Pretty ordinary week for the junior oilers with only DLS and PSA breaking out of their recent trading ranges. Biggest falls were recorded by CVN, PCL. FAR and PPP. By the end of the week most other stocks were pretty much back were they started the week. Volumes were unspectacular and on a par with recent weeks. The stocks involved in the upcoming Perth Basin drilling, ARQ,AWE, NWE, BUY, ROC,HDR and VOY were all steady or down with the exception of VOY which ticked up a little. Can’t be long now before some excitement builds in some of these stocks.
Oil ended the week a little stronger and gas continued to trade above $US4.00. Situation in Venezuela continues to deteriorate. Saddam Hussein’s 10,000 page denial of the possession of WMD will be the focus of international attention next week. Look for a re-emergence of war rhetoric. Strengthening gold price could see some rotation out of the oilers though not if the situation in the Middle East leads to a similar strengthening in oil prices.
Individual Stocks
PPP dropped from 13 cents to 11.5 cents this week on the announcement of the failure of Immortelle. Rig now moves on to Taunton 2 in which PPP has a larger interest (10%) . Rig will drill Montgomery in WA 149P after that. With Argos, Ceres and now Immortelle all dusters, current round of drilling in the Carnarvon basin is not looking too flash. ( Remember Yogi’s prophetic comments on shallow drilling in the Carnarvon Basin to meet lease requirements!). PPP could be a buy after Taunton 2 results are in particularly if, as the odds would suggest, it is another duster. Remember Tui is just around the corner. We should know Taunton 2 result early in the coming week.
Two media presentations by AWE and HDR gave a temporary fillip to their share prices but both had retraced post announcement gains by weeks end. AWE found it difficult to stay above 90 cents and HDR remains in the trading range 50- 57 cents. Perth Basin drilling is likely to do more for AWE than HDR. I would expect the latter’s share price to drift lower now that Ted (CEO) has told all and next drilling off Mauritania is months away. ASIC investigation into the trading of the stock might not be good for it either. Jingemia should now be in production testing mode. This was a good find for both companies
AYO announced the drilling of Gocerler 4 by end of December but also the postponement of Cayidere to next year due to land access problems. Not sure where AYO will go. Market may be concerned by announcement this week that Turkey had agreed to be a base for US forces in the event of an attack on Iraq. At these undervalued levels AYO might be a good stock to buy and put away in the bottom drawer. In my opinion it will drift sideways for a while unless there is a sudden upsurge in gas sales or another discovery at Gocerler. Yogi however sees a rise to test 70 cents so it is a stock to watch for any signs of strengthening.
Market was not impressed with Carnarvon’s media release this week on flows from new (and old ) wells and marked the stock down accordingly. It is not a bad result for the Wichian Buri JV partners though I would have preferred combined production rates above 1,000 bopd than below. 700 bopd will not make CVN but will not break it either. Can’t see much interest returning to CVN until Phase 3 drilling gets under way next year. JV now has to build up some cash reserves from current production and bed down the current wells.
