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. http://thesharehub.com/?p=207
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.
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
Morning broker notes / updates on Bowleven from Merrils and FD.
Merril’s Broker note from this morning…
Epsilon discovery opens up Cretaceous fairway BLVN announced that the deepened Sapele well (Block 5; offsh Cameroon) hit a further combined 8 metres (4m+4m) of net hydrocarbon pay at the Cross-Cut and Epsilon (gas condensate) targets. The company is yet to provide volumes for the discovery as the well continues to drill deeper. More importantly, this result (1) confirms the prospectivity of the Cretaceous age sands in the block and (2) has significantly de-risked the multiple leads/prospects already identified nearby. Block 5: Sapele has just scratched the surface Block 5 seismic data points to a potentially transformational resource base and the Sapele well has only scratched the surface of the block. BLVN has identified over 20 leads/prospects in the block with a combined (unrisked) size that could be multiples of the resources found. With tenders for extra rig capacity already underway, we expect the exploration & appraisal programme in the coming months to combine lower risk Miocene-age prospects (eg, Kappa/Gamma) with high impact Cretaceous-age targets (eg, Alpha/Zeta). Upping resource estimates for Deep Omicron by 13% In addition, management has increased the in-place resource estimates for the shallower Deep Omicron find by c13% to 65-430mmboe (from 55-380mmboe). The next step in the drilling campaign is to sidetrack the well at the Miocene level over the next month to start appraising the Omicron (Lower & Deep) discoveries.
Re-iterating Buy rating; raising NAV by 65p Reflecting the Epsilon discovery (20p), the de-risking further prospects (+35p) in the block and the increased resource estimates for Deep Omicron (+10p), we raise our NAV/PO by 65p to a total of 460p. We re-iterate our Buy rating on the stock. BLVN is one of our top picks in Euro E&Ps along with TLW and RKH.
And Fox Davies note…
“Bowleven (BUY, £4.50) (LON:BLVN, 395p, ▲ (0.38%) announced that the Sapele-1 exploration well drilling in the Douala Basin, offshore Cameroon has encountered further hydrocarbon-bearing pay in both the Tertiary and Cretaceous objectives based on the results of drilling, wireline logs, samples of reservoir fluid and pressure data. The well was designed to intersect multiple stacked objectives of Tertiary to Cretaceous age. Wireline log evaluation indicates all of the five objectives to be hydrocarbon-bearing with net pay confirmed in three, based on fluid samples. The well has reached a current total depth (TD) of 4,539m and the intention is to set liner and drill onwards, subject to attaining various approvals, on completion of current logging activities.
Comment: A very good result that extends the prospectivity of the acreage down to the Cretaceous, de-risking a number of similar prospects. The Company is chasing oil deeper down by extending the well beyond current TD and has identified a number of objectives to be tested. The Company needs to complete the evaluation of the penetrated Cretaceous section before providing resources estimates as well as a view on the commerciality of the discovery. The well being designed to intersect multiple independent exploration targets from a single location, a number of the targets have been intersected at sub-optimal locations and we can expect better reservoir characteristics away from the well bore. The lowering of the risk on pre-drill resources estimates raise our risked NAV beyond 450p where we set our new target price.” END.
What a great update from AAZ. The sp has done very well since late Dec but the figures today demonstrate just why they were so undervalued at previous levels.
• Production for year ended 31 December 2010 totals 67,267 oz Au – exceeded 60,000 oz Au forecast
• 19,555 oz gold production in Q4 for Dec
• SART process fully operational and first copper sales Q1 – will be positive on 2011 financials.
Upside case could see 70k to 80k ozs in 2011. That’s quite a jump from circa 50k to 60k mentioned last year.
More analysis to follow
Ithaca 4th quarter highlights taken from today’s RNS.
Combined production in the fourth quarter averaged 8,754 barrels of oil equivalent per day (“boepd”) gross (4,148 boepd net to Ithaca).
The average realised price for oil production in October was $83.826 per barrel and in November was $89.856 per barrel (before hedging and any additional price uplift at the point of sale to a third party). Deliveries for December are currently being priced; gas pricing figures for Anglia and Topaz will be included in future updates.
During the first quarter of 2011 several ongoing activities are anticipated to have a positive impact on production levels at Beatrice and Jacky. These projects include:
– Sustained incremental injection of water into the Beatrice reservoirs
– Completion of the Beatrice Alpha well workover campaign including the installation of downhole pumps in two Alpha production wells
– Intervention to restore pumped production from Bravo well, B1
Current average daily production levels for the Company exceed 4,400 boepd, being the target for the first quarter.
Management anticipates net average production for 2011 to be between 5,500 to 6,000 subject to successful interventions across the Beatrice Complex and the planned second production well at Jacky as well as first oil from the Athena Field in Q4 2011.
Comment: 2011 is all about consolidating and preparing for the introduction of Athena in Q4. IAE looks in a very good position to exit 2011 with close to 10,000bopd once Athena kicks in. If oil remains near $90+, then 2012 looks very healthy indeed. Note the figures used by Ithaca are ‘average’ daily projections for the year. Daily output may be up nearer 10kbopd once Athena kicks in late Q4.