Ivan Lo Equedia Weekly wake up investors...tracers take cover

Investors have once again been duped. Gold fell last week, while stocks rose. The S&P 500 ended its best week in 2012. The strong gains came after the benchmark index fell more than 6 percent in May and dropped just below its 200-day moving average. But why in the world is the stock market rising? Was it the possible thought of QE? Nope. Bernanke denied us of any immediate spending - yet the market continued to climb. Was it the encouraging report that U.S. wholesale stockpiles grew twice as fast as they grew in March, signalling that businesses are ordering enough goods to lead to increased factory production and sales? Nope. Stockpile growth largely depends on the spending habits of U.S. consumers and businesses. With little to no job creation and payrolls rising slower than the rate of inflation, where is the spending coming from? (I suspect that it's coming from savings and further loose credit. That means it's all an unsustainable one-time increase. Yes, oil and gas prices have dropped but still remain high. Spending is not coming from income.  That's what is really scary behind the GDP numbers. More QE? Coming right up...) Was it China's central bank announcing a surprise interest rate cut? Nope. Because that means China's economy is slowing down. It was China's first rate cut since the 2008 crisis which means the world's economic engine may be preparing to announce some very weak data. Analysts are already forecasting China would deliver its weakest quarter of growth in three years in the second quarter at 7.9pc - the sixth straight quarter of slowing growth. They expected 2012 full-year expansion of 8.2pc, the weakest outcome for China since 1999. So why in the heck is the market rising? Uh Oh, Look Out In March, I explained that stocks have been rising on historically low volumes: "The one biggest concern scaring investors is the volume in trades that has been pushing the market higher. Trading at the New York Stock Exchange declined to the lowest level since 1999 last month, with the average volume over the 50 days ending Jan. 25 slowing to 838.4 million shares. The value of stocks changing hands dropped to $24.9 billion, a 50-day average not seen since at least 2005."   When stocks rise on low volume, its fall could be disastrous. While stocks had one of its best weeks, it also had one of its lowest volume weeks of the year. If that signals to you that the markets are moving back up on a new bull leg, you need to think twice. It may sound shocking to you, but the rise in stocks and the downfall in gold was yet another clear shot of market manipulation by the powers running America. There are no buyers right now. So forget all the talk about a new bull leg. There isn't one. It's only a matter of time before everyone realises the market can only be propped up for so long. Stimulus can, and will, only ease the minds of investors for a brief period before it becomes mundane. And after one more round of QE, people will finally come to the realisation that their dollars and their currencies are losing value at an astonishing pace. That's why the Fed will wait until last minute to unleash its paper force. A Giant Credit Bubble The world is in one giant credit bubble sustained only by more credit. Just ask your friends, your neighbours, your families, and your coworkers. I bet they all owe a lot of money - and not just money for their overpriced Canadian homes they were able to buy because of historically low interest rates, despite record high prices. Most of these debts will never be repaid and yet  more debt and credit will flow. But don't stress yourself thinking you're the only one. The governments of the world are loaded with even more debt that will NEVER be repaid. It used to be millions. Then it turned into billions. And now sovereign debt is figured in the trillions. How are these debts being repaid? With more debt... What Does That Mean? There's nothing we can do to fix the world's financial crisis. It will get a lot worse before it gets better. There are only two likely simplified scenarios: We continue to print more money and inflate the heck out of all fiat currencies. We move to some sort of a gold standard. The likelihood of scenario two is highly unlikely given that the world is still, and will continue to be, controlled by politicians and bankers. In both scenarios gold prices will move up, as it has done without question in the past century. Citizens will soon realise that wealth is not something you can print. As a result they'll begin to hoard their gold, land, and other real tangible assets. Every fiat currency since the Romans first began the practice in the first century has not only ended in devaluation but eventually in collapse. Not only did currencies fail, but the economies that housed them failed as well. Is our modern civilization on the same path? If you compare the fall of previous fiat currencies, they all have a similar cycle and consequence. In almost every case, so much money was printed that they became useless and lost nearly all of their value as serious inflation took over. The fall of civilizations, economies, and currencies don't happen overnight. Some of these currencies failed within years, some within decades, and some within a century. While the US implemented fiat currency since the late 1800's, its current currency issued by the Fed (and no longer by the US) is just over 40 years old. How much longer do you think it will last? While it may seem farfetched today, this point of failing fiat currencies will eventually make sense. We're already seeing this in gold's slow and steady rise over the last ten years, right alongside our monetary base. Slowly, but surely, gold will continue to rise. There will be a point where gold will show its force and turn speculative. While gold has been shunned by the mainstream media, psychology will reverse and everyone will be rushing to own gold. It's the only form of money that has been rising steadily for the last few hundred years. Can you say the same about the dollars in your wallet? Will it take another 100 years before people realise that the only thing fiat currencies do is lose value over time? The only thing gold has done over time is gain more value... No wonder China continued to buy more gold in April, importing another 100 tons of physical gold. In the first four months of 2012 Chinese purchases have already increased by an unprecedented 782% over 2011. The Chinese are the only ones with real money to spend. With the highest savings rate in the world, they are spending their money on gold and silver. I wouldn't even call it spending; I would call it saving or preserving wealth. The Chinese have the strongest purchasing power and a labour shortage while America is a country riddled with debt and unemployment. Which side would you prefer? Walking on a Tightrope While QE and additional world stimulus packages have alleviated pressures for the time being, the truth is quietly lurking behind the scenes. Take a look at this chart from BofA Meryll Lynch's Global Research:   In the last year or so market fragility has soared, signaling even higher systemic risks than in the peak pre-Lehman era in 2008. The credit markets are clearly telling us that there is serious risk on the table. Even after spending trillions of dollars, systematic risks across the board are just as high as they have ever been. Spain still needs a bailout. Greece is finished. Europe remains a mess. And Americans aren't the economic powerhouse they need to be.   If we adjust for inflation, the real economy is actually in a contractionary state. We're 3 years into a recovery and we're growing at an anemic 1.88% rate while the per-capita income continues to shrink. I had mentioned last week that we may see a bounce from the week prior: "The stock market could bounce from Friday's low, but that won't signal we're in the clear. The real short term bottom would only be found if indeed another round of QE is announced, or the Greek mess is resolved. And I stress that it would be a near term bottom." My thoughts haven't changed. Politicians are only delaying the inevitable. I don't see a pretty week ahead. Let's see what Spain does first.     Until next week,   Ivan Lo Equedia Weekly    

