BCC - Buccaneer Energy

[prawn_86]

Big volume gone through this morning.

To me it looks as though someone knows something positive, cause the last few days has been big volume, pushing the price up. The only negative is perhaps its manipulation to set-up for big holders to bail at a higher price. But i am a sceptical one...

I think/hope its a good thing, but am ready for the worst...

 

[prawn_86]

Im now convinced that someone knows something positive that the rest of the market doesnt.

Already this morning there has been more high volumes and the price is up, on a big down day for the market in general.

Im guessing one of 2 things:
1) T/O coming
2) Good drill results (although im not aware of any drilling going on...)

 

[prawn_86]

Just received this:

Prawn

When the sale goes through the Company will have no debt, ~US$6.5 million in available cash and the Macquarie Facility with which to pursue opportunities.

The feedback I have received from a few brokers is that given the above there is probably not much downside to the Company and worth picking up a few.

Once the sale settled we will be releasing a more detailed forward development plan on our remaining development projects in the portfolio.

Regards

Dean L Gallegos
Director

So at the current exchange rate thats about $9.5 mill aus the will haev in the bank. Current market cap is 10.4 mill, so essentially this co is only being valued at 1 mill for all the rest of its projects...

 

[prawn_86]

Ann out that the deal has failed to go through.

Personally i think thats good, as i like the fact they have an income producing asset. I know mac bank is putting the squeeze on them to pay of debt however, so i guess it means not many new explorations coming up till the debt is paid down.

Dunno what the market will think...

 

[prawn_86]

Ann just out with an update.

BCC has decided not to try and sell Pompano and Lee County, which i think is a good thing. They will now go ahead with the wrk-over of Pompano #1 to get the flow rate up again and also go ahead with drilling at Lee County.

They state that the NPV of Pompanos Proven and Probably reserves is $25m AUD, and that they have $3mill cash at bank.

Current MC = $7m

 

[AussiePaul72]

Ann just out with an update.

BCC has decided not to try and sell Pompano and Lee County, which i think is a good thing. They will now go ahead with the wrk-over of Pompano #1 to get the flow rate up again and also go ahead with drilling at Lee County.

They state that the NPV of Pompanos Proven and Probably reserves is $25m AUD, and that they have $3mill cash at bank.

Current MC = $7m

I agree Prawn, I think with BCC keeping the Pompano wells and completing the workover themselves is a good move. I'm a holder and this was a very good announcement in my opinion.

As stated in the released announcement:

"A Reserve Report has been completed on the two drilled and completed Pompano wells (SL‐102229# 1 and SL‐102230 #1) with an effective date of 1 June 2009 using a conservative price deck. These two Pompano wells have a Net Present Value of US$20.2 million1 (AUD$25.25 million or $0.165 per share) based on Proven and Probable reserves only."

That's a conservative BCC valuation of 16.5c per share on the Pompano wells alone. This doesn't take into account any of BCC's other projects. One of which, the Lee County project, they are proceeding ahead soon with drilling and another announcement out soon regarding details.

Looking forward to the next few months with BCC active and news to be reported regularly with plenty of upside potential

 

[AussiePaul72]

Well just as i thought in my above post ...... BCC market depth has changed markedly over the last few days. Sellers are drying up quickly now that we are approaching drilling of Lee County. As stated in their release to the market the success rate of wells in this area is very high. I managed to pick some more BCC yesterday at 4.3c with very little available under 5c on the sell side now. Hopefully we'll see a correction in share price over the coming weeks to reflect the true value of BCC which as stated in one of their recent market releases is at least 16c and that doesn't include anything they may find in this current drilling program

 

[prawn_86]

I was away on holidays for the last announcement, but its good to see they are going to drill Lee County soon.

They are planning to twin a well that previously flowed at 10mmcfpd, but was capped due to lack of gas market. Hopefully they get the same rates Also good to know that Pompano drilling is covering the costs so no need for cap raising.

Only concern i have about Lee County is the difficulty some other companies have in the Austin Chalk area (such as ADI etc), so i hope they dont get caught up in a difficult drilling campaign

 

[jancha]

Well just as i thought in my above post ...... BCC market depth has changed markedly over the last few days. Sellers are drying up quickly now that we..

So are the buyers. Currently at 3.8c

 

[AussiePaul72]

Well just as i thought in my above post ...... BCC market depth has changed markedly over the last few days. Sellers are drying up quickly now that we..

So are the buyers. Currently at 3.8c

Hey Jancha ...... yes was really surprised at todays selling. The screen sell depth really didn't change so i'm guessing a few sellers were desperate to get out for some reason or somebody wants to push the sp down to pick some more up cheaply before we get into drilling. However, there seems to be support around the 3.7-3.8c mark and buying depth started to build a little by the end of the day. I don't understand why you would be selling at these prices but i still think there is lots of upside for BCC over the coming months....

 

[jancha]

Aussie Paul i hope your right on the upside. Market sentiment does seem to be more positive of late. A bit of good news at this point of time would give risk takers a bit of an incentive to get on board & raise the sp on it. Only trick is at what point do you exit when it does?

