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8 Responses to “Wrap – Week Ended 11/9/12”
Crysball posted this this morning of the Friday post, good stuff, thanks
EGY Q3 CC……………….The Little Train that Could
NUTSHELL: Most positive CC for the company in my memory. Only two analysts on the call, however, many major & positive disclousures ………not the least of which was the notification by the Gov't of Angola of the approval of their partner for Blcok 5 while the CC was ongoing. Wisely, the CEO decdied not to reveal the partner until he had something in writing………….other than a note passed down the table.
OnshoreGabon[Mutamba ]oil discoverywasagreedtoasa ‘’TIGHTHOLE” withpartnerTotal………..sofulldetailswon’tbe availableforabout 45days……….but theycanhardlycontaintheirexcitementasthisisafieldnotjusta singlewell………they actuallydrilleda high anglewell fromthe same islandpadtheyused 2 yearsago whichcameup as a dryholebuthadallkindofpositivegeochemicalshows.Previously thishadcharacterizedasa 15millionbarrelprospect.The wellis5 milesfroman existingTotalFieldandclosetoa Shell Pipeline.Theywill beabletobringthe wellonlineveryrapidly………..andalsoplantodrillseveral morewellsasthisisa Gambasandstonestructure……….justlikeVaalco’sOffshoreEtamefield,andwill require several wellstodrainthe structure.Note: In this well Vaalcois listed as the operator……….insubsequentwellsin MutambaTotalwill bethe operatorastheyhave vastlymore experience and in-place infrastructureon shore drillingin Gabon……….havingovera hundred producing wellsand30+ yearsofexperience.FINANCIALNOTEWhilethecurrentMutamba agreementis50/50betweenVaalco&Totalthe Gov’tofGabonhas a 15% backin rights,whichwill undoubtedlybe exercisedupon developmentof the field.The first wellhad3 sidetrackstohelpdelineation.
FinancialNote from Greg HullingerCFO: Thereisanimmediate$29 million onetime eventforVaalcowhentheformalannouncement ismadeonthe abovetwoitems
They receive$5millionfromtheirnewAngolapartnertocoverexpenseincurredbyVaalcooverandaboveits 40%Workinginterestandthiswillbean immediate cash payment….most of thisislongleaditemsfordrilling the first welll.
Theyarecurrentlycompleting[frac’s]inbothfieldsandawaitingflowbackdata……..the wells arenot BARN BURNERS, butwill provide solidreturns, andlaythegroundforfurther drilling plansin 2013………probably4 to 6 wellsin each field.
Theyrecently acquired a 10,000acreleaseholdinSouth Dakotaas a Red Riverformationprospectandhavecompsfromnearby wells. They expectto spudtheinitial wellbeforethe end of this calendaryear.
EquatorialGuinea.Thegov’tapprovedtheiracquisition ofa 31%workinginterestin BlockPon Nov. 1.They acquired Petronas interest which is leaving WestAfrica.Devon Energywasformerly inthe blockwhentheydrilledthe first4explorationwells.The GovernmentofEq. Guinea [GE Petrol] acquiredDevon’s31% interestin2011andismost anxioustodevelopBlockP.Intotal GE Petrolhas51% Working interest [31%theypurchased from Devon plus20% carry]andwhileGE Petrol areon paperthe operator……….the governmenthasnopeopleorexpertisein explorationordevelopment …………..henceVaalcowillbethe technicaloperatorofthe BlockPconcessionin fact.Startingover6 monthsVaalcowasgivenaccessto alltheseismicdataand drilllogsontheVenusdiscoveryandtheother 2bestprospectsso they arehitting thegroundrunning.ByprioragreementwithGE Petroltheyaregoingtodrillupthe2 prospectsas this will determinewhatsizeFPSOtheywillneed.TheFPSOsizing andacquisitionis thepacingfactortotheBlockPdevelopment.
Would anticpate the street will take renewed interest in Vaalco, as beginning in 2014 would expect them to outspend their cashflow and given the pristine condition of their balance sheet and history probably start with a senior debt issue.
p.s. Would encourgae those interested in Vaalco to listen to the CC replay available on the Vaalco website.
I was looking at various stocks I own. I noticed that I had bought some PWE on 12/19/08 and the price of PWE was back to slightly below what I paid on that date. But there have been a lot of "moving parts" in the stock over that period. When I bought it was paying about 20% dividend. The dividend eventually went down has been consistent since March 2011 and is about an annual 10% at the current price. Other moving parts are:
a. oil up somewhat
b. NG down a lot
c. Canadian currency up almost 25% (it is a Canadian company)
d. Management selling a lot of stock, diluting stock holders
e. Several top executives left the company this month. Some major investors had been pressing for management changes
Z did a nice analysis of the company fundamentals on 7/12/12 at 11:57AM.
The price of the stock is back to almost its low, adjusted for dividends, in March, 2009, which was its lowest since it started trading in 2005, adjusted for dividends. Over the almost 4 years I have held it, the stock has returned an annualized 7.6%, adjusted for dividends. Not great but since it seems to be beaten down now, not too bad IMO.
The potential for the future has several good points:
1. Owns some good oil/gas assets
2. New management coming in with mandate to turn it around
3. Canadian company. If you are concerned about the fate of the USD due to deficit spending , fiscal cliff, ineffective congress, etc, it might be good to have some money in an investment based on the CAD as the Canadian government and banking system have been much more better than the U.S. counterparts in many ways. This is partly reflected in CAD being up almost 25% from 2008 but there could be more to go.
This one takes a lot of patience but since they have been paying consistently 10%/year dividend, I could live on that okay while waiting for the stock price to go up.
Fracing in N. Dakota led to the cholera outbreak in Haiti?? Not that I agree with this thesis but these people are making a push to have the endowment funds of universities sell their E&P stocks. Something to be aware of.
Should prompt more spending on cyber-security programs-haven't seen the WSJ article mentioned this article:
-Chevron implied that stopping Stuxnet was no big deal but as I understand Stuxnet is not even close to state of the art these days. http://rt.com/usa/news/stuxnet-chevron-cyber-virus-348/