ARQ - Arc Energy

[Logique]

Ken,
my first thoughts (please somebody correct me if I'm wrong),

are that having held at the record date, you may now sell your existing holding without forgoing the opportunity in the ensuing placement. There is a known quantity of company shares on issue, regardless of who owns them.

Bear in mind the CGT liability incurred in selling before 12 mths. Also that what you would be selling are shares ex-entitlement in the placement.

And if applying for new shares in the placement, how many are you entitled to, or likely to get, in this process? Will it be as many as you want. A lot depends on the nature of, and any implied entitlement within the placement. Applying for shares is not necessarily a guarantee of getting them.

Personally I'm waiting to see fuller detail when the formal notification to shareholders arrives from the company.

 

[Ken]

Response from company:

You are certainly able to sell your shares on market at any time.

Please note that Share Purchase Plan offer has been mailed out to all eligible shareholders (i.e. those who appeared on our Share Register at 5:00pm on 17th May, 2007 and who have a postal address, as recorded on the Share Register at this date, in Australia or New Zealand only). Therefore, providing you meet the criteria above, you should have already received the brochure and form enabling you to participate. Please do let me know if this is not the case, and I will investigate further for you.

If you have received the offer documents and would like to participate, there is nothing preventing you from selling your existing shares prior to this.

Please don’t hesitate to contact me again, should you have any further questions.

 

[Logique]

Ken,
our thoughts are confirmed, as the SPP documents reveal.

If you received the documents, you are eligible, on non renounceable basis. You can apply for one of: $1k worth, $3k worth, or $5k worth, at notional $1.30 per share. However oversubscription, in combination with share price movement, may lead to scale back of allotments, of currently unknown magnitude.

I'll be applying for the max and hoping for no scale backs.

 

[Ken]

Well I only had 2000 shares to begin with.

So in the event of a scale back I will receive more than 2000.

So I am pretty happy.

This is a 5 year stock for me.

 

[Lachlan6]

Bit of technical side. (ARQ) looks like a reversal is under way. Weekly has just recently bounced nicely off the 50% fibonacci from all time lows and all time highs, coinciding with a nice little double bottom off the fibonacci level. Its next test will be fibonacci level of $1.6, however if this is cleared, it should test all time highs again. All bets are off if it falls through $1.20.

 

[Logique]

Technically, it does appear to have broken out of a 17 month downtrend Lachlan6. One thing I'd add to your analysis is that increased volumes are validating the current uptrend.

On the potential down side, is the unknown dilutive effect of extra shares on issue through placement and SPP.

Then again, thinking about peak oil, the long term trend for oil and gas prices can only be up, and this acquisition of Wandoo Petroleum increases ARC's diversity and availability of potential reserves.

 

[Sean K]

Just saw in the Fin this morning that a recent report on ARQ by Peter Strachan has described the Valentine structure as potentially company transforming prospect, hosting up to 1 trillion cubic feet of gas and 200 mbo.

Having a look at the report itself, it looks like there's potentially quite a bit of upside for Arc as well as the other partners in the projects.

Looks to be more upside for Empire and Emerald by these figures though. Over 3000%!

Will be interesting to see how the drilling goes. At least.

http://www.far.com.au/files/research/StockAnalysis FAR Special Issue May 3rd 2007.pdf

 

[cicak_kupang]

Oil Search reports that as at 0600 Yemen time (+2 hrs GMT) on 6 June
2007, the Al Magrabah-1 well was at a depth of 3,440 metres and
preparing to log section. Drilling progress for the week was 468 metres.
During the week oil and gas shows were recorded while drilling the Lower
Nayfa section. The significance of these shows will be evaluated during
the next wireline logging programme.
Al Magrabah-1 is located in Block 35, onshore Yemen, approximately 55
kilometres north east of the Nabrajah field. The primary target is the
Qishn Clastics with secondary targets in the fractured/karstified Saar and
Nayfa formations, Kuhlan sandstone/Weathered Basement, and fractured
metamorphic basement.The planned total depth of the well is 3,039
metres MD.[/COLOR]The participants in Block 35 are:
Oil Search 32.5% (operator)*
Virgin Resources 37.5%
ARC Energy 15.0%
MND 10.0%
The Yemen Company 5.0%
Total 100%
* Working interest. The Yemen Company is carried by the other JV participants.

Cant wiat to see these wire logs, as they have drilled about 400 m deeper than they had planned, thats substantially deeper than planned. oil and gas shows where recorded.....mmmmmm, pay dirt???

 

[Logique]

Up another lazy 5.8% today. Sure hope they don't scale me back in the SPP. Might take a look at Empire and Emerald, thanks Kennas.

