Monday, June 30, 2008

Working on a report on a Montney shale junior

I am starting to put together a short report on a Montney shale junior that was first suggested to me by another research analyst. After performing quite a bit of research myself, I think this company's share price is undervalued at the present time. Drilling results are expected in 5-6 weeks that will either explode the price upward or knock it down a notch or two. Such is the life of a junior explorer. However, this risk-reward looks extremely attractive at the moment. I have nibbled a bit buying a few shares today but the daily volume is fairly low and the price moves up on any buying pressure. I'll probably have the short report finished this weekend if I can find the time.

A blurb I posted on stockhouse

I last picked up shares of ATI a few weeks back in the $2.80 range (which increased my avg cost basis) prior to the recent sell-off. One point that I think investors are still missing since Questerre has not been shy in touting it's wonderful "fairway" position is that one of the two discovery holes drilled by Forest Oil (Becanour #8) was drilled north of the Yamaska fault. Questerre likes to claim that land north of the fault isn't as prospective (so would I if I didn't have any LOL) yet one of the two Forest Oil discovery holes was just north of this fault. Although Altai has land both north and south of this fault most of the land is north of it. What is also lost is that most of the Forest Oil land they jv'd with Junex is also north of the Yamaska fault. Why would Forest Oil take in the majority of it's land that Questerre says isn't as prospective? Good question. Maybe Forest Oil knows a bit more than Questerre in this regard? The Utica structure north of the Yamaska fault is closer to the surface which Questerre claims isn't as prospective. Yet one of the main reasons Forest Oil mentions in their presentation as to why the Utica play may be better than the Barnett play is the relatively shallow depth of the Utica shale. The Utica shale is much shallower north of the Yamaska fault than south.

Maybe investors are starting to figure this out evidenced by Altai's share price out-performance compared to the other three horsemen over the past few weeks. Forest Oil certainly thinks the land north of the Yamaska fault is prospective and they certainly qualify as a "Major Oil Company" as mentioned by Altai in their new presentation on their website.

Tuesday, June 24, 2008

Riding the waves at Myrtle Beach....................

Not following the market action that closely this week as I'm hanging 10 with the kids at Myrtle Beach. Got the typical first day sunburn and just trying to go non-stop 24 hours day and survive the trip. Altai putting in a relatively good performance vs it's peers so far this week. Maybe a little short covering.

Saw the short interest on Canadian Quantum is near 100,000 shares which accounts for the nearly 50% hair cut. At the present trading volume, these shorts may have a hard time covering in a few months before the Forest announcement.

Triangle's just announced partner is a private company headed by an individual with plenty of experience in the shale plays. I would have thought a major would want to play with them but I guess they want to see the play develop a bit more.

Got to go.

Wednesday, June 18, 2008

New to the video

For those who want to learn about drilling for oil/gas, Petroworth has a good beginning video at: (note - right click to open in a new window)

Petroworth commercial frac next to Contact

Petroworth's E-08 horizontal frac has produced commercial quantities of gas. The area is adjacent to Contact's Stoney Creek field.

Jun 18, 2008 09:00 ET

PetroWorth: Interim Report on Frac Results at E-08 Well in New Brunswick

CALGARY, ALBERTA--(Marketwire - June 18, 2008) - PetroWorth Resources Inc. (CNQ:PTWR) (FRANKFURT:T3F) today provided the following interim report on the frac results to date at the company's E-08 discovery well in New Brunswick.

The first of the two completed fracs at E-08 flowed back 42 cubic metres out of a total of 103 cubic metres of frac fluid prior to initiating burnable gas flow. The interval flowed gas at a rate building to 260 mcf/day at a wellhead pressure of 87 pounds per square inch over a flow period of 76 hours. A sand plug was then placed over the interval in preparation for the next frac interval.

The frac in the next interval flowed back 68 cubic metres out of a total of 216 cubic metres of frac fluid prior to initiating burnable gas flow. The interval flowed gas at a rate building to 976 mcf/day at a wellhead pressure of 474 pounds per square inch over a flow period of 62 hours.

The fracs of the remaining two intervals at E-08 will be conducted within the next few weeks. Once these fracs are completed, PetroWorth plans to provide final flow results on the basis of each individual interval and as a commingled total of the four intervals.

PetroWorth is currently investigating various alternatives to both short and long term marketing of the potential natural gas production from the E-08 well.

