Thanks to all for your positive comments and constructive criticisms.
I have only just logged on as I am still waiting for the broadband revolution to arrive. In the meantime I have to wait for all of the local kids to log off to get a bit of bandwidth.
I have had to go back through my notes and re-check the ASX and investment reports to follow-up anything that was queried in the replies to my initial post.
zoomyjeff
In my analysis of STX Strike Oil, I quoted estimates from “Hartley’s WA Oil & Gas: Explorer/Producer” company research valuation dated 21/09/2009. Hartleys has provided corporate advice within the past 12 months and continues to provide corporate advice to Strike Oil Limited … so you would expect their 2P Reserve (bcfe) of 19.3 to be accurate. Hartley’s updated this research on 29/10/2009 and still quotes “2P Reserve (bcfe) 19.30”. However, their latest “EV / 2P Reserve” valuation is $3.04 (reduced from the “EV / 2P Reserve $3.73” stated on 21/09/2009). It appears that Strike Oil exclusively publish Hartley’s Analysis Reports on their website.
Refer to: http://www.strikeoil.com.au/investorCentre/analystReports.php
Using Santos’s Conversion Calculator http://www.santos.com/ConversionCalculator.aspx?p=73 19.3 bcfe or 19300mmcf = 3519kboe or 3.519mmboe
db76
I got the P50 estimates from the following NWE ASX announcements
NorWest Energy Quarterly Activities Report June 2009
Norwest now holds 100% interest in the TP-15 licence having acquired an additional 90% interest earlier this year from ROC Oil (WA) Pty Limited (ROC) and ARC Energy Limited (ARC) and it is already discussing farm-in opportunities with a number of parties. It is also important to note that the TP/15 permit has a number of significant leads and prospects and is located in a region with producing oil and gas fields including the Cliff Head oil field to the west (seaward ) and the Jingemia, Hovea and Dongara onshore producing fields to the east. The TP/15 License will be the key focus area for Norwest over the next 12 months. The Xanadu West prospect is currently the prime target within TP-15 with potential volumes - P50 at, 90 million barrels of oil in place based on mapping and available data.
ASX: NWE 7 September 2009 ASX Announcement
Norwest Energy completes airborne Full Tensor gravity Gradiometry imaging (FTG) survey over Northern Perth Basin Norwest Energy (ASX: NWE) advises its airborne FTG survey over the TP/15 permit (NWE - 100%) in the Northern Perth Basin has been completed. The contractor, Bellgeospace, is expected to process the survey and deliver a report within the next 30 days. Norwest’s specialist team will then integrate the FTG data with existing seismic data to evaluate and optimise drill location options in TP/15. Norwest is using the FTG survey to assist in the target selection for drilling in 2010, with Xanadu and Capel/Metricup being the lead prospects. The company has identified several exciting petroleum prospects and leads in the northern Perth Basin, including Xanadu, a possible 90 million barrel oil field located between the Cliff Head oil field and several onshore oil and gas fields. Whilst Xanadu is the preferred prospect, it is possible that interpretation of the FTG survey results could see another target being prioritised.
Xanadu and Redhill South structures confirmed as prime targets for 2010 drilling season. A preliminary review by Norwest Energy (ASX: NWE) of the air borne FTG survey results (Full Tensor Gradiometry) has confirmed the structural integrity of Xanadu and Redhill South prospects and as prime targets for drilling in the 2010 drilling season. The two targets – Xanadu and Redhill South –are in an underexplored northern Perth Basin permit, TP/15 (Norwest 100%).
Preliminary interpretation confirms targets The company plans to drill at least one, and possibly both, of these targets during 2010 and is now focused on progressing both the drilling and farm-out processes. Importantly, both wells can be drilled from onshore sites using deviated drilling techniques.
Following the preliminary review of the FTG survey, Norwest now has enough information to confidently work on identifying and securing a suitable drill rig, and to begin the planning and permitting processes for drilling either Xanadu or Redhill South, or both prospects. In parallel, the company will further evaluate data from the FTG survey in conjunction with other data in order to mitigate risk and determine the optimum drill sites.
Preliminary interpretation of the FTG survey undertaken by Bell Geospace confirms the Xanadu seismic interpretation map. Norwest believes the prospect has a potential 98 million barrels (MMbbl) of oil in place with potential for 27MMbbl of recoverable oil. Additionally, the Redhill South prospect could hold up to 27MMbbl oil in place with potential for 7MMbbl oil recoverable, which would be of a similar size to Jingemia, a nearby onshore producing field.