During the week oil and gas shows were recorded while drilling the Lower
Nayfa section. The significance of these shows will be evaluated during
the next wireline logging programme.

15% interest in Block 35 in Yemen. Nice one cicak_kupang, let's not count our chickens though.

 

[Ken]

I dare say people will be rushing in there forms for ARQ energy seeing as it is almost a 25% higher than $1.30 issue price.

I know i applied for the maximum. you'd be pretty stiff, if you owned an oil and gas producer and it was struggling, feel for the PSA holders.

 

[Tomahawk]

Closed at 174 today Have held ARQ for a long time and have been looking at a loss for quite a while. Am now glad to that I have held on to my shares

Two gas discoveries and two oil discoveries the last several weeks. Company suggests at least 2 of them (Frankland and Dunborough) will be commercial.

Drakea sidetrack results due this week or early next week. Hoping it's good coz 6-7 million barrels recoverable would be worth 30-35 cents per share to ARQ.

So many things to look forward to:
Yemen results dues soon
Stokes Bay Pt Torment in July
Valentines in July (multibagger factor!)

This is such an exciting time to be holding ARQ

 

[Ken]

Would ARQ be classed as a potential blue chip share, or just a small cap?

It seems above speculative. With the capital raising I would think it will put it further up on the asx 200, but then again other share prices have been rocketing.

Gas sector has had some good gains, and i am glad i stuck with westpacs recommendtions on this.

 

[Tomahawk]

I would think that they probably still fall into the small cap category with slightly less than half a billion dollars market cap. Hopefully we will see ARQ joining the ranks of the mid caps with > 1 billion market cap like BPT, ROC, AWE soon.

Wilson's report from the ARC site is worth reading
http://www.arcenergy.com.au/files/brokerreports/Wilson%20HTM%2018%20May%202006.pdf

"Post Acquisition Valuation
Our simulation based DCF model estimates an expected (i.e. mean) Net Asset
Value of $ 2.10 /diluted share for ARQ post the Wandoo Petroleum acquisition.
We estimate an unrisked value of $ 8.50 /diluted share. The unrisked value is a
simple measure, indicating the potential upside from 100 % exploration success.
The probability of this occurring is low, as is the probability of 0 % success. A better
estimate of realistic upside potential can be derived from simulation results. We
estimate a 1 in 10 chance of the share price exceeding $ 3.40 /diluted share.
The Monte Carlo simulation shows a bi-modal share price distribution, with a range
of outcomes based on production from existing assets at the lower end, and a range
of outcomes at a higher level, incorporating exploration success.
Our 12 month price target of $2.00 /diluted share represents a 10 % discount to the
12 month roll-forward of the current valuation. This discount results from our view
that the market is unlikely to assign a risk adjusted valuation to ARQ’s exploration
portfolio until Canning Basin and Yemen discoveries have occurred, and hence we
have only included 50 % of the risk adjusted exploration value in our price target."

 

[cicak_kupang]

Closed at 174 today Have held ARQ for a long time and have been looking at a loss for quite a while. Am now glad to that I have held on to my shares

Two gas discoveries and two oil discoveries the last several weeks. Company suggests at least 2 of them (Frankland and Dunborough) will be commercial.

Drakea sidetrack results due this week or early next week. Hoping it's good coz 6-7 million barrels recoverable would be worth 30-35 cents per share to ARQ.

So many things to look forward to:
Yemen results dues soon
Stokes Bay Pt Torment in July
Valentines in July (multibagger factor!)

This is such an exciting time to be holding ARQ

Im in pretty much the same situation too Tomahawk, have held it for a long time, and at a loss. some would say ive missed out on other gains with having my dosh tied up at a loss for so long, but ive always had a good feeling with ARQ. Its a well managed company, good production, good management, excellent exploration an the horizon. And its a company that really want to go places, and i feel it is starting to do so, what with the Wandoo take over and the alliences, and massive exploration thats in the pipe lines. Im really keen to see how the Yemen results come through. they palnned td for this well at 3039m, but drilled to 3440m?. You dont drill THAT much further is you havent a reason...right?????? There are some companys that have foung oil colums up to 900m in depth in the fractured basement, that this same drill is targeting. Im not counting my chickens yet, but i'd be crazy happy with even a 50m oil pay zone. Anyway time will tell. They where hoping to find 35mmbbls in this drill, but i cant remember what P estimates that was on.
Anyway, good to see ARQ sp moving in heavenly direction.

 

[cicak_kupang]

Just as an after thought, I wonder how many big fish will be watching ARQ's Yemen results and canning basin exploration results as a prelude as a take over target????????
I understand that several companys where eyeing ARQ for take over before the crappy 06 exploration that was full of dry wells......

