The Contrarian Investor UK portfolio had plenty of action today.
Xcite Energy (XEL) collapsed another 5% to 311p. Rumours abound about reasons for the delay in the reserves upgrade and Competent Persons Report (CPR). Conspiracy theories are circulating that management are hiding something with the shift to TRACS rather than RPS energy to complete the reserves report. Like the rubbish that we saw on the bulletin boards pre-flow test like the Betty Knutsen saga, its almost certain to be complete fiction. The supposed "guys in the know" are spooking ordinary investors to sell shares at daft prices. Market Makers are taking the Michael!!
Then we have the funding issue. Again lots of talk by derampers that Xcite will have a massively discounted placing to fund the Bentley field development. As a reminder from last weeks Reuters interview with Rupert Cole (CFO) - ""We're not of a mind to farm-down ... There's no reason that we can't deliver this and bring the field into production," "bringing a substantial oil field like Bentley into production is a costly process for a company with no cash flow, but Cole believes Xcite can undertake the development without bringing in a partner and possibly without raising fresh equity."I wouldn't rule it out, I wouldn't rule it in either," he said when asked if the company was planning a fundraising, adding that he was encouraged by approaches from institutions willing to lend to the company. See my previous post at http://contrarianinvestoruk.blogspot.com/2011/02/xcites-cfo-cole-confirms-partner-may.html.
I believe 311p is a crazily low price because:
1. Xcite are It is already sitting on substantial oil-in-place volumes of between 109 and 235 million barrels as confirmed by the last CPR - probable 170 mm barrels (which is a legal document). The Bentley field is in the North Sea, no political risks.
2. A new reserves report is due in late March - the 9-3b/6 well flowed at the top end of expectations (2900 barrels per day) and the vertical pilot section of the well encountered a larger than expected oil column towards the end of October 2010. RNS of 31st December said “In addition to the successful well flow test announced on 21 December 2010, high quality downhole pressure, temperature and sample data has been safely recovered following a 36 hour shut in and build up period after the flow test.” It would be expected that we will looking at 250-300 million barrles.
3. A rig has been contracted from British American offshore (Rowan Norway) and is due for delivery in June and be in operation in October or November
4. Production of 15,000 barrels per day is due to start in early Q1 2011. Upside of 60,000 barrels per day. Field life of 12-15 years.
5. The Bentley field has full infrastructure support through the Bentley alliance which includes BP and Amec.
Enough said really. This feels like pre flow test days when the price was oscillating like crazy on unfounded rumours. I bought then in the dark days when the derampers were calling a "duster". Now I am buying on equally dark days....and hoping for brighter days ahead. But less hope, more conviction!
EnCore also announced the Burgman exploration well 23/9-4 in Central North Sea Block 28/9 was spudded this morning. It is a joint venture with Premier Oil (PMO), Wintershall, Nautical Petroleum (NPE) and Agora Oil & Gas. The well is exploring the Tay and Cromarty sands and is expected to take approximately 25 days. In addition it will also drill a deeper, Jurassic aged Fulmar sand target. The shares dropped 1% to 119p.
Sirius Minerals (SXX) popped nicely again today with an 11% gain to 14.88p. After buying last week I took some profit to invest in Xcite Energy. I am sure further gains are ahead, but Xcite is just too tempting at 311p,
Bowleven (BLVN) also had a good day, finishing up 6p at 338p. I sold a tranche earlier in the day at over 340p. This stock has risen nicely since the Goldman Sachs conviction buy report last week, it was less than 300p little more than a week ago.
I took the opportunity to increase my stake in Rockhopper (RKH) and also bought into Solomon Islands and Australian gold explorer, Solomon Gold (SOLG) which is now trading at 28.5p (which is only 0.5p higher than the £15 million October 2010 placing). I am finishing a Contrarian Investor review on the company and I hope to post it in the next day or two. Time is tight these days! I was trading SOLG late in 2010, but it has dropped back below 30p and I like the prospects for this company with its varied portfolio of gold assets, particularly in the Ring of Fire area in the Solomons.
There was some suggestion (only rumour) on iii a few weeks ago that CPR was delayed because of a backlog so perhaps it does explain the switch (the poster was originally lambasted). This backlog was allegedly 3 months long.
ReplyDeleteWhat I find outrageous is how certain posters on iii, particularly a 'colourful' individual who clip-clops along to show up on many a board, acts friendly and then inevitably sours. People like this cannot be genuine investors, it happens too often and seems too organised. I am very wary of this behaviour pattern since the shares they claim to hold are no more or less subject to market whims/delays/bad news than those they suddenly fall out of love with. I basically despair when I see them arrive on a certain board, once an enclave of peace, is then turned into a circus. The only thing one can do, as this practice will never be curbed by iii, is to avoid such bbs and wait for official news. It's a hard temptation to resist as there is often very informative news and posters there too. That's the only way round this as far as I can deduce.
There are organised packs of traders who use iii.co.uk, LSE and ADVFN. You are right, they write some apparently good posts, then say they are selling out. In fact they are waiting for a drop, and buying. Crooked game!
ReplyDeleteI have been buying the last few days with some last night at 308p. I'm very comfortable buying around the £3 mark. I do not believe for one minute that the board are being dishonest which is what some iii folk are suggesting!