junior oilers 2 march, page-4

I always find your precis of the state of the oil exploration industry interesting. The omissions are also interesting.

What is it that inhibits your commentary on AYO. Two successful wells from two holes which would increase the reservoir size. These wells confirm supply to an upside market of 30MM scf/day at a price of around $US4.85/1000 scf. This gives a gross revenue of $A45 million pa to AYO with a large drilling program to come.

I think your readers should first accept the principle that the basins in and around Australia are typically oil poor and if you are very lucky you may find some gas and liquids. This has been proven by many drill bits since the Bass Strait fields in the early 1970s. The NW Shelf fields are moderate sized high producers as WPL for all their drilling have demonstrated.

With junior oil stocks to make a trading profit what you can do is accumulate them in slow periods and flick them to the dumbest players as the well rigs up.

My advice is [unless you are using the greater fool trading principle] is to conserve capital and invest in an emerging producer with a good size field to underpin the forward revenue.

When you throw out the challenged [KRZ with 500 barrels/day] and AMU [was it 60 at its latest well], bypass the short term moderates you are left with few decent stories perhaps PSA, AYO and AWE that warrant discussion.

Personally, I thought your commentary on PSA was worthy of a BAFTA and an Oscar for screenplay - what was that line - "drilling into Fort Knox" - certainly ranks up there with "Greed is Good" - or perhaps there is a connection.