technologists ply their trade for oil harvest, page-5

re: selmo is gonna selmo imho I hold as well. Here is a post a did on another site a couple of weeks ago:


IPM is a recent listing with a very good exposure to the oil price. I have accumulated a few sub 90c.

They raised $61m @ $1 to purchase the Selmo oil field in Turkey. There are 67m shares on issue. They initially opened at $1.09 before slumping under 90c, probably as a result of the weaker oil price. The market Cap is now $60m.

Substantial Holders Consist of:

MMC Asset Management 5.6%
Equity Trustees 5.4%
Monterrey Investment Managment 6.4% but have recently bought on market to increase their stake to 7.5%
Some other group has also appeared as a substnatial holder today

Two directors have recently bought on market. One of them bought 100,000 shares @ 98c and 93,000 @ 89c, the other 20,000 shares @ 94c

The Selmo field was dicovered by Exxon in 1964 and was estimated to contain recoverable reserves of 500m barrels. To date 80m barrels have been produced. The field currently produces at a rate of around 50,000 barrels per month and this has been relatively constant over the past 4 years

IPM plans to rework existing wells and drill new wells in the field to increase this production rate.

In Oct they produced 50962 barrels of oil. Over the past 3 years, cash producing costs have average $10/barrel.

Some recent research is below:

"TRICOM RESEARCH: Incremental Petroleum (IPM $0.90) Initiating Coverage

We initiate coverage on Incremental Petroleum Limited (IPM) with a $1.23/share valuation.
Key points:

IPM is focused on maintaining and possibly increasing production at its 100% owned Selmo Oilfield in southeastern Turkey.
The company's strategy is to complete workovers on existing wells in order to increase oil production from those wells.
The workover process is relatively simple and low risk, and Tricom is confident that the 28 wells that have been identified as likely to benefit from a workover will translate to production increases for the field as a whole over the next two years.
No official reserve has been calculated for Selmo, however, IPM has estimated the reserve to be around 4.7M bbls, which we believe will increase to around 8.1M bbls once the workover program is completed.
Our estimates assume the workover program is successful, which translates to production at least being maintained at 1,600bopd for the next two years.
At that production rate, our estimates suggest IPM should generate around $15Mpa in free cash flow at current oil prices.

While the company is yet to outline its dividend policy, we believe the strong cash flow generation will enable IPM to return around $0.08/share in dividends in both CY06 and CY07.

The stock looks extremely cheap on earnings multiples, currently trading on a CY06 P/E of 4.8x and an EV/EBITDA of 2.0x.

IPM offers significant upside should new wells be brought on line. We note that previous new wells at Selmo have flowed in excess of 1,000bopd. Should the two new wells that the company is planning to drill in 2006 achieve flow rates totaling 1,000bopd, our valuation would rise to $1.60/share."


Might be worth a look if the oil price rebounds.

Mark