daytrade diaries... october 2 part 2, page-122

I posted this information on BCC yesterday for daytraders & thought I would repost it today, given most traders would have more time over the weekend to read it, unlike when the markets are open.
Bucaneer Energy Ltd (BCC) could be worth a little research.
Hopefully in the near future the outlook will improve on the previous 12 months.
Positives:
1. Recent capital raising has allowed BCC to not only repay most of the Macquarie debt but obtain an extension on the small balance.
2. Fund raised also covered a work over of the Pompano 1 Well (65% interest) which had a cement problem (refer ASX announcement 29/9/2009). This cleanout will allow access to the B sand in the deeper 70 feet pay sand that originally flowed 5,000 MCFD. Re-establishment of production would have a material effect on the company’s cashflow, possibly as much as $200,000 per month at $3mcf.
3. The company has an experienced management team & a good business model that was EBITA positive in its first 2 years of operation of listing.
4. Last Friday US Gas prices were up $0.82 cents to US $3.78 an mcf with a 12 month forward price now over US $5.00 an mcf. So gas price may not only have bottomed but look like starting to rise. The recovery in US gas prices offers the company huge upside.
5. Hopefully by November 2009 the company will have spudded its first well in Lee County (43.75% interest). Of 12 recent wells by adjacent operator there has been only 1 unsuccessful well. Success there could turn this into a successful drilling operation at Lee County with potential resource play of 30 -40 wells upside (refer AGM Presentation 2008). 2 successful Lee County wells at 300BOPD would increase net cash flow by US $300,000 per month at US $60/BO (refer AGM presentation 2008).
6. BCC projects viable down to US$3/mcf and US$20/BO (refer AGM Presentation 2008)
7. BCC has recently broken a downtrend since May 2009 with 3 days of high volume. Today it has again slipped below the trend line, but it looks like it is trying to breakout given the recent surge in volumes traded.
Negatives:
1. Lower gas prices, hopefully they are now on the rise.
2. Influx of sand plugs into its only producing shallow Gulf Of Mexico Well (hopefully now rectified).
3. High Executive salaries, Top 6 2009 $2.6m down from $3.4m in 2008 (refer Annual Report 2009)
4. Hedge book issues look to now be under control.
References:
Annual report 2009
Recent Boardroom Radio Presentation 17/9/2009
Recent Quarterly Report & Prospectus on Fund raising.
AGM Presentation 2008
BCC is a highly speculative stock & everyone should do their own research because no investment advice is given.
Regards
Buffett