vermilion and what it means

PSA will produce about 5 bcf from its West Cameron fields this year which will deliver lets say A$45 million gross. If Petsec proves up 30 bcf at Vermilion West alone then that is worth A$270 million if higher average gas prices offset exchange rate appreciation.

Thats roughly $2.70 a share. For that to be reflected in the actual share market value the shares would have to be worth at leat $2.00 with the success of the current wells.

Now there are no dead certainties in the oil business and these wells are no exception but they are about as good a risk as you could get. Certainly PSA thinks they have got a winner. All the careful preparation reflects that as does the decision to drill through a caisson. Vermilion is the key to the restoration of Petsec's fortunes and this is seen as a low risk drill.

The wild gyrations the share price yesterday don't reflect anything other than the lack of liquidity in the stock. It is a shame that 100k had to be offloaded at the same time as the press release came out about the spudding of the well.

I can tell you the offloadee had no idea at the time that the release was coming out and the sell down had nothing to do whatsoever with the news.

PSA has confirmed that new material on the company and its forward program is under preparation along with broker presentations. What the market needs in this stock is some liquidity that some institutional and big investor interest would provide.That can't be too far away though one could understand why the bigger players would probably prefer to wait until the results of Vermilion are to hand.

May even take some shares off the table myself in the next week or two but only if we can get the shares up over a dollar.