These FTG results significantly enhance the potential of TP/15, making it more attractive to potential joint venture partners. Norwest has been in discussion for some time now with potential farm-in parties.
“Now the FTG data over TP/15 is available and highly prospective drill targets have been confirmed, we expect farm-in negotiations to gather pace,” Mr. Munachen said.
Xanadu The Xanadu prospect is a large culmination on the Beagle Ridge – and a geologic look-alike to the Roc Oil-operated Cliff Head field – but it has been overlooked because of the complex geology and limited seismic data covering the TP/15 permit.
At Xanadu, the FTG survey confirmed that a basement high corresponds with the reservoir high, interpreted from seismic data by Norwest and previous operators. The FTG data also gives Norwest confidence that the structure closes to the northeast; this section of the structure had not been covered by seismic by previous operators. Xanadu has a potential 98MMbbl oil in place with potential for 27MMbbl oil recoverable.
Red Hill South While the Redhill South prospect in the northeastern area of the TP/15 permit is considerably smaller than Xanadu, it is well defined and is easier and will be less expensive to drill than Xanadu. Redhill South has potential for 27MMbbl oil in place and could hold 7MMbbl oil recoverable.
In the first summary table of my post, I did classify the various companies as either: Junior; Explorer; predominantly Explorer/Producer; or predominantly Producer/Explorer in an attempt to compare like with like i.e. where they best fit in a oil/gas companies development lifecycle. (see the right-most column). I classified NWE as an Explorer/Producer (small time producer as it does receive some income from oil production (royalty rates at 1.278%). There were also other small cap Explorer/Producers that were producing less than 100kboe. It was never my intention to directly compare NWE with STO or WPL. A range of producers were included to get a feel for the valuation that the market places on them at various stages in the development lifecycle, and to confirm whether the range of boe valuations that some of the investment/research papers quote hold true. A range of producers were included to highlight future potential as the company moves from an exploration to a production phase.
NWE's is now in a position that it holds 100% of TP15 and 50 - 75% of its' Southern England tenements. This gives them a stronger position in any farm-out negotiations, which they are actively pursuing. What percentage they ultimately finish up with is anyone's guess. But that could also be said about any of the small cap producers. They enter into JVs to reduce their risk/exposure. However, reduced risk is usually associated with higher stock prices.
It is up to individual investors to determine their own "Risk v Reward" strategy and to know at what level their pain barrier starts to kick in i.e. do you buy now at 3.0 cents or wait till they hit 6.0cps or more. In doing so you have at least halved potential profits. With reduced risk comes reduced potential profits. You have to make your mind up for yourselves when and at what price, if at all, that you want to invest. At a price and risk level that you feel comfortable with.
I still have nightmares about the ones that got away, where I got scared and panicked or didn't do my research e.g. PDN (Paladin) - I bought 1.1m @ 1.8cps, the price dropped to 1.6cps... my pain barrier kicked in and I sold for a $2200 loss...very soon after they started their spectacular climb... in 1yr $1+, 2yrs $5+ and 3yrs $10+. I got too scared to buy in as they were rising quickly as I thought the bubble would burst and I would lose most of my investment. It didn't (in the first 3 years anyway). So through lack of research, short-term financial pain and fear, I missed turning $20k into $11m. Other missed opportunities include MAK from 13.5cps to $2.80 ($1m+ missed) and LNC from $0.60 to $5.20 ($460K missed). That is why I now try to do as much research as I can, and try to have the courage to follow my instincts. Does this guarantee success -- NO!!, but hopefully I will get more right than wrong.
I am happy to share what research I have done. When I feel comfortable putting it out there for public scrutiny, I'll share it. I also like to fully reference my research so that anyone reading my posts can verify the information for themselves and make up their own minds what they want to do.
There is so much information readily accessible these days, so you can suffer from information overload. If we can use this forum to share information, that would be great...and of course if you have a contrary view, share that as well, but back it up with references so that the average punter can make up their own minds.
Share the love folks ...
...and as always DYOR before making any financial commitments!!!
Cheers and good luck to all,
GrayNomad
NWE Price at posting:
3.0¢ Sentiment: Buy Disclosure: Held