PetroWorth Resources Inc. is a junior oil and gas exploration company with extensive onshore properties in Eastern Canada. The Company has acquired 100% working interests in almost one million acres in nine separate exploration permits on Prince Edward Island, Nova Scotia and New Brunswick. The strategy of the company is to conduct aggressive exploration programs on these permits, both internally generated and through advantageous farm-in arrangements.

Monday, June 16, 2008

FINALLY !!!!!!!!!!!!!!!!!!!!!!!!

There is life after all on planet Altai. This transaction took much longer than it should have to complete but it is done and the next phase of Altai's move to equal status with the other 3 Horsemen can begin. I would expect an announcement in short order on a farm-in JV with either Forest Oil or one of the other Majors with horizontal shale gas experience. In the current corrective phase of the shale gas players, even a Forest Oil announcement would probably not move the share price up to the $5 range but we will get there before the end of August.

Thursday, June 12, 2008

Anyone game for a potash play?

The Utica shale and potash plays are running neck and neck for the speculators attention. Many potash juniors have already made spectacular runs yet there is one play that hasn't yet gone parabolic. They are Ringbolt Ventures (RBV.V). They have just uncovered past drilling data on their huge potash claims in Utah and this should give them a re-rating as this play is better understood. Casey just sent out an alert on them and they have the lowest number of outstanding shares of any serious potash player (under 18 million out). Everyone knows I like the tight share structures as they provide the greatest leverage in these bull runs. The service below provides a good starting point to get familiar with them and their website also is worth looking at. I bought 20,000 shares last week and my cost basis is around $1.88. Happy Hunting. (note: right click the link to open in a new window)

Monday, June 9, 2008

How to paint a pig and take in almost $10 million

How to paint a pig and take in almost $10 million:

1) Start with a low outstanding share company
2) Stake claims in an area close to a significant gas discovery
3) However, since all of the prospective land was spoken for, bend the truth a bit and announce:

"The land staked is in close proximity to Junex Resources and Intragaz Exploration near Shawinigan city, and Squatex Resources in the Rimouski area in the heart of the Quebec Utica-Barnett-like shale natural gas play."

4) Don't put a map on your website so that no one really knows where your claims are located.
5) Get all the Stockhouse day traders in a frenzy so they bid up your share price well over $2
6) Convince a company to take part in your private placement
7) Announce the completion of the private placement and tone down your claim of where your land really is:

"X-Terra Resources Corp. has received approval from the Quebec Ministry of Natural Resources for permits on approximately 150,000 hectares (1,500 square kilometres) of land prospective for shale gas in the Quebec Lowlands, Utica-Barnett-like shale natural gas play. The staked land is in close proximity to Junex Inc. and Intragaz Exploration near Shawinigan, Que., and Squatex Resources and Gastem in the Rimouski, Que., area. See the location map on the company's website."

8) Leave the map off of your website even though your morning press release announcing the PP states it is there.

I wonder who told them to remove the language "in the heart of the Quebec Utica-Barnett-like shale natural gas play" which they proudly proclaimed in order to raise their share price and then suspiciously leave out once the PP is announced. Company lawyers? The Venture Exchange? or maybe the typist accidentally left it off of the press release?

So there you have it. The path to riches have been laid out for the next Utica Shale wannabe. Are you listening Stelmine?

Thursday, June 5, 2008

A case for a further 100% gain in CQM.H

In the Wellington West research report, they have given separate valuations for each of the Junex properties and the Nicollette property is given the highest valuation of all of their properties with an assigned value of $3.50/share out of the $9.50 target price. This $3.50 works out to a current projected value (already discounted for a 70% prospectivity ratio and a 50% capital dilution factor) of $175 million for 50% of the Nicollette property. Using logic, the other 50% owned by Canadian Quantum would be assigned the same $175 million current target. This equates to a $38/share target price that would have been assigned to CQM.H if Wellington would have picked up coverage. Since Junex is today trading at 2/3 of the $9.50 target price, it is reasonable to assume that Canadian Quantum should be trading today at 2/3 of it's assumed $38 share price or $25.

At the present time, Canadian Quantum would have to rise 100% from current levels to equal the same value the market is currently giving Junex for their 50% of the Nicollette property. I would argue that CQM will base in the $25 range assuming Junex stays at these levels and is certainly still a buy today.

Of course, I am giving no value to the 3.75% WI in the Gentilly play with Questerre and Talisman or their other WI in other permits with Questerre. The market is not giving them any value either even though this is being touted by Questerre as prime real estate in the fairway.

