Got out of Arcan Resources and bought into Vero Energy.
Why?
Arcan: Profit taking(51% gross in two months) and the comments made by the CEO of Second Wave Petroleum(SCS) on the Swan Hills-BHL play in the CIBC presentation.
Vero: A potential inventory of 100-200(my number) horizontal Cardium oil wells(what is not reflected in the share price), good management and relatively low valuation(e.g. P/CF ~6).
SCS has been moved to the top of my "shopping list".
"For the glorious cause of LUCRE I will do anything, be anything"
7 comments:
I decided to jump again in..WEE! This time with big bucks. Started position on rocky energy too, undervalued and maybe some upside with radialdrill success. I dumped Arcan also(this could be a huge mistake).
There was no comment on the current production rate of the first well in Arcan's latest pr. That could be a bad sign or could be meaningless.
WEE: Where's the money? A lot of upbeat press releases about new (pilot)contracts, but very little info on the financial impact of these contracts.
its obvious that there's some concerns about their future cashflow, but their products (especially powerwave) should be take into consideration and wee is very early stage. PW is already proved to increase production 10-20% + whole lot more (effected by geology/oil)and its über cheap compared to other EOR technologies. i think wee has several strategic choices to make company very profitable, e.g they could provide their products for "free" and take profit from customers increased production (risk free). all depends now wee's ability to market pw? 1000 wells/5000$/m=60M/y (current mcap 155M)
current sale 60unit (backlog > 110) and wee's estimate of cf/unit is between 4000-6000$/m.
long way to 1000 units?
Wee published quarterly report yesterday after market closed. Negative: revenue decreased, i assumed they would show more positives numbers for growth. Positive: They are going global, trying to establish customer relationship with opec nations, s-america, europe. When orders will flow in sp will rocket sky high.
Lets see how market reacts to report.
Current cashburn rate = 500k$/month (including extraordinary expenses)
net profit/unit = 2000$/month (lease contract 4000$)
After 250 installed units wee would generate positive income.
The numbers for WEE are much appreciated. I have still have doubts towards the business model, but I might take a position.
Post a Comment