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Junior Oil Companies. ASX


Carsha

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Same with the midcaps as well, i.e BPT, AWE. I think the market is saying the V recovery is not sustainable and a U is the proper shape. If it is right then the POO will drop just as it did on the first leg down. Not saying this drop would be wise or justified. Too many investors out there with bloody noses.
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Albion,

You are so right. There is a general malaise against junior oilers at the moment. In fact it has been going on for quite a while. Amongst this cloud of doom and gloom are an increasing number of real gems. Sooner or later people will wake up to the fact that these opportunities are for real. And then there could be quite a rush for those juniors that have positive cashflow, little debt, good reserves and oil/CSG potential.

 

As you know there are a few out there. E.g. VPE, ITC and STX .

 

Times will change. They always do.

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Hi Albion, there may be individual operational issues however Ive got these "on watch"

especially since the POO has doubled in the last 9 months.

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NDO

NXS

ROC

STU

TAP

AWE

BPT

CVN

MOS

post-20731-1257416960.gif

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You are quite right things always change, but how close is it? Well most oilers have been going down for about 6 months while the POO has gone up, no matter what positive announcements companies make their shares are usually marked down ., So you have to think its getting close. All of a sudden interest will return to the sector and many will miss out.Some of the graphs are almost identical just try ROC/CVN. With CVN I think its just a case of a lot of punters locked in at higher prices and wanting out, we all know that increased reserves,increased production and increased profits are on the card early in the new year.A good guide to the lack of interest is the low number of postings. I like this list AMU,AWE,ADE,CVN,STX,ITC,ROC,PSA,VPE,TAP ect. The oils sector is usually the last to get any interest but when interest returns the moves are often fast.

 

 

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OEX is on the long list of oilers that look oversold,. IMO the market is all of a sudden is going to say OK we have had a good upward move, which sector has almost completely missed out? Blind Freddy can see its the oils, more so the ones that have proven reserves, good cash flow,no debt and increased earnings. The trouble with oil shares is that if there is a change in attitude the movements can be fast and you can miss out if not on board. It might just be starting to happen, AZZ is an example how quick things can change. Just watch CVN if that oil production increase happens as the company says.
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Hi all, thought id add my thoughts for what its worth...

 

Based on my own personal philospohy i invest in junior oilers which have a favorable risk/reward equation. Risk for me is always the same as determined by my position size/stops and is within my control, reward is determined by the success (or lack of) the company i am invested in.

 

What i look for is big prospects (exploration/appraisal/development) which are fully funded through to determinantion of at least some of the reserves/proof of concept (ie. generally drilling costs fully funded through to reserves determination) relative to company size (market cap). Big prospects need not be 100's of millions of barrels, for example an exploration prospect of 1 million barrels may be highly material to a company with a market cap of a few million, while similarly a 100's of million barrel prospect may be material to a company like a WPL/STO with much higher market cap. Of course what i am generally looking for is a small market cap with 10's to 100's of million barrel prospects...

 

On this basis, i still like the value in and am invested in... AZZ, ADX, CTP, MPO, KAR (though becoming less so).

 

OEX is one which i have thought about and looked over several times but doesnt fit my criteria at this point in time (shoudlve have bought a few months back!). Upcoming Timor sea drill is big (ie. 200MMbls recoverable) yet OEX share, i think, is only 10%. Therefore we are talking 20MMbls recoverable to OEX. When you consider the high risk being an exploration play (ie. need to discount the 20MMbls reward somewhat) and the market cap at around A$60MM i see some upside but not the several multiples of the current market cap which is what i am looking for.

 

Looking ahead, i have my eye on

- CUE, HZN (looking to re-enter after having made a nice profit recently in the devlopment/appraisal drilling stage),

- BUY/MMR, offshore large, high risk Sydney drill, thought the Montara incident has the government very worried and this could potentially delay approvals/drilling

- AUT/ADI/EKA, Eagleford shale play similar to AZZ

- PCL, huge propsect offshore Africa

- COE, LNC, NXS (though still need to do some research on these)

 

My thoughts only and interested as always in what others think of my genreal philospohy and companies i like...

 

Cheers,

 

DJ

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Albion, sounds like you feel a move is coming with some of the better oilers. I would have thought that investors would be too gunshy still on them. However I respect your instincts on this sector. What do you reckon about a possible leg up for BPT? TIA 2bs

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The "gunshy" might be getting thin soon.Oils have been the worst sector of the market for several months now.Many investors have just given up on the sector "I'm out of this nothing will make oil shares move" We see mark downs on bullish announcements and even oil discoveries. Some stocks such as ROC,AMU,TAP,PSA ect are almost totally "bombed out" after years of decline.Others with no debt,good cash flow proven and increasing reserves are ignored. As investors start to look for a sector that has completely missed out on the current upmove am sure oils sticks out like a sore thumb. Would have to think debt free BPT would join in.
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albion: Fully agree with you that some of the junior oilers should have a run-up sooner or later (assume and hope it might be sooner rather than later...)

As I regard you as one of the best knowledge-filled posters on oil stocks, a "simple" question to you. For which ones of these junior oilers do you see the best upside if/when the start to get rerated? A short list would be highly appreciated.

wasa

P.S. I am holding quite a few. For some I do have HIGH hopes/expectations (ITC/SUR/VPE/STX) and for others I perceive them as being quite/highly RISKY (FAR/PCL) and for some others I do have small positions (and in huge loss territory) and almost "given-up" on them completely (BKP/EMR/NWE/SER).

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