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ian_whitchurch

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Everything posted by ian_whitchurch

  1. In reply to: mosaic1996 on Tuesday 04/10/05 07:02pm Mosaic, They arent pursuing it anywhere as seriously as they are pursuing buying oil assets wherever they can get them. The other point to note is that the guys building the pilot plant are China's biggest coal company - by owning CTL plants, they hedge against high oil/low coal prices. Ian Whitchurch
  2. In reply to: jonas X on Tuesday 04/10/05 08:49am JOnas, In the US, they have cold winters, using a lot of gas for heating, and use gas for electricity generation. In Australia, we use very little gas heating, and burn coal for power. Thus, the conditions that led the US to seven dollar gas just dont exist here. And if they do, then the PNG pipe and the various planned transcontinental pipelines will fill that need, so I wouldnt be expecting four dollar gas any time soon. Ian Whitchurch
  3. In reply to: mosaic1996 on Tuesday 04/10/05 03:19pm Mosaic, It hasnt got the Chinese excited. It has Woteva excited. Woteva, We dont have an energy problem. We have a liquids problem. You can carry oil in a bucket with a lid. You can't store electrical energy anywhere near as easily. And I'll believe a safe hydrogen vehicle when I see one (think of being rear-ended and having a H2 leak ... ker blowie). Kahuna, Oil from shale also has the issue of what you do with the reasonably toxic ex-shale that you just heated. Apart from anything else, it expands quite a bit. Ian Whitchurch
  4. In reply to: marathon on Tuesday 04/10/05 01:10pm Marathon, Doh ! That'll teach me not to check my maths ... but I guess that strengthens my argument. Ian Whitchurch
  5. In reply to: woteva on Tuesday 04/10/05 11:35am Woteva, Welcome to the land of the big numbers. 850 000 tons of oil is about 5.5 million barrels. Assuming thats an annual figure, thats about 150 000 barrels a day. According to the Peoples Daily here http://english.people.com.cn/200410/07/eng...007_159213.html "IEA estimates Chinese and Indian demand will grow 970,000 barrels per day (bpd) this year -- nearly 40 per cent of total world growth. China accounts for the lion's share, with 840,000 bpd of incremental demand. The surge in consumption has stretched world production capacity and helped drive oil prices to record highs. The US crude has averaged US$38.60 a barrel so far this year, up more than US$10 from the previous five years. Short-term measures to curb consumption and increase efficiency would most likely come in the transport sector, Birol said. Growth in Chinese car sales, which almost doubled last year, has decelerated this year. Even so, sales are forecast to increase 10 to 20 per cent this year. Sales of passenger vehicles in India rose more than 18 per cent, year-on-year, in July. " Bluntly, three of these projects would make a decent dent in one year's incremental Chinese demand for liquids. Ian Whitchurch
  6. ian_whitchurch

    GOP

    In reply to: King Baz on Monday 03/10/05 04:25pm King Baz, At a rough guess, they'll spend about $100k reprocessing the 2D, then they'll fly a Facoln gravity survey over the area for a million bucks or so, then spend about $3m on additional 2D. They might also end up using the CSAMT that Hardman are playing with. I can't see them actually drilling without bringing in a partner. Ian Whitchurch
  7. In reply to: woteva on Tuesday 04/10/05 09:49am Woteva, Firstly, for many years the Gulf States were quite happy with USD22-27 as their target price for crude ; that price kept them in the lifestyle to which they've become accustomed. I havent seen any liquids-replacement technology that is viable at those numbers. USD30, maybe, 40 probably and 50 yeah. Secondly, I'll believe a 1 million barrel a day coal liquefication plant when I see it, and thats what a plant to replace 10% of the Chinese fuel demand is. Thirdly, with an average field decline rate of 5%, we need 4 million barrels a day in new production just to keep up with decline. I dont see coal liquification replacing that number, let alone adding another 4 million barrels a day to drive prices back down to USD30. Ian Whitchurch
  8. ian_whitchurch

