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Russell T. Dratwa, CFP
Investment Advisor
Russ is the "Voice of Edmonton Business" on
TEAM 1260 AM Radio
Monday-Friday 6, 7, 8, and 9 am
Russell T. Dratwa, CFP
Investment Advisor
Russ is the "Voice of Edmonton Business" on
TEAM 1260 AM Radio
Monday-Friday 6, 7, 8, and 9 am
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| Weekly Business Feature
the junior sector, fellow Canaccord Investment Advisor and editor of the “Stocktalk - Late Edition” newsletter, David Pescod.
While we all know Josef Schachter is decidedly negative on the price of oil and for that matter, the economy, his Maison Monthly report is still intriguing reading if for nothing more than it’s a chalk-full report of statistics and information that is always interesting reading. This month, everything from the frequency of hurricanes in the Gulf of Mexico, to his list of high risk-high reward plays around the world is once again, must reading.
But his tune has not changed.
The headline for this month is: “Economic Data is Getting Worse! Risk of Double Dip Recession Rises to 2/3”. He continues, “We remain defensive on the markets...focus on companies with high impact exploration upside.”
The intriguing part is his two featured companies this month are domestically—Delphi Energy, a long-time favorite of his and internationally—Sterling Resources, a company that we have featured many times, but has so far not enriched us at all! Schachter starts his work with a phrase that tells you what his thoughts are: “Economic Data is Weakening”. He writes, “While there is some positive economic data on the industrial side of key mature economies, most of the data for the total U.S. economy and most of the OECD is clearly negative. In fact, much of the recent data is showing deteriorating condition.”
Well you get the drift of what he is thinking and we just hope he’s wrong.
His comments on Sterling Resources though, & points to the fact that while there has been two prospects missed on their recent drilling results (Airidh and Macanta) he points to the next well currently drilling that is going to become important.
He writes, “The next well in the drilling program will be an appraisal of the Cladhan discovery, of which Sterling owns 39.9% and is the operator. Cladhan is an oil discovery with independently evaluated P50 contingent and prospective reserves of 90MB, excluding potential deeper fans. Cladhan could be worth >$1.50/share based on this assessment. The field is already close to existing infrastructure and in the event the company would like to move forward to production; the oil could be marketed quickly. The company also has plans to drill an exploration well in Quad 48 in the South North Sea on the Grian prospect which if successful, would also be a meaningful discovery.”
STERLING RESOURCES (V-SLG) $1.94 n/c
Once again, while negative and pointing out the bearish viewpoint, his list of the high risk/high reward plays bears watching. And we suspect you will find one or two of them appealing to your sense of greed.
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| Weekly Business Feature
the junior sector, fellow Canaccord Investment Advisor and editor of the “Stocktalk - Late Edition” newsletter, David Pescod.
While we all know Josef Schachter is decidedly negative on the price of oil and for that matter, the economy, his Maison Monthly report is still intriguing reading if for nothing more than it’s a chalk-full report of statistics and information that is always interesting reading. This month, everything from the frequency of hurricanes in the Gulf of Mexico, to his list of high risk-high reward plays around the world is once again, must reading.
But his tune has not changed.
The headline for this month is: “Economic Data is Getting Worse! Risk of Double Dip Recession Rises to 2/3”. He continues, “We remain defensive on the markets...focus on companies with high impact exploration upside.”
The intriguing part is his two featured companies this month are domestically—Delphi Energy, a long-time favorite of his and internationally—Sterling Resources, a company that we have featured many times, but has so far not enriched us at all! Schachter starts his work with a phrase that tells you what his thoughts are: “Economic Data is Weakening”. He writes, “While there is some positive economic data on the industrial side of key mature economies, most of the data for the total U.S. economy and most of the OECD is clearly negative. In fact, much of the recent data is showing deteriorating condition.”
Well you get the drift of what he is thinking and we just hope he’s wrong.
His comments on Sterling Resources though, & points to the fact that while there has been two prospects missed on their recent drilling results (Airidh and Macanta) he points to the next well currently drilling that is going to become important.
He writes, “The next well in the drilling program will be an appraisal of the Cladhan discovery, of which Sterling owns 39.9% and is the operator. Cladhan is an oil discovery with independently evaluated P50 contingent and prospective reserves of 90MB, excluding potential deeper fans. Cladhan could be worth >$1.50/share based on this assessment. The field is already close to existing infrastructure and in the event the company would like to move forward to production; the oil could be marketed quickly. The company also has plans to drill an exploration well in Quad 48 in the South North Sea on the Grian prospect which if successful, would also be a meaningful discovery.”