Sometimes the hardest thing about achieving great wealth is being right and sitting tight. Those holding shares now are being right. The hard part will be sitting tight.


X-Terra Resources and the Zero Utica Line

For those following the X-Terra Resources (XT.V) story and either holding shares or considering purchasing shares, please be aware that their property is north of the Zero Utica Line as shown in the map below. The Zero Utica Line guessed it; no geological utica shale formation north of this line. Maybe instead they can apply for potash or coal permits on this property. That may move the price to $5-$10. Remember, it's not what you have, it's what you can convince the uneducated investor what you might have.

An update on Altai......some Sulphur tidbit

According to Altai management, they have not yet decided what to do with their sulphur property. They may spin it off, sell or option it. Mr Kacira has experience in this area as he has done a spin-off once before (Adonos Resources Inc.) on other properties of Altai.

Petroworth (adjacent to Contact) announces drilling plans

Petroworth announced their plans on their horizontal program today. Below is a summary of the play and a map (note Contact's Stoney Creek Field in green/blue):

The E-08 discovery well (Feenan #2) was drilled in November 2007 to a total depth of 1605 metres and tested only the Hirambrook sands. While drilling on air, gas was flared at surface at a rate of approximately 650,000 cubic feet per day. An independent petrophysical analysis of the well calculated a combined potential gas pay thickness of 40 metres within five sand zones with an average porosity of 10.1%. Recent perforation and testing of two of the sands zones yielded encouraging results, confirming that the well is an excellent candidate for the frac stimulation.

PetroWorth has acquired an additional 7,000 acres of land in the Rosevale region of New Brunswick, and 88,737 acres in Westmorland County, bringing its total land holding in this region to 129,583 acres. These properties are extremely attractive for two reasons:

1. To the immediate northeast of our lands is the Stony Creek field, which has produced 800,000 barrels of oil and 28 billion cubic feet of natural gas to date;


2. To the immediate southwest of our lands is the McCully field, which is estimated to have one trillion cubic feet of gas in place. It is worth noting that Corridor Resources Inc. recently received approval to construct pipelines and related facilities to connect the McCully field to the Maritimes & Northeast pipeline.

In November 2006, PetroWorth completed an extensive 2-D seismic program on its New Brunswick properties. This will be followed by a sophisticated 3-D seismic program and an aggressive exploration drilling program.

Wednesday, June 4, 2008

Contact goes for a $10 million PP

As shown below, it looks like Contact will be participating with Triangle on their 30% owned shale gas play in Nova Scotia:

Contact Exploration Inc. Announces $10 Million Bought Deal Financing


Tuesday, June 3, 2008

Another PP for a neighbor of Contact Exploration (CEX)

Petroworth announced today a $6 million PP to fund the drilling of horizontal shale gas wells adjacent to Contact's New Brunswick property. This is in addition to recent PP's by Triangle and Corridor. Now all three neighbors are cashed up for the Summer drilling program. If any one of the three hit a nice horizontal well, the frenzy seen in the Quebec Lowlands will move eastward to the Maritime shale play and the lowest market cap company in the play, Contact Exploration.

As expected, the Utica shale plays pulled back today after several days of running up. Look for one more down day tomorrow before a rebound to new highs.

Monday, June 2, 2008

Finally........a pull back

I was hoping for a pull back to get the froth out of some of the stocks that have no reason to be going up 100% a day, namely PAN and JML. The Four Horsemen sold off as well around 3:00 and finished well off their highs for the day. Watch out for the naked shorts on Altai tomorrow. I'm guessing they'll try a take down to the 3.00 range to cover their miserably underwater shorts so watch your stop losses as they'll steal your shares. Have done it twice in the last 2 weeks and will try again.

The first closeology land pump happened this afternoon with x-terra resources (XT.V). They claim they applied for claims in the heart of the utica shale play but they couldn't be further from the truth. None of the claims can even smell Utica shale gas. Didn't matter to the herd who buys before they think. This will surely deflate rather quickly but I wouldn't rule out another big run tomorrow.

Good news on the Maritime shale front. Corridor announced today they will accelerate their shale gas play in Elgin New Brunswick, which if successful, will light a fire under the all ready hot Contact Exploration (CEX.V).

Finally on Mundiregina, a fellow research hound has found out that the Mundiregina land was farmed out to Suncor last year by Anne and Jerry McCullough. Too bad as they blew the chance for a million dollar lottery prize.

That's all folks.

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