BANKERS PETROLEUM
(T-BNK)
So after one of the biggest market crashes ever and fol-
lowed by one of the biggest rallies ever (and once again a
correction) what next? We mentioned on Friday, Bob Hoye
of Chartworks has had a pretty good sense of timing over
the last year or so—not perfect, but a lot better than most.
He is predicting over the next couple of months for the
resource sector, we have a bit of consolidation, but then
things could get quite good again as he is expecting the fall
is the time to get back into energy stocks and he had some
really interesting comments about gold for that time period
as well.
This goes hand in hand with the usual resource cycle,
which is buy in early fall and sell in April, so his expecta-
tions for the gold and oil and gas sector aren’t that much out
of a normal cycle at all.
So we will take this time to take a look at three of our fa-
vourite stories as we narrow down a long list and look for-
ward to a time in the next few weeks and months of shop-
ping and stink-bidding.
Bankers Petroleum:
We’ve learned over the years that it’s very
important for any company you invest in to make sure that
the country or province or state is a good place to be in-
volved. Over the last six months or so, more than a few peo-
ple have got to be shaking their heads about what is going
on with the Premier of Alberta and what he is doing.
First he raises royalty rates to some of the highest in Canada and
sends the oil and gas business packing to Saskatchewan
and BC. Lately he has lowered the royalty rates and after
just increasing alcohol taxes, he has reduced them in just a
matter of weeks and then he is going to reduce tobacco
taxes. Sounds like a little bit of an iffy place, doesn’t it?
Yes, the Alberta oil and gas players have got to be shaking
their heads…
Meanwhile we were off to Albania, a country that suffered
for 30-some years under the dictatorship of Hoxha and right
now, all of the people we met in Albania are dying to have
what the western world takes for granted and they will do
what it takes to get there.
Where else have you seen a gov-ernment pass laws to make sure there is less regulation out
there so that projects can get done. You get over there and
see the new roads being built, the housing being built and
while much of the western world might be slowing, in Alba-
nia, things are going the right way. Mind you, from a lower
level. The other thing about visiting Albania is that when
you see
Bankers project in southern Albania, you realize the scale of it.
Go over a small hill and a valley is just full of hundreds
and hundreds of old derricks from the Chinese and Russian
days. Go over another hill and there’s another couple of
hundred or thousand rigs or so and it just keeps on going as
far as the eye can see. No wonder the analysts and others
debate and wonder whether it’s four billion barrels of re-
sources that they have or six or eight or who knows? It’s
enormous.
Abby Badwi and his team of Doug Urch from the old Rally
days are going to try and replicate exactly what they did in
Egypt. Take an old, heavy oil project, use new technology
and try to increase production and the resource numbers.
Whether he’s going to try and do that for one year or two
years, before the assets are sold to someone really big, who
can really turn up the temp is open to debate, but with a team
that has done it before, we suspect can do it again and we
also suspect down the road, higher oil prices will help.
The best report out there that we would consider manda-
tory reading would be a recent one by Kevin Shaw of Wel-
lington West that gives Bankers Petroleum a $4.00, one-year
target.
In talking with Kevin, he suggests it could be as
much as two years before the company is sold and we love
his tasty target for a 2-year target.
Keegan Resources: The one thing about Bob Hoye that might
get you a little bit excited about gold is his most recent July
7th report where he points out that at the end of every dec-
ade, there has been an enormous run in something. Every
year over the last 40 years ending in a “9” has seen some-
thing explosive...be it the Nikkei Index in Japan going
through the roof, the price of gold decades ago doing the
same, interest rates, or the flight that NASDAQ took. Hoye
suggests that this time, it could well be gold which he feels
is currently consolidating.
He points out that if gold goes through its old highs, there
are not too many analysts out there that wouldn’t expect
$1250 to $2500 for gold.
While I can’t see a sign of inflation out there anywhere,
anytime soon, there is an awful lot of money flooding into
gold-based ETF’s these days—meaning that suddenly, it’s
not just the gold bugs that are interested in gold anymore.
It’s still a very debatable topic, but we’ll see.
In the meantime, Keegan is a play in a country where gold
is starting to play a big role (Ghana) and more importantly,
they want the jobs. They are encouraging development in
the business and gold resources in the country already ap-
proach more than 100 million ounces.
Biggies that are players there, such as Newmont and
there’s more than a few people following Keegan that wonder
how long before Keegan could disappear.
In the meantime, the debate remains whether they have 3
1/2 or 4 1/2 million ounces that additional exploration over
the next six to eight months, could add considerably to what-
ever number you want to use.
Should gold prices go, all gold stocks should participate,
but Keegan is one that is followed by only two analysts that
we could find, but we suspect over the next eight weeks,
many more analysts will start discovering this story and add
following to Keegan, which currently is rather an illiquid and
volatile stock.
On a spike up, it previously hit $4.00, and it’s your for sale
for significantly less. For those who would like a decent back-
ground report, e-mail Debbie for a look-see by Nicholas Camp-
bell who has a $5.00 target on the stock.
Wavefront Energy: If you were in the market over the last few
years, it doesn’t matter what sector you were in, you got
beaten up.
If you were in the junior cap stories, you got beaten
up more than most because the juniors offer the leverage. But
hey—18 months ago, who would have ever thought companies
such as Oilexco or GM would both have gone bankrupt?
To get some of that money back, you need to find doubles
or once in a while take a risk. Wavefront is definitely a risk and
we all know that the higher reward you are hoping for means
the bigger risk you are taking and that is Wavefront.
They’ve been working on new technology for the oil and
gas patch over the last 12 years or so and have spent the last 2
years setting up a public company and try and get a new tech-
nology that they’ve developed for the oil and gas patch ac-
cepted as standard.
So far, they’ve only got about 80 tools out in the patch and
they need 120-150 to break even. They also need that one big
contract by that one big company that would make their tech-
nology industry standard.
In the meantime, the world is full of old oil fields where 30%
or 40% of the resource has been captured. A new technology
that could grab another 10, 15 or 20% could/would revolution-
ize the oil and gas business and should create a huge, new
market.
But the oil and gas patch is slow to adopt new tech-
nologies because usually new technologies involves big
money and if it doesn’t work, it looks bad on somebody’s re-
sume. This is not an expensive new technology, but it still is
new.
In the meantime, the market has been lousy, there is a big
hedge fund selling the stock and more than a few people that
have been following this story for a while have been disap-
pointed at how long it has taken for the technology to be ac-
cepted.
For the best background look at this company, go to Keith
Schaefer’s website at www.oilandgas-investments.com to fol-
low this story. As Schaefer writes, this is potentially a five or
ten-bagger from the $0.70 level where he bought it and of
course, if you are taking the risk on a story like this, that’s the
kind of reward you are hoping for.
In the meantime, looking at contracts that the company
hopes to land, some of those hopes could be quite timely in
the next four to six weeks.