 

[Tomahawk]

Im really keen to see how the Yemen results come through. they palnned td for this well at 3039m, but drilled to 3440m?. You dont drill THAT much further is you havent a reason...right?????? There are some companys that have foung oil colums up to 900m in depth in the fractured basement, that this same drill is targeting. Im not counting my chickens yet, but i'd be crazy happy with even a 50m oil pay zone. Anyway time will tell. They where hoping to find 35mmbbls in this drill, but i cant remember what P estimates that was on.
Anyway, good to see ARQ sp moving in heavenly direction.

Now you are getting me excited!
Had a look at a report on fractured basement reservoirs around the world
http://www.geoscience.co.uk/downloads/fracturedbasementver8.pdf

Found the part about Yemen interesting
"DNO have also had significant successes in onshore Block 43 in the Yemen. The Nabrajah
wells have primarily targeted both the Qishn Formation sandstone and the Kohlan Formation
dolomite, however significant hydrocarbons have also been discovered in the basement.
Production tests carried out in the basement lithology flowed 5800 b/d of 38.6 API crude and
4162 Mscf/g of gas using an ESP. Following a pressure build-up test, flow was 2812 b/d of
41.9 API crude, and 3054 Mscf/d of gas with no pumping. Oil is also being produced from
the basement in the neighbouring Blocks 10 and 14 (operated by TotalFinaElf and Nexen
respectively) (see DNO press-release,13/04/05)"

 

[Tomahawk]

Having said that, we probably shouldn't get carried away just yet. They could have drilled an extra 400m just simply because the basement was fractured and they decided to drill until solid basement was encountered. Also note that they only mention oil shows in the lower Nayfa section. One would have expected them to mention shows in the basement if there were any.

Either way, we will find out very soon I think. There has been an announcement every Thursday.... so expect one in the next 16 hours!

 

[Tomahawk]

Hmm... more waiting for Yemen. It seems they are still carrying out intermediate logging and will only drill into the basement after this. This well is definitely going to be a lot deeper than the planned 3090m.

Drakea news just out seems positive but doesn't tell us much other than elevated gas readings and oil shows, which I guess is a lot better than finding nothing at all

 

[Tomahawk]

Anyone else noticed the volume today? Highest I have seen for years if not the highest ever. 7,714,105 shares changed hands with big trades coming after market close. If not for the after market shenanigans, it would probably have closed at 180ish.

179 394,546 16:50 SXXT
179 2,416,469 16:28 SXXT
179 1,128,333 16:27 SXXT
179 579,844 16:27 SPXT

 

[cicak_kupang]

Yeah, massives volumes yesterday Tomahawk. Total vol for ARQ yesterday was 12,940,400, the only other volume that came close in the companys history was back on the 18/10/2001, when 12,316,300 shares for the day where traded. Sourced from bigcharts.com

This is a snippet from the Wilson report, it can be found on te ARQ site, dated 18 may:

Post Acquisition Valuation
Our simulation based DCF model estimates an expected (i.e. mean) Net Asset
Value of $ 2.10 /diluted share for ARQ post the Wandoo Petroleum acquisition.
We estimate an unrisked value of $ 8.50 /diluted share. The unrisked value is a
simple measure, indicating the potential upside from 100 % exploration success.
The probability of this occurring is low, as is the probability of 0 % success. A better
estimate of realistic upside potential can be derived from simulation results. We
estimate a 1 in 10 chance of the share price exceeding $ 3.40 /diluted share.
The Monte Carlo simulation shows a bi-modal share price distribution, with a range
of outcomes based on production from existing assets at the lower end, and a range
of outcomes at a higher level, incorporating exploration success.
Our 12 month price target of $2.00 /diluted share represents a 10 % discount to the
12 month roll-forward of the current valuation. This discount results from our view
that the market is unlikely to assign a risk adjusted valuation to ARQ’s exploration
portfolio until Canning Basin and Yemen discoveries have occurred, and hence we
have only included 50 % of the risk adjusted exploration value in our price target.

I think that the $3.40 per share is possible if any of the bigger drills pay of as listed bellow
1: 1 or both of the Yemen wells come through with the goods.
2: Sugarloaf, via ADI in Texas...check out ADI thread in ASF.
3: Valentine 1, first drill to be done in canning. ARQ 33%, P10 est at 380-1000bcf and 19 mmbls.
4: yulleroo,canning basin. Arq 100% P10 est at 332-900bcf and 17 mmbls.

With such large volumes yesterday at the current price, i feel the upward momentum of this share will continue, i was getting worried that it may had started running to far too quick, but now feel alot more composed.