    GBP

    In reply to: Dalesman on Friday 10/06/05 06:07am Just got this off IndigoPool ... http://www.envoi.co.uk/P106MaltaSynopsis.pdf Yeah, it's a sales document, but they look like decent prospects. They're asking 100 for 70 on some 2D seismic and a well. Ian Whitchurch
  9. ian_whitchurch

    GOP

    In reply to: mangrove on Tuesday 27/09/05 11:06am Mangrove, Firstly, original oil in place does not equal recoverable reserves. Secondly, if it is a mix of gas and oil (like several fields in the vicinity) then the amount of oil - both in place and recoverable - will be reduced. Thirdly, just because you found oil doesnt mean it will flow ; if the flow rate is low, then the find may be uneconomic. Fourth, flow rates are assessed on a DST, not by cores or logs. In this case, that would probably be done after the second well, and capital raisings by the various partners (DSTs offshore cost about the same as a well). Fifthly, a gas find of this size (circa 60 bcf) would pretty much be worthless. If you believe the IGs report (and I think that anything with fault-dependant sealing does not deserve odds of 2.6:1), then it's a 40% chance of gas ... that puts the odds at roughly 12.5% oil, 10% gas, 75% miss. Finally, the history of post-discovery oilers in Australia does not support a run from 20-ish cents to five bucks. Look at Hardman as an example ... or Nexus. Ian Whitchurch
  10. ian_whitchurch

    GOP

    In reply to: King Baz on Monday 26/09/05 02:01pm King Baz, Yeah, and the numbers in the IG's report make it clear that it's either oil or gas, but not both. If it is a story similar to Sperm Whale-1 (two thirds gas, one third oil) then thats trouble, because at anything under the P50 number, two thirds gas is dropping below 20 mmbo of oil ... and developing offshore fields is expensive, and you need a certain minimum amount before it's worth developing. Now, with $60 oil, the minimum size of an oil development has fallen but Zane Grey was the kind of small oil/gas find that wasnt worth developing. I agree that Gilbert is reasonable, I just wouldnt pay 2:1 for it. I'd pay 3:2, and that implies about a 14 cent share price. Ian Whitchurch
  11. In reply to: larne on Monday 26/09/05 12:10am Larne, If I had $2 for every positive announcement, then I could buy a slab of beer out of Oilex and Rookwood alone. Yes, India is real. But they got outbid on two of the three permits, and Cambay is going to need capex (note to win their 30%, they need to pay 30% of their partners total spend on a 61-well field - see ASX release of 27 July 05). We dont know about the third block, in onshore Assam ... but this Indian newspaper is reporting 9 bidders in Assam. http://www.thehindubusinessline.com/2005/0...72602850900.htm So yeah, I'd be lightening up. Ian Whitchurch
  12. In reply to: crowman28 on Monday 26/09/05 10:01am What I want to know about is the damage to the pipeline system in the GOM. Ivan saw underwater mudslides damage a number of pipelines ... between Katrina and Rita, I'd be guessing that at least some intact rigs are connected to broken pipelines. Ian Whitchurch
  13. ian_whitchurch