China surprises with rate cut

The chase by Marty Cej:

China cut interest rates for the first time since 2008 in a bid to stoke growth and defend against the European debt crisis, almost like throwing up a massive wall, a great wall, even. The People's Bank of China cut the one-year deposit rate to 3.25 percent starting tomorrow and said the one-year lending rate will fall to 6.31 percent from 6.56 percent. The PBOC also said banks will be able to offer a 20-percent discount to the benchmark lending rate, up from the current 10 percent. Back in May, the country's ruling State Council said that risks to the economy were growing. I guess that the risks had grown quite enough, thank you.

The biggest challenge today will be in understanding and communicating how a quarter-point rate cut in China will be transmitted through the global economy and financial markets. Lending has dropped in China and the rate cut is intended to spur companies and consumers alike to borrow, which in turn stokes demand for goods and services both domestically and from abroad. Can lower Chinese lending rates offset Europe's impact on the global economy? Will the cuts be enough to lift industrial commodities from their recent funk (Maybe Prince, who turns 54 today, can help with the funk)? The Australian and Canadian dollars became the world's favourite currencies the last time China cut rates and introduced stimulus in 2008; will it happen again? For stock investors, is it suddenly time to take another look at the likes of Teck, Hudbay and other miners? The oil companies?

Today's action by the People's Bank of China may enliven Federal Reserve Chairman Ben Bernanke's visit with the Senate Joint Economic Committee at 10:00 a.m. ET. Bernanke will deliver a prepared statement at the top of the hour before facing a series of rambling political statements from committee members that may or may not end with the upward lilt of a question. At some point, he will be asked about jobs, and there will be a question or two on the impact of the European debt crisis buried in the rhetoric somewhere. We'll cover the Q&A.

Bernanke's testimony also comes a day after Fed Vice Chairman Janet Yellen told an audience in Boston that a "stalled" improvement in the jobs market and worsening financial conditions may result in more monetary easing by the central bank. The Fed's next meeting is June 19.

Among the stocks we're watching today is Lululemon, which reported a 25-percent jump in same-store sales in the first quarter and beat the average earnings expectation by 2 cents. The company said, however, that it sees second-quarter profit in a range of 28-30 cents US a share, compared with an average estimate of 33 cents. Full-year earnings per share and revenue are also seen coming in just short of analysts' consensus forecasts. Perhaps Tom Jones, who turns 72 today, could help sales with a new tour; all those Groovy Girlshorts, Premium Technikinis and Foxy Lulu Hotshorts flung from the audience will have to be replaced.

