CVN disappointed again by failing to inform market of flow rates from new Wichian Buri wells. It had earlier promised to do so this week. We had to make do with a rather curious PTE press release which announced that all three wells would be put into production towards the end of next week but did not disclose any flow rates. Production facilities they are building suggest they are confident of developing the field. Shares closed the week a little higher but on small volume.
First Australian Resources
FAR fell to a year low of 5.4 cents following Argus failure. (Sun resources was also hit by this duster and subsequently by Ceres failure). Next publicly announced drilling not until Banjo in March. There is also some concern about FAR’s cash position. However FAR has farmed out of 30% of its Banjo stake to Rawson Resources (new IPO) and should get back a third of the money it has pre paid for the drill. Add to that expected higher gas revenues in the December quarter as a result of higher gas prices and start of production from Rainosek and FAR ‘s finances look OK to me. I have been buying this past week at 5.8 cents in the belief that FAR will not stay at these prices for long. Could be some more production drilling at Rainosek in the near term.
BUY
After the market closed on Friday BUY announced the capital raising I had thought was inevitable. A one for three rights issue will probably see a fall in the sps next week. BUY has an interest in Perth Basin drilling and might be worth a closer look on any weakness. Shares closed up for the week at 9.6 cents but this was before the rights issue was announced. (Interesting here to note that of several junior oiler IPOs in recent times BUY, COE, VOY, AOE, CPN, EPR most took a hammering after listing and only VOY and EPR are at or above listing price today, assuming that is that EPR listed at 20 cents. Most of the IPOs halved in the months after listing before going on to stage recoveries so maybe BUY can do the same)
Cooper Energy
COE seems to have sufficient confidence in up coming Karbine drill in Cooper Basin (spud in two weeks) to change its farm in arrangements to bring forward the drilling. Well is targetting 5 mbo which is large by recent Cooper standards. COE strengthened from 14 cents to 15.5 cents in recent weeks helped by the announcement of COE’s successful conversion from E to E & P in less than a year since listing. Be interesting to see if it can go higher in the period up to the spud of Karbine. Still well cashed up and Sellicks looks like being better than expected. A duster at Karbine could be a good buying opportunity for COE.
HDR, ARQ and AYO
All three are not stocks I hold. All three have graduated from E to E&P status following drilling success over the last year or two. All three are the big successes of the junior oil sector in the past 18 months. And all three have strengthened this past week on better volumes, AYO quite suddenly on Thursday. My pick would be ARQ given that its interests are in the Perth Basin; the fact that it has an extensive drilling program coming up (12 appraisal, development and low risk exploration wells in next three months according to CEO) and will have Hovea producing 2,500 bopd by January. But ARQ has run strongly in recent weeks so entry might have to wait for a pullback. HDR’s valuation seems overly to depend on Chinghetti discovery which is a long way away from development. And ASIC inquiry into trading in HDR shares may not be a positive for the stock. But they certainly know how to spruik their interests and upcoming road shows could help the share price. AYO is not in the right geographical environment for me. Just a personal choice. But AYO is looking good with increased gas sales and a 12 well drilling program coming up begining with Cayadere (?) and Gocerler 4 in coming weeks.
Essential Petroleum (EPR)
Interesting company just some two years on the boards and only 57 million shares on isue. Only listed company with primary focus on the Otway Basin, an area that has caught my attention since Mitsui farmed in to VIC/P46. Mitsui is very careful with its money. EPR has run quite hard since July/August though was a little softer this past week. Volumes have been low during November. However price strength through September/October possibly in anticipation of the drilling of Koriot West 1 in December, a follow up to the Port Fairy 1 discovery, and some upbeat media presentations including some ambitious predictions of a possible 2 billion barrels of oil in VIC/P45 and VIC/P50. Had cash in hand of $3.52 million at end of September but no producing assets as yet. Too late perhaps to get on board now for Koriot, maybe after the drill. Banganna 1 will spud in March.
Disclosure: I hold shares in AWE, CVN, FAR, PCL, PSA, GBG, NWE and BPTOA
