A very solid start to 2011 by all the Hotlist stocks with just the one exception being GKP. Key story today was without a doubt – the Varadero Discovery. Fantastic news and a great start to 2011. Here’s a couple of Broker comments.
Broker comments as follows…
Note from Cenkos on Encore (and relevant to Nautical)
“After weeks of waiting the Transocean Galaxy II has finally made it out of Dundee harbour and will await a weather window to be positioned on the first of 4 E&A targets in Block 28 – which include the Catcher discovery. We saw management 2 weeks ago and think the market could be missing something here….management believe that Catcher East is an “injectite”, a play type that has never been targeted in the North Sea (although by chance the Alba and Gryphon fields are injectite plays). This team has an unmatched track record (having discovered the 2 biggest N.Sea finds in 25 years with Buzzard and Catcher) and if they are right Block 28 has 8 potential injectite targets making a conservative target volume of 800mb for the block vs. Estimates for Catcher alone of 220-300mb,if this works this could be the start of a whole new phase of N.Sea exploration. Block 28 and Cladhan drilling campaigns over the next few months could be transformational. We still expect that either Premier or Wintershall will look to buy the company in the near term. Well worth meeting management. BUY.” END.
And a comment from Oriel Securities…
“The Catcher Area partner group (Premier, Nautical and operator EnCore) have announced that the Varadero exploration well has made a new oil discovery
The discovery is located to the west of the Catcher field and was targeting the Tay injectite play which was successful in the Catcher East sidetrack. The well intersected 84ft of net oil pay over a gross interval of 185ft in-line with pre-drill expectations with no oil-water contact encountered. A further 22ft of net pay was also encountered in thinner sands above the main Tay reservoirs. Oil quality is good at 27deg API (a key pre-drill risk, given concerns that oil quality could degrade further westwards from the original discovery) as is reservoir quality with an average porosity of 33% in the main Tay sands.
Pre-drill resource estimates were c40mmb which appear to be largely underpinned by this result. Unrisked this would be worth c101p/sh net to Premier, c56p/sh to Nautical and c18p/sh for EnCore over and above our carrying values for the main Catcher discovery
In addition, this result has significantly derisked the follow-on potential of the Catcher plays on Block 28/9. The rig will now move to drill the Burgman prospect to the south-west which has multiple objectives within the proven Tay injectite and Cromarty sand plays in addition to a deeper untested Fulmar target. The Tay and Cromarty targets have pre-drill resource estimates of c45mmb worth unrisked 114p/sh to Premier, 64p/sh to Nautical and 21p/sh to EnCore.
Our NAV’s (excluding exploration upside) stand at 1811p/sh for Premier and 490p/sh for Nautical before the addition of this latest discovery.
We re-iterate our BUY recommendations on Premier and Nautical whilst we have yet to formally initiate on EnCore.” END.
And here’s an insight from CS regarding Aussie floods and Beacon Hill resources are mentioned as possibly benefitting.
From Collins Stewart…
“Australia’s position as the dominant seaborne exporter of both thermal and coking coal means the flooding in Queensland has disrupted a major amount of coal supply.
The situation is worse than the 2008 flooding when the coking price moved above $300/t for the first time, as the number of mines and transportation infrastructure affected is larger. The mines affected in 2008 took at least 6 months to recovery from the interruption and return to full capacity. This fact is just hitting home on the world coal markets. Any producer or company with coal operations, particularly coking coal, outside of the affected areas should perform well with the rising prices. In London, obvious names already on the rise are Coal of Africa (CZA), New World Resources (NWR), Beacon Hill Resources (NHR) and Ncondezi Coal (NCCL).” END.