There's still more work to be done on the Barrick story. I'm interested in hearing more about the company's strategy now that Aaron Regent has been replaced. Will the focus return to gold? Is the new CEO Sokalsky cut from the same cloth as Munk? Is Barrick more of a "buy" today than yesterday? How many investors have had a change of heart, as Dean Martin asked in his 1955 hit. Martin would have been 95 today.

Bank Of Canada Rate Remains at 1%

Canada's central bank it keeping its benchmark interest rate steady at one per cent — the same level since September 2010.

The Bank of Canada said Tuesday it would hold its target for the overnight rate steady in its latest policy decision.

The bank has decided not to raise or lower the rate on which other banks base many of their interest rates for 14 consecutive six-week policy meetings, dating back to fall 2010. That's the longest that Canada's central bank has stayed on the sidelines since the 1950s.

MAPInterest rates around the globe

"Underlying economic momentum appears largely consistent with expectations," the bank said in its statement accompanying the decision.

"To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate," the bank said.

That was a slightly more hawkish tone that the previous statement, suggesting if and when the bank makes a move, it's more likely to be a hike to curb lending, not a cut to stimulate the economy.

"The message is that the bank, unlike the market, still expects the next move to be a hike, but it is acknowledging that there is less certainty about the economy being strong enough to warrant that move," CIBC economist Avery Shenfeld said in a note following the bank's rate announcement.

Modest growth

Canada's central bank says the U.S. economy has continued to expand at a modest pace, but activity in emerging markets has slowed a bit faster than expected, and Europe remains a major concern.

In Canada, the first-quarter growth rate was disappointing at 1.9 per cent, but the economy is holding up overall because of a strong housing sector, positive business, and consumer confidence and low interest rates.

The bank also said inflation remains in control and not a worry at this time. The bank has its next scheduled decision on rates on July 17.

Bankers Petroleum provides technical and operational progress update prnews CALGARY, June 4, 2012 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM:BNK) is pleased to provide the following update. Production Average production for April and May 2012 was 13,800 barrels of oil per day ("bopd"), and average production for May 2012 was 14,150 bopd. First five months 2012 production average of 14,000 bopd represents a 7% growth over 2011 production. Horizontal Drilling Performance New horizontal drilling in the central and northern areas of the field in 2012 has encountered good results with flow rates north of the river averaging 170 bopd and wells in the North Central region averaging 90 bopd. To follow up on this positive performance, the remainder of the 2012 drilling program will utilize 4 rigs to drill high impact Driza and Gorani wells focused on steady production additions in these areas of the field. The 5th rig will be used for core and delineation wells in other part of the fields, and to drill water disposal wells and an exploration well into Block F. Three (3) type curves for horizontal wells in the Patos-Marinza oilfield have been added to the Corporate Presentation representing the majority of the wells drilled to date and additional production performance.


 Results are consistent with previously forecasted 40-50% declines in production during the transient phase, followed by a shallower 15-30% decline as well performance transitions into a steady state phase. While results across the field and in different zones vary, the future development program will continue to focus on those areas of the field which can yield the best results. Secondary recovery methods are being reviewed to enhance both the ultimate recovery and also the pace of recovery through stemming the above stated natural reservoir declines. Indications are present in the field that secondary flooding will be effective. The Company is planning to gather core data for special core analysis and establishing water-flood and polymer-flood pilots over the next several months to validate the potential for secondary recovery processes.

Wellbore Construction Improvements Drilling procedures, sand production, and localized tectonics within the field area are believed to be the main causes of recent liner mechanical integrity concerns in some of the horizontal wells. Wellbore construction has been an ongoing focus of the technical team and several improvements are being implemented, including liner and slotting design for additional strength and adjusted drilling techniques for better down-hole conditions. As these improvements are implemented by the fourth quarter, they are expected to largely mitigate concerns in the go-forward program.

While the impact of wellbore construction has contributed to lower production results in the first part of the year, liner and slotting configuration adjustment for optimum performance is not uncommon in heavy oil developments and the Company believes the solutions discussed will aid in rectifying the situation within the next few quarters. Water Control Water control initiatives in the field continue with over 200 old vertical wells now plugged to prevent water cross-flow, which impacted existing and new production in both re-activated vertical wells and several new horizontal wells. The expansion of the Company's water disposal capacity in the first quarter has enabled many of the shut-in high water cut wells to be brought back on line. The Company expects to see a gradual increase of oil production from these wells as the water cut decreases over time.