    GOP

    In reply to: King Baz on Wednesday 21/09/05 02:23pm King Baz wrote "Mensa/Lczel . . . read the section in the prospectus. There could be upto 190mmbo! 56mmbo is the likely size. Massive amounts of gas also." Umm, no. Any space in the structure with gas in it will not have oil in it. The main risks I see are seal risk (it's a fault sealed play, not a simple bowl shape) and valuable oil being replaced by nearly valueless gas. It was a good punt at 12 cents. Ian Whitchurch
  14. In reply to: Mensa on Monday 26/09/05 08:56am Mensa, "If you handicap a horse at 8 to 1 and it's paying 20 to 1, then that's good odds and value betting" I'm doing that handicapping, and there's more issues than just saying 'if it's all oil at P50'. How much money is made if it's between P90 and P50, or if it's oil and gas, or if only some sands come in ... these are real questions, and some prospects are better than others. The issue of how hard stocks will run after a discovery ... pre-Longtom, Nexus were at about 20-30 cents. They ran to about 70 cents, then fell back. Pre-Worrior, COE was about 13 cents, and they ran to 27 cents. Pre-Worrior, STU was about 45 cents, and they ran to about 70 cents. MOG during Moby is harder to assess, but it didnt run that hard - topped out at 35ish. BAS during Zane Grey ran to about 80 cents. Lots of people got burned in BAS, and that should temper enthusiasm. Basically, I'm not seeing huge speculative gains during the excitement ... or after it. Nothing to match runs like Karoon Gas's, whose prospects are yet to be ruined by a drill bit (for the record I think Karoon is worth a solid 30 to 40 cents). If you get in early enough, then the odds look better. But right now you're paying roughly double what you were a couple of months ago for all the stocks on your list. If you're goanna buy early and sell before spud, buy early. If you're goanna hold during the drill, buy once the rig's booked, not when you start reading lots of posts on bulletin boards and seeing charts showing impressive rises. Ian Whitchurch
  15. In reply to: sabretoothed on Monday 26/09/05 08:27am Sabretoothed, On the contrary. GOP and GOPO have both doubled since about 10 June 2005. Check my HC post on GOP of 10 June 2005 ... Ian Whitchurch
  16. In reply to: Mensa on Monday 26/09/05 03:34am Note that these numbers rely on hitting acceptable flow rates of 100% oil at the P50 number. First things first ; acceptable flow rates. Just because you have oil, doesnt mean it will flow. No flow, no field. Basker/Manta is the yardstick with 8000 bopd. Note that you'll need to do a DST to prove flow rates, and this may not happen until well #2 in the field. DSTs are where we count the marbles. Although we're in an oil boom, dont expect the market to fully respect an oil "discovery" until you have flow rates. A lot of people got burned in BAS at Zane Grey on initial logs, and I think that will reduce punters enthusiasm. Nexus is a case in point with their Longtom 'discovery'. While I personally believe Longtom-1 hit commercial gas, Apache dont ... the results weren't clear cut, and the shares didnt run that far. On the other hand, we have $64 oil ... While I dont have problems with the P50 number, something like Zane Grey, where you had some oil with a big gas cap, is much, much less likely to be economic. I'm happy to use 20 mmbl as the 'magic number' for recoverability in Bass Strait ... it's about the size of Baska/Manta which is Anzon and Beach's small oil development project that I'm using as a yardstick. OK, as per the IGs report, Gilbert had a P90 number of 23 mmbl, and a gas number of 19 bcf. He's calling a 60/40 chance of oil rather than gas ... but what about oil with a gas cap, which is not unusual with oil fields. Taking the numbers out of the gas case, every bcf and a bit of gas knocks out roughly a mmbl of oil (P90 23:19, P50 56:43 and P10 80:63). Thus, if it's half oil and half gas at the P50, we're floating very close to the 20 mmbl size we seem to need to develop an oil field in Bass Strait. If it's half oil and half gas at midway between P90 and P50, then it's right on the 20 mmbl number. OK, so lets run with 25 million barrels recoverable, and say the oil is worth $20m in the ground. Thats $500m worth of oil. Now, split it between the JV partners. GOP have 50%, so thats $250m. 120 million shares fully diluted (lots of oppies, only half of them traded) ... thats $2 each. OK, I'm an oil bull, so lets use Mensa's $15 rather than my $20 ... thats $425m of oil, so thats $217m to GOP or call it a buck eighty. Lets reality check this against Basker/Manta. Basker/Manta is 23 mmbo of Proved and Probable ... about the size of the case I'm talking about. Someone just paid $39m plus bonus payments for 12.5%, so I'm happy to use that as yardstick. Waddya know, that puts the field at about $20 a barrel in the ground. But again, Basker had flow rates from a DST. In summary, when playing offshore, failure will be sudden, but success takes a while to prove up. Heck, Hardman re only two and a tiny bit times more than what Woodside paid to buy into them ... in 2001 (I had to read it twice. Release of 3 July 2001). Ian Whitchurch PS If you're going to buy early and sell before spud, make sure you buy early. Once you read a thread like this, sharks like ACTurtle have already got set and are looking to have you carry them through the drill.
  17. In reply to: barnzai on Sunday 25/09/05 09:58am Barnzai, Nobody ever went broke taking a profit. Pull half off the table and let the rest ride ... that way, you get your capital back, and if it does dive back down again (and, me, I think 40 cents is overvalued for Oilex, given the information available today) you are still substantially ahead. And if it goes up, you still have exposure. Ian Whitchurch
  18. In reply to: trader10 on Sunday 25/09/05 02:30am Cheer, cheer the red and the white ... Ian Whitchurch
  19. In reply to: apache123 on Tuesday 20/09/05 01:40pm Not if it stays at force 1 or 2. You need force 4-5 before it's a real problem. Ian Whitchurch
  20. ian_whitchurch