 

[AussiePaul72]

Aussie Paul i hope your right on the upside. Market sentiment does seem to be more positive of late. A bit of good news at this point of time would give risk takers a bit of an incentive to get on board & raise the sp on it. Only trick is at what point do you exit when it does?

Jancha ..... i really do think BCC has been heavily over sold and without a lot of news up until just lately investors have sold it down. Also sentiment of selling off Pompano etc didn't do share holder confidence much good at all. Now that that is all behind us i think sentiment should start to improve together with the drilling of the highly potential Lee County.
I keep going back to it but as BCC stated in a recent release the current value without taking into account any resource at Lee County etc is equivalent to a BCC share price of around 16c.

 

[jancha]

Hi Aussie Paul,
At what point would you exit if they started to rise or would you just hang on to them. RAU for eg. I bought for 3c & sold at 8c only to watch them go up to 28c & then fall back down. Is there an easy exit strategy where you can maximise your profit? Cheers

 

[AussiePaul72]

Hi Aussie Paul,
At what point would you exit if they started to rise or would you just hang on to them. RAU for eg. I bought for 3c & sold at 8c only to watch them go up to 28c & then fall back down. Is there an easy exit strategy where you can maximise your profit? Cheers

Hi Jancha,
There is no easy formula to use for exit strategies. It all depends on what your personal strategy and goals are. It varies considerably between long term investors to short term traders.
Your example of RAU is a good one. I too bought in at 3.5c and again at 8c and sold half at 20c and the remaining half at 8c on the way down. Just remember a profit is always a profit. You shouldn't be disappointed with buying at 3c and selling at 8c ..... thats a very good profit and even though they went to 28c, they are now down around 2c!!
In regard to BCC, i won't openly state what i think would be a good value to exit on. I think you need to regularly revise your exit strategy depending on news releases etc. I'm still learning myself and nobody gets it right all of the time. My approach to BCC is that they have openly stated a current valuation on their business of around 16c with other projects to be drilled and evaluated like Lee County. As with all investments there are risks, but in my opinion i believe BCC has a lot of upside

 

[AussiePaul72]

Share price movements have been a bit puzzling in BCC of late. Sold down in recent days to 3.1c. Then with the release of the prospectus for the upcoming non-renounceable rights issue to shareholders today it bounced back up to near 4c.

The market obviously sees the offer as very attractive pushing the share price up just over 8% on larger volume today. Shareholders can purchase 1 New share at an issue price of 3.5c per New share for every 1 share held at the record date of 14 August. Each 2 New shares subscribed for will have 1 attaching New option with an exercise price of 10c and an expiry date of 30 November 2012. The offer will raise approx $5 million for BCC.

 

[jancha]

Hi AussiePaul so with the options @ .10c & your share evaluation @ 16c you would be participating in the offer? Not much happening in regards with the company other than the sp dropping. No confidence in this one. I wonder what reponse they'll get with the offer?

 

[AussiePaul72]

Hi Jancha ..... yes i am considering taking the offer up. I think its a good offer myself. However, i still don't understand why BCC is getting sold down. Any ideas from anybody???

Hi AussiePaul so with the options @ .10c & your share evaluation @ 16c you would be participating in the offer? Not much happening in regards with the company other than the sp dropping. No confidence in this one. I wonder what reponse they'll get with the offer?

 

[prawn_86]

Hi Jancha ..... yes i am considering taking the offer up. I think its a good offer myself. However, i still don't understand why BCC is getting sold down. Any ideas from anybody???

Im at a bit of a loss too, but i think they are getting squeezed by Mac Bank, who obviously want to get out (hence the raising to pay them out). I guess the market doesnt like their chances of Pompanos life span or Lee County success

 

[iimamit]

I think most selling is people selling and getting some cash to participate in the offer, thereby reducing their cost and getting some free options. I think, once this offer is over, the bottom maybe set at 3.5 cents. Also the market has rallied a fair bit and this stock has not participated.

I think, once the supply is over, the SP should recover ...

 

[prawn_86]

This is the only spec i still hold that has not moved up significantly since the downturn; hopefully a few factors coming up will see it move.

Annual report out today so thought i would give a summary of what they have said about their main projects:

Pompano - Well #1's workover has commenced, essentially to stop the sand blocking it. If all goes to plan it should be up and flowing at 5000mmcfpd again within a couple weeks.

Lee County - BCC has increased lease acerage from <900 to approx 2500 acres. Still planning to 'twin' the original Vick #1 holve which flowed at >10mmcfpd back in the day.
Still no date set as yet, aside from saying they are talking with the JV parites. I would really like to see some faster action on this personally.

Other projects - No firm dates set for Tuna, Tang, Swordfish, Redfish, Ruby, Jaguar or Cove Deep. Essentially all that is happening is 3D modelling.


All in all a bit of a disappointing report. I can see why the stock had languished, no action to cause interest, not even wildcat ddrilling to attract a few punters. Lets just hope that the Pompano workover gets the flow rates up again and they get stuck into Lee County asap.