 Included in the Company's plans is the utilization of third party consultants and oilfield service providers with global experience in similar old oilfield developments, to help provide the needed solutions on a collaborative basis with Bankers' technical and operational teams towards production and reserves enhancements. Thermal Program Laboratory results from the oil sample recovered from the first cycle of the thermal pilot have shown viscosity measurements of over 100,000 centipoise at reservoir temperature and demonstrated oil mobility can occur at temperatures over 90 degrees Celsius. To achieve optimum results in the second phase of the pilot, steam will be injected for a shorter 30 day cycle at over 250 degrees Celsius and the well will be put on production after a few days soak period to enable higher temperatures during flow-back and production. The second steam injection cycle is expected to commence this month. Exploration Block "F" The Company intends to drill the second Block "F" exploration well in the fourth quarter. Seismic modeling and detailed interpretation of a large turbidite prospect is underway. Work has also commenced to gain lease access and the approvals to construct the road necessary for the well location. 2012 Budget and Liquidity The Company will continue to maintain a strong balance sheet, especially considering this global economic uncertainty.

 As a development company with significant production, Bankers can rely on a relatively consistent cash flow to fund its project growth. The work program maintains sufficient flexibility to be modified, if needed, to fit within expected cash resources, thereby focusing capital program spending during lower oil prices towards maintaining and supporting production levels. The Company has stress-tested its liquidity at various Brent oil price levels and additionally, by way of a hedge executed in 2011, has secured a floor price of US$80 Brent oil price for 25% of its production in 2012. On the basis of Bankers independent reserve valuation at December 2011, the existing borrowing base covenants show that nearly $300 million of debt capacity is supported by proved reserves. The existing $110 million credit facilities, held jointly with the European Bank for Reconstruction and Development ("EBRD") and the International Finance Corporation ("IFC"), are mid-way through their initial six year term. Under the terms of these facilities, and with the expectation that cash flow will be in excess of capital program requirements, principal repayments will commence in October 2013 and over the remaining two years.

The Company expects to open discussions with its lenders early next year to extend the facility, thereby deferring the repayment requirements. At the end of March, 2012, the Company renewed its US$20 million revolving loan with Raiffeisen bank for another two years. With its $215 million capital program, Bankers anticipates delivering growth in production for 2012, however, until the Company completes a full assessment and determines the time needed to implement and see positive results from the wellbore construction and water control initiatives, the Company will not be providing production guidance for this year. Updated Corporate Presentation For additional information on this update, please see the June 2012 version of the Company's corporate presentation and also a new presentation titled Technical and Operational Progress Update Dated June 4, 2012 at www.bankerspetroleum.com. Conference Call The Management of Bankers will host a conference call on June 4, 2012 at 2:30PM MDT to discuss this Technical and Operational Update. Following Management's presentation, there will be a question and answer session for analysts and investors. \

As questions will not be able to be asked from the dial in live, please forward any questions to mhodgson@bankerspetroleum.com during the webcast and we will attempt to incorporate them into the Q&A. ial, sans-serif; font-size: 13px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-align: -webkit-auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;">prnews






CALGARY, June 4, 2012 /PRNewswire/ - Bankers Petroleum Ltd. ("Bankers" or the
 "Company") (TSX: BNK, AIM:BNK) is pleased to provide the following
 update.


Production


Average production for April and May 2012 was 13,800 barrels of oil per
 day ("bopd"), and average production for May 2012 was 14,150 bopd.
 First five months 2012 production average of 14,000 bopd represents a
 7% growth over 2011 production.


Horizontal Drilling Performance


New horizontal drilling in the central and northern areas of the field
 in 2012 has encountered good results with flow rates north of the river
 averaging 170 bopd and wells in the North Central region averaging 90
 bopd.  To follow up on this positive performance, the remainder of the
 2012 drilling program will utilize 4 rigs to drill high impact Driza
 and Gorani wells focused on steady production additions in these areas
 of the field. The 5th rig will be used for core and delineation wells in other part of the
 fields, and to drill water disposal wells and an exploration well into
 Block F.


Three (3) type curves for horizontal wells in the Patos-Marinza oilfield
 have been added to the Corporate Presentation representing the majority
 of the wells drilled to date and additional production performance.
 Results are consistent with previously forecasted 40-50% declines in
 production during the transient phase, followed by a shallower 15-30%
 decline as well performance transitions into a steady state phase.
 While results across the field and in different zones vary, the future
 development program will continue to focus on those areas of the field
 which can yield the best results.


Secondary recovery methods are being reviewed to enhance both the
 ultimate recovery and also the pace of recovery through stemming the
 above stated natural reservoir declines. Indications are present in the
 field that secondary flooding will be effective. The Company is
 planning to gather core data for special core analysis and establishing
 water-flood and polymer-flood pilots over the next several months to
 validate the potential for secondary recovery processes.


