Gulf Keystone – looking lively

Great day all round today with FTSE bouncing up 1%+ and with general sentiment up I was a tad surprised to see GKP trade flat in the morning session. However, equally, I didn’t expect such a spike up on increased volume post 3pm. The sp closed at 177p based on the UT, a gain of 11.25p (6.8%). This was higher than the previous high for the day. Normally a bullish sign. As mentioned last week – GKP are presenting at the Oil Barrel Conference on Thursday 13th January. It’s possible that they may want to reassure investors over the recent legal dispute but also on operations. Due to market rules, nothing can be discussed in the conference that is not already out there in the public domain. Thus, an RNS would be required before Thursday’s market open.

Volume was ok today but nothing massive. It will be interesting to see what the volume is like tomorrow.

Dominion tests 7p+

Great momentum with Dominion at present. Late in 2010 thesharehub highlighted the significance of breaking 6p. (see DPL breaks sp).

Dominion may be about to announce a partner for its Alpha prospect. Recently, an independent audit suggested the Alpha prospects in deep-water Tanzania could contain 1.1 billion barrels of oil and 7 trillion cubic feet of gas. Recent news on France’s Total looking for entry into Africa has also helped with raising the profile.

France’s Total In Talks To Enter Congo Oil Block – Sources –

A long way to go for DPL as drilling any prospects is still some time off. But the prospect of drilling Alpha is enough to see the early speculators getting on board. A risky stock but one that could be very rewarding should they succeed with Alpha. DPL is on the alternative 2011 hotlist – the ‘B’ List.

On the move – PPC

After a recent sell off from 96p highs, PPC (President Petroleum) dropped back to test 77p after hitting some delays on their Kafoury-3 drill. Recent drill data from Sonlite suggests they are now ready to continue drilling after setting casing/liner. If this drill proves successful – it could add significant upside to PPC’s share price (currently 82.5p). If it fails – then a retrace to 50p ranges could be on the cards. Not one for the faint hearted but they do have other key /significant assets and thus Kafoury-3 is not the begin and end all. Drill news/TD may not be far away now. Previous comment was given on Dec 27th 2010.

Nautical Share Option awards

Nautical share option awards announced today which look fair at 433p. Investors often grumble when management feather their nests with share options. But NPE have without a doubt earned every share/option with a transformational year which has seen the business increase from a £30mln market cap to £400mln in under 12 months.

Share options can be an interesting indicator for investors. I often find that in a bullish market, directors will naturally seek the lower sp points to issue options as it makes them more appealing/rewarding. With Kraken news due soon plus the current Catcher appraisal program in full swing… the option price of 433p ‘might’ just look like a bargain in a few weeks/months time. NPE management are a smart and timely bunch. Whilst investors cannot grant themselves options (if only!) they can indeed participate in shares at 433p range via the open market. This option clearly carries all the risk.

11 January 2011 Nautical Petroleum plc

Grant of Options and Directors’ Shareholdings
“Nautical Petroleum plc (LSE: NPE) announces that on 10 January 2011 the Board approved the grant of 585,000 options over ordinary shares of the Company to the directors and key employees of the Company. The share options granted to directors are as follows: Stephen Jenkins 150,000 Paul Jennings 125,000 Will Mathers 100,000 Philip Dimmock 35,000 Patrick Kennedy 35,000.

The options are to subscribe for new ordinary shares in the Company and the exercise price is 433.00 pence per ordinary share, being the middle market quotation of the shares on 10 January 2011. The options have been granted for nil consideration.

The options may be exercised semi-annually, on a pro rata basis, over a 24 month period from 10 January 2011. All share options must be exercised before 10 January 2019, failing which they will lapse.” END.

Broker Note on IAE Q4 Production numbers

Union Securities Broker note by Warren Verbonac based on canadian TSX.

Ithaca Energy – Highlights
10-Jan-11 Stock Rating: Strong Buy Target Price: $3.50 (was $3.00)
Comment: “Ithaca’s production averaged 4,148 boed in Q4 2010, down 15% from the prior quarter. Production Averages 2010, boed / Q4 4148 / Q3 4862 / Q2 4914 / Q1 4193 Considering the latest quarterly production included some minor amounts from the recently closed acquisitions of the Anglia and Topaz fields, the drop in production may be somewhat disappointing for the market. Oil prices held up relatively well, at US$83.83/b in October, and US$89.86 in November. Our previous cash flow forecast of US .11 for Q4/10 was based on a slight increase in production to 5,000 boed; with the lower production, we expect the Company to report cash flow of US .09 for the quarter, and US .45 for the full year. The Company’s cash flow guidance for 2011 is US$100-115 million, or approximately US .42 per share.

Recent strength in the stock price reflects the large increase in production that is anticipated towards year-end 2011, when the Athena oil field commences production and contributes 5,000 bd net to Ithaca’s 22.5% interest. Workovers in the Beatrice field will also sustain production for 2011. Ithaca’s production is forecast to more than double to over 12,000 boed in 2012 from the addition of the Athena oil field, and gas from Carna (16% interest), Stella and Harrier. Cash flow in 2012 could increase to C .65 per share, and we believe the stock can trade as high as $3.50 based on the upcoming growth, and more or less maintaining the current cash flow multiple. The 2010 year end reserve report will also likely support an asset value well in excess of $3.50.

Valuation and Recommendation:
The stock is trading at 6.3 times our 2011 cash flow estimate of C .43, and at 4.2 times our 2012 estimate of C .65. We are maintaining our Strong Buy recommendation and increasing our target to $3.50.” END.

$3.50 based on current f/x equals around 226p. That presents a decent 32% upside from today’s levels (170p). It’s nice to Brokers raising estimates.

Also, worth noting was market call program last Friday evening with Bruce Campbell taking about IAE on BNN.

The BNN clip starts at the beginning of Part 6 of Market Call Tonight.

Summary of Bruce Campbell’s comments on IAE:
– recently purchased at $2.15 to $2.25, even bought some today on the dip
– has pretty big production gains almost guaranteed to be coming in late 2011 into 2012 and 2013
– very cheap; stock could double from $2.40 and get to $4.50-$5.00 in a couple years
– management is solid