    EDN

    In reply to: apache123 on Tuesday 20/09/05 09:09am Apache, Brazil is a very, very big place ... Ian Whitchurch
  21. ian_whitchurch

    BKP

    In reply to: wilson5 on Monday 19/09/05 10:23am A lot of people at Good Oil liked BKP's presentation. They are in my opinion a better story than Global Petroleum. Ian Whitchurch
  22. ian_whitchurch

    STU

    OK, it's time for my semi-annual review of STU. At the moment, with a share price of about $1.30, they are a $82m company. They have $2m cash, no debt and about 2.6 mmbo of reserves, plus a little bit of stranded gas at Kiwi and Worrior that I'll ignore as valueless. Normally, I'd give their reserves my in-thre-ground number of A$30 a barrel, but Stuart's hedging strategy makes things less simple. This is out of their annual report ... if I make mistakes, can someone please correct me. They are locked in to selling 180 000 barrels of oil for USD27 until 30 June next year, and then 8000 barrels a month for USD26. The accountants think this hdging strategy cost Stuart $15m, so the simplest way is to take my standard A$30 number and then subtract the $15m in hedging costs. That crunches out to $78m-$15m, or $63m worth of oil in the ground. Is this realistic ? Well, lets cross check by assuming they produce 750 000 barrels in 2005/6 (this is below their estimate, and they've been pretty darn good at hitting their numbers). We thus get 530 000 barrels of unhedged oil, and 180 000 barrels of hedged oil. Hedged oil nets us A$40, costs are call it A$30 a barrel, so the hedged oil should contribute $1.8m to the 2005/6 bottom line. With USD60 oil, unhedged oil nets us A$80, costs are call it A$30 so the unhedged oil should contribute $26.5m to the bottom line. Thats ummm call it A$28m net free cash flow in 12 months, so the $63m number doesnt look too bad. Thus, for the company to be fairly valued, the exploration country would need to be worth about $15-$20m. Right now, I'd value it at about half of that, given the value that farmin deals seem to give Cooper Basin acreage. Thus, I dont think they are undervalued ... but there is a but. The critical feature for the Australian oil sector at the moment is a lack of rigs. Everyone has targets, almost everyone has money, but people dont have rigs to put holes in the ground. Stuart have taken a leaf out of ARC's book, and have taken long-term leases on not one but two rigs. This will allow them to drill, and drill, and drill. OK, their targets arent great - they tend to be either small oil targets (ie 113 has 10 targets with a total of 18 mmbo original oil in place - this will crunch down to 250 000 barrel or so targets), or gas ... and gas relies on finding a lot of it, to be able to link straight to the EPIC pipeline system and avoiding Santos entirely. Stuart have 800 or so bcf of gas targets, which should reduce down to 500 or so recoverable, if they can find it. Gas has a better hit rate than oil in the Cooper, so with 2 drill rigs being funded by Worrior cash, they should be able to end 2006 with enough gas to make it worth connecting to the EPIC system by themselves. Basically, I expect Stuart to drift as people go to the sexier oilers (ie COE). But once they get hold of the rigs, expect a new drill every 3 weeks for a year. Ian Whitchurch
  23. ian_whitchurch