Wellbore Construction Improvements


Drilling procedures, sand production, and localized tectonics within the
 field area are believed to be the main causes of recent liner
 mechanical integrity concerns in some of the horizontal wells. Wellbore
 construction has been an ongoing focus of the technical team and
 several improvements are being implemented, including liner and
 slotting design for additional strength and adjusted drilling
 techniques for better down-hole conditions. As these improvements are
 implemented by the fourth quarter, they are expected to largely
 mitigate concerns in the go-forward program. While the impact of
 wellbore construction has contributed to lower production results in
 the first part of the year, liner and slotting configuration adjustment
 for optimum performance is not uncommon in heavy oil developments and
 the Company believes the solutions discussed will aid in rectifying the
 situation within the next few quarters.


Water Control


Water control initiatives in the field continue with over 200 old
 vertical wells now plugged to prevent water cross-flow, which impacted
 existing and new production in both re-activated vertical wells and
 several new horizontal wells. The expansion of the Company's water
 disposal capacity in the first quarter has enabled many of the shut-in
 high water cut wells to be brought back on line. The Company expects to
 see a gradual increase of oil production from these wells as the water
 cut decreases over time.


Included in the Company's plans is the utilization of third party
 consultants and oilfield service providers with global experience in
 similar old oilfield developments, to help provide the needed solutions
 on a collaborative basis with Bankers' technical and operational teams
 towards production and reserves enhancements.


Thermal Program


Laboratory results from the oil sample recovered from the first cycle of
 the thermal pilot have shown viscosity measurements of over 100,000
 centipoise at reservoir temperature and demonstrated oil mobility can
 occur at temperatures over 90 degrees Celsius. To achieve optimum
 results in the second phase of the pilot, steam will be injected for a
 shorter 30 day cycle at over 250 degrees Celsius and the well will be
 put on production after a few days soak period to enable higher
 temperatures during flow-back and production. The second steam
 injection cycle is expected to commence this month.


Exploration Block "F"


The Company intends to drill the second Block "F" exploration well in
 the fourth quarter. Seismic modeling and detailed interpretation of a
 large turbidite prospect is underway. Work has also commenced to gain
 lease access and the approvals to construct the road necessary for the
 well location.


2012 Budget and Liquidity


The Company will continue to maintain a strong balance sheet, especially
 considering this global economic uncertainty. As a development company
 with significant production, Bankers can rely on a relatively
 consistent cash flow to fund its project growth.  The work program
 maintains sufficient flexibility to be modified, if needed, to fit
 within expected cash resources, thereby focusing capital program
 spending during lower oil prices towards maintaining and supporting
 production levels. The Company has stress-tested its liquidity at
 various Brent oil price levels and additionally, by way of a hedge
 executed in 2011, has secured a floor price of US$80 Brent oil price
 for 25% of its production in 2012.


On the basis of Bankers independent reserve valuation at December 2011,
 the existing borrowing base covenants show that nearly $300 million of
 debt capacity is supported by proved reserves. The existing $110
 million credit facilities, held jointly with the European Bank for
 Reconstruction and Development ("EBRD") and the International Finance
 Corporation ("IFC"), are mid-way through their initial six year term.
 Under the terms of these facilities, and with the expectation that cash
 flow will be in excess of capital program requirements, principal
 repayments will commence in October 2013 and over the remaining two
 years. The Company expects to open discussions with its lenders early
 next year to extend the facility, thereby deferring the repayment
 requirements. At the end of March, 2012, the Company renewed its US$20
 million revolving loan with Raiffeisen bank for another two years.


With its $215 million capital program, Bankers anticipates delivering
 growth in production for 2012, however, until the Company completes a
 full assessment and determines the time needed to implement and see
 positive results from the wellbore construction and water control
 initiatives, the Company will not be providing production guidance for
 this year.


Updated Corporate Presentation


For additional information on this update, please see the June 2012
 version of the Company's corporate presentation and also a new presentation titled Technical and Operational Progress Update
 Dated June 4, 2012 at www.bankerspetroleum.com.


Conference Call


The Management of Bankers will host a conference call on June 4, 2012 at
 2:30PM MDT to discuss this Technical and Operational Update. Following
 Management's presentation, there will be a question and answer session
 for analysts and investors. As questions will not be able to be asked
 from the dial in live, please forward any questions to mhodgson@bankerspetroleum.com during the webcast and we will attempt to incorporate them into the
 Q&A.