BANKERS PETROLEUM
PAINTED PONY
STERLING RESOURCES
We haven’t actually seen an exhibition yet where Wel-
lington West oil and gas analyst Kevin Shaw walks on wa-
ter, but he has certainly had an amazing year. Mind you,
anyone brave enough to step back into the markets six or
seven months ago when it looked like the world was end-
ing, has been rewarded and there have been some big re-
wards out there.
Kevin Shaw has certainly been helpful in some of sto-
ries we’ve followed. There was a trip we made to Albania
back around February/March to visit the Bankers Petroleum
site that first got us excited that the world might some day
return to a semblance of normality and having seen the
scale of operations—it was nice just to get excited about
the markets again.
While we might have written about Bankers probably
more than anyone wanted to read, it was Shaw’s 30-page
write up on Bankers that really brought the company to the
attention of the markets in general. We have to give him
credit for that. He also did something interesting...he actu-
ally went to Albania for a look/see himself. We still wonder
how many other analysts have done that. Once you see all
the thousands of old rigs, it’s like finding religion. Thank
you Kevin for getting the Bankers story out.
Just a couple of months ago, Kevin Shaw wrote up
Painted Pony Petroleum with what they’ve got going on be-
tween their different oil plays in Saskatchewan and gas
further west and Painted Pony has done incredibly well
ever since. So needless to say, we are watching Shaw
closely.
On Friday the 13th of November, he writes a very ag-
gressive report on Sterling Resources writing, “Sterling
Poised to Triple or Quadruple Value with Net Risked Re-
source Potential approaching 153 mmboe.” It’s the kind of
stuff that attracts your attention and Shaw says that if he
could only buy one stock today, this would be it.
In the report, he writes, “Two development projects
poised to generate substantial cashflow as Breagh and
Doina (offshore Romania) are expected to drive net produc-
tion and cashflow of around 14,700 boe/d and $193 mm,
respectively in 2012. But it is the huge exploration inven-
tory that Shaw focuses on and comes up with a risked
EMV/sh of $10.42.
Shaw writes, “Up to eight wells planned in 09/10 starting
with an exploration well in offshore Romania followed by
wells at Cladhan, Quad 48 and Airidh (UKNS) are part of the
program.
All in all, Shaw ups his target on Sterling Resources
to $3.40, which folks gives you a double from today’s
price.
For ourselves, now that oil is at a rather decent range,
we think of between $60 and $80, that means a lot of
what didn’t make sense six months ago in the North Sea
now does. It’s an area where costs to build, explore and
work can be high, but where government taxation re-
gimes are reasonable...certainly a lot more reasonable
than say, Alberta of late.
To us we kind of figure that a portfolio of Sterling Re-
sources, for the short and longer-term, particularly with
that enormous cash flow in 2012 expected and in the
shorter-term the drilling excitement of Xcite Energy, as
soon as February/March—makes for an interesting two-
some for your portfolio.
GOLD
$1138.50 +21.80
Today gold hits all-time new highs as we hit numbers
some analysts had been hoping for by Christmas. Noth-
ing ever happens on time I guess, but one gold bug who
has been predicting that market pretty well has been Bob
Hoye of Institutional Advisors and he wrote an interesting
comment on November 14th.
Hoye and Ross Clark write, “gold is generating it’s first
daily upside exhaustion alert since January 2008.” They
add, “This alert occurs when a market exhibits urgency on
the part of investors to buy. Major tops have been seen in
gold when weekly and monthly alerts are generated. Daily
signals, such as this, tend to occur around minor highs
and lead to corrections back to test the most recent break-
out or a pause until the 20-day moving average catches up
to the price.”
Hoye then writes, “In this case, $1070 appears to be a
reasonable targeted support.”
We all know that nothing goes straight up or for that
matter, straight down, so it will be interesting to see just
how accurate Hoye is with this prediction.