    GOP

    In reply to: bailej03 on Sunday 18/09/05 07:49pm I have considered Lakes Oil, and my considered opinion of them is not merely a violation of Sharescene's terms of use, but can probably be regarded as libel in most Australian jurisdictions. All I'll say about LKO is they didnt get to 2 billion shares by accident. Ian Whitchurch
  24. ian_whitchurch

    GOP

    In reply to: King Baz on Sunday 18/09/05 06:57pm Remember, that 25% is (a) including any hydrocarbons, and (b) subject to the caveat that independant geologists who err on the side of pessimism tend not to get hired to write IG's sections of more prospectuses. Taking the 40/60 and the "25% hit chance" at face value, thats a 15% chance of oil and a 10% chance of gas. Realistically, it's more probably 10% oil, 5% gas and 10% oil and gas. Gas is very hard to make work in the quantities that they will find it in ; Bass Strait is not the Gulf of Mexico where you can monetise 20 bcf. Oil and gas could get messy, especially if it's a Zane Grey Memorial lots of gas with some oil. Finally, given that GOP was trading at 11 cents not so long ago, I dont think it will stabalise at about that if Gilbert misses. Ian Whitchurch
  25. ian_whitchurch

    RAW

    In reply to: coolhand99 on Tuesday 30/08/05 05:31pm Rawson arent listed yet, but the word is that they have raised the full $6m. They have 4 assets, split over 4 basins. The onshore Otway I dont like that much - small gas targets plus complex geology equals an area I dont rate highly. Little drilling there for a couple of years, and it's 100% theirs, so it's not like they paid a premium to farm in there. In addition, Beach are playing in the same basin on the Victorian side of the border, so Rawson will get 'coat-tailed' on any Beach success. Their Cooper Basin countnry is to the west of the recent Kiana discovery in PEL107, so I think thats good country to play in. The deal is paying 100% of costs to win 50% on up to three successive wells. Their Surat basin country is, well, Queensland. They are drilling west of an old Sydney Oil and Gas drill at Bellbird, and Bellbird probably would have been completed as a producer if drilled today. Again, they paid 100 to win 50, and if it succeeds, then it'll probably be about as good as Altona or Fairymount (ie not very, but cash flow is cash flow). Finally, I do like the Perdirka, as it has a lot of similarities with the Cooper Basin, and they have 100% of quite a lot of dirt. The main issue is that there hasnt been a successful find in that basin, but my guess is that if Poolawanna was drilled today, the DST result of 71 barrels recovered would have seen the well put into production. They havent put numbers on the target sizes in the Perdirka, but Greg Ambrose of the Northern Territory Geological Service estimated that the Simpson prospect had an OOIP number of 200 mmbl in the Purni and 350 mmbl in the Poolawanna (see Ambrose, Hydrocarbon Potential of the Perdirka Basin on the NTGS site - if you google 'Perdirka Ambrose' it comes up). These are offshore-sized targets in a politically stable area, and my guess is that as oil prices stay high, then this sort of country will become more and more interesting to more and more farmin partners. So, in short, they've got a decent mix of Cooper country, some wholly-owned gas in the Otway, a couple of drills in the Surat, and lots of very green elephant country in the Perdirka. Capital-structure wise, they'll have 53 million shares on a $6m raising, 30m of which will be issued in the IPO, so the uplift from a discovery is pretty decent. I couldnt see any Innaminka-style rakeoffs going to the directors or anything of that ilk, so I think that with oil prices the way they are, anyone who got shares in the float will be happy once it comes to market. Ian Whitchurch
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