STERLING RESOURCES (V-SLG) $1.94 n/c
Once again, while negative and pointing out the bearish viewpoint, his list of the high risk/high reward plays bears watching. And we suspect you will find one or two of them appealing to your sense of greed.
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| Weekly Top Pick
This gets us to another analyst, Warren Verbonac, who got us into Xcite Energy way back at around 50-cents. He gives the exploration in Guyana for Sagres Energy a better than 50% chance of success...the question he asks is how big a flow rate you will see because this well had been drilled over 30 years ago by Home Oil and had 400 barrels a day.
That’s why now, Verbonac’s favorite spec story is Sagres Energy and while Canacol Energy has a 65% interest in the play, little itty-bitty cheapie Sagres’s 25% interest, should it hit, could work out to a net of 30-35 million barrels. Or in other words….one huge number for the stock...if….
Meanwhile, spud date for the Takutu Basin is hampered by heavy rains in the area, Kevin Flick, who does the PR for Canacol Energy, suggests, so the September 1st spud date might be a little hopeful. For those looking for excitement, we are about two to three weeks away from spud on the high profile Takutu basin play of Canacol and Sagres Energy in Guyana.
The following is an excerpt from August 25, 2010 courtesy of one of the most respected names in the junior sector, fellow Canaccord Investment Advisor and editor of the “Stocktalk - Late Edition” newsletter, David Pescod.
If you would like to subscribe to this highly regarded, daily newsletter, Dave has been kind enough to extend an invite to do so by simply emailing me.
A BRIEF INTERVIEW WITH DR. DAVID JOHNSON, PRESIDENT AND CEO, WITH SAGRES ENERGY
(As of August 23, 2010)
We are with Dr. David Johnson and he, along with his partner, are formerly with some fairly significant companies …Husky and Pan Orient.
David Pescod: So Dr. Johnson, just what are you doing with a small company like this?
David Johnson: We had a unique opportunity that came forward and the opportunity to explore and start a new company was an opportunity I just couldn’t pass up.
DP: What the company is centered on right now is an exploration play in Guyana that some people think is quite sizeable. Is this right?
DJ: It is quite sizeable. It has a significant prospective resource with a Gaffney Cline assessment of about 128 million recoverable stock tank barrels. Their geologic chance of success on finding oil is 90%.
DP: Now this area had been drilled something like 30 years ago, correct?
DJ: That’s right. Home Oil drilled the prospect in 1982 and found oil. They tested about 400 barrels of oil per day and it was 42 grade API oil. Back in 1982 other things were being discovered as well and being in the backwoods of Guyana as perhaps compared to say the North Sea, can cause a company to think about moving elsewhere.
DP: Would new technology developed in the last 30 years – would it help you along? Or is the location close to the Brazilian border still an obstacle?
DJ: The location next to the Brazilian border is not an obstacle; in fact, far from it. The development of new roads and bridges into Guyana from Brazil has actually made it easier to mobilize a rig into the area. The rig is on its way to the Guyana location right now, and has passed through Brazil. With respect to technology, our understanding of fractured reservoir has increased dramatically in the last 10 years. In particular, our ability to image fractures in the well-bore, analyze the stress fields associated with those fractures and therefore predict where porosity increases. So we believe there is a real opportunity to delineate the fractured resource and hopefully capture it.
DP: Warren Verbonac is one analyst (looks like he’s the first) to discover this story. He says you’ve got a better than a 50% chance of this well having commercial flow rates and he says if you get what he thinks you’ve got, the stock could be worth “x” to “y” (I have deleted Warren’s target as it is substantial and you need to talk to your own advisor to review). Is this outrageous?
SGI Sagres Energy Inc. (TSXV)
DJ: It is tough to speculate on what works and what doesn’t work in an investors mind as to what will drive a price to higher levels. There is certainly a significant resource here, 128 million barrels P mean and we have a 25% interest in that resource. We should add that we also have a significant asset with tremendous potential in Jamaica.
DP: We always like to end these interviews with the question: If you could only buy one stock today, other than your own, what would it be?
DJ: You caught me off guard on that one! Well, I have got to be on Canacol Energy on this well coming in. It’s just a really strong bet.
