3 of the drills are based on 4-way closures – the same as the Uytas success. It should also be noted that MXP are in need of funding to enable them to drill their deep prospects later this year – this could come in the form of a placing or a farm in from a partner. The deep prospects are truly mouth watering and in essence is what MXP is all about. More updates and broker comments will follow throughout the day.

From this mornings RNS…

“Based on a probable oil/water contact at 161 metres as indicated by revised petrophysical analysis and current mapping, the potential oil in place for the Cretaceous reservoir is estimated to be between 85 and 135 million barrels of oil. While other Cretaceous fields in the Pre-Caspian Basin from similar depths report recovery factors between 20% to 30% of original oil in place, long-term testing and pressure analysis of the discovery well, combined with confirmation drilling and a new seismic survey specifically focused on these shallow reservoirs will be needed to more accurately define recoverable oil reserves. Enhanced recovery techniques, such as water flooding, may also be needed to improve recovery from such shallow depths with low reservoir pressure.” END.

Wednesday’s Roundup

Another exciting day for the Hotlist stocks. On Tuesday we had Nautical’s discovery of a possible 45mm to 55mmbls at Varadero. Today, we had Gulf Keystone announcing a discovery at SH-3 with p50 estimated at 220mmbls and a p10 near 2.2bln mmbls. Two days into 2011 and we have two hotlist stocks sporting seriously tasty discoveries. That’s what it’s all about for E&P’s. GKP started the day at 163.5p and closed up 9p (5.5%) at 172.5p. Nautical also continued its run from yesterday, closing up 11p (2.6%) to 441p

Also of note today was Max Petroleum’s sudden spike and strong volume. As mentioned at the time via “Heads Up’ post, the volume was circa 3.5mln which is average for MXP before suddenly jumping to 7mln within 45mins. The sp started the day at 18.25p and closed at 22.75p with a very fine 4.5p (24.7%) daily gain and not a whiff of news anywhere.

A possible farm out deal or update on the UTS well test could be behind the rise. MXP is certainly one to watch tomorrow.

Another Hotlist stock to keep your eye on is Bowleven (BLVN). News is due imminently on their offshore cameroon exploration well Sapele-1. Sp currently firm at 397p.

Dominion (DPL) which featured in the ‘B’ List (or alternative picks) closed today at 6.2p. Its highest close in a month and second highest since July’s 6.23p close. If it can break 6.2p and close above 6.3p tomorrow, then it might be tempted to push on further and test the 7.4p high last seen in May.