DP: Thank you very much David!
these investments may not be suitable for all investors as there are always unique characteristics & risks for each company that can include illiquidity, entry level price, insider buying/selling and commodity prices. Call me at 780-408-1516 or at 1-877-313-3035 ext 151
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| Weekly Top Pick
This gets us to another analyst, Warren Verbonac, who got us into Xcite Energy way back at around 50-cents. He gives the exploration in Guyana for Sagres Energy a better than 50% chance of success...the question he asks is how big a flow rate you will see because this well had been drilled over 30 years ago by Home Oil and had 400 barrels a day.
That’s why now, Verbonac’s favorite spec story is Sagres Energy and while Canacol Energy has a 65% interest in the play, little itty-bitty cheapie Sagres’s 25% interest, should it hit, could work out to a net of 30-35 million barrels. Or in other words….one huge number for the stock...if….
Meanwhile, spud date for the Takutu Basin is hampered by heavy rains in the area, Kevin Flick, who does the PR for Canacol Energy, suggests, so the September 1st spud date might be a little hopeful. For those looking for excitement, we are about two to three weeks away from spud on the high profile Takutu basin play of Canacol and Sagres Energy in Guyana.
The following is an excerpt from August 25, 2010 courtesy of one of the most respected names in the junior sector, fellow Canaccord Investment Advisor and editor of the “Stocktalk - Late Edition” newsletter, David Pescod.
If you would like to subscribe to this highly regarded, daily newsletter, Dave has been kind enough to extend an invite to do so by simply emailing me.
A BRIEF INTERVIEW WITH DR. DAVID JOHNSON, PRESIDENT AND CEO, WITH SAGRES ENERGY
(As of August 23, 2010)
We are with Dr. David Johnson and he, along with his partner, are formerly with some fairly significant companies …Husky and Pan Orient.
David Pescod: So Dr. Johnson, just what are you doing with a small company like this?
David Johnson: We had a unique opportunity that came forward and the opportunity to explore and start a new company was an opportunity I just couldn’t pass up.
DP: What the company is centered on right now is an exploration play in Guyana that some people think is quite sizeable. Is this right?
DJ: It is quite sizeable. It has a significant prospective resource with a Gaffney Cline assessment of about 128 million recoverable stock tank barrels. Their geologic chance of success on finding oil is 90%.
DP: Now this area had been drilled something like 30 years ago, correct?
DJ: That’s right. Home Oil drilled the prospect in 1982 and found oil. They tested about 400 barrels of oil per day and it was 42 grade API oil. Back in 1982 other things were being discovered as well and being in the backwoods of Guyana as perhaps compared to say the North Sea, can cause a company to think about moving elsewhere.
DP: Would new technology developed in the last 30 years – would it help you along? Or is the location close to the Brazilian border still an obstacle?
DJ: The location next to the Brazilian border is not an obstacle; in fact, far from it. The development of new roads and bridges into Guyana from Brazil has actually made it easier to mobilize a rig into the area. The rig is on its way to the Guyana location right now, and has passed through Brazil. With respect to technology, our understanding of fractured reservoir has increased dramatically in the last 10 years. In particular, our ability to image fractures in the well-bore, analyze the stress fields associated with those fractures and therefore predict where porosity increases. So we believe there is a real opportunity to delineate the fractured resource and hopefully capture it.
DP: Warren Verbonac is one analyst (looks like he’s the first) to discover this story. He says you’ve got a better than a 50% chance of this well having commercial flow rates and he says if you get what he thinks you’ve got, the stock could be worth “x” to “y” (I have deleted Warren’s target as it is substantial and you need to talk to your own advisor to review). Is this outrageous?
SGI Sagres Energy Inc. (TSXV)
DJ: It is tough to speculate on what works and what doesn’t work in an investors mind as to what will drive a price to higher levels. There is certainly a significant resource here, 128 million barrels P mean and we have a 25% interest in that resource. We should add that we also have a significant asset with tremendous potential in Jamaica.
DP: We always like to end these interviews with the question: If you could only buy one stock today, other than your own, what would it be?
DJ: You caught me off guard on that one! Well, I have got to be on Canacol Energy on this well coming in. It’s just a really strong bet.
DP: Thank you very much David!
these investments may not be suitable for all investors as there are always unique characteristics & risks for each company that can include illiquidity, entry level price, insider buying/selling and commodity prices. Call me at 780-408-1516 or at 1-877-313-3035 ext 151
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