CVN - Carnarvon Energy

[doogie_goes_off]

Yep, production is one thing but for the company(ies) to expand they need to test the broader potential of the basin(s). The long term outlook is looking quite rosy. The main thing is that there has been consistent positive intersections from the same trap horizon which means they have a model that works for their local targetting and now they are also prepared to step out. That makes CVN a good bet each way.

 

[doogie_goes_off]

Good news for holders of CVN with the CEO indicating that in January they expect to be able to deliver the current production of 6000bpd to market (current delivery capacity of 4500bpd). Presumably this means they've got some trucks lined up. Production cost of $6 a barrel is pretty outstanding. I think that there is potential for a rise in share price based on these figures alone ie: once they announce they are delivering all current production to the market they will have proved that they can cope with increasing capacity which is fundamental given the amount of potential they are showing for further discoveries! Obviously new drilling results will almost certainly be available by then but it just gives you confidence that they will make things work.

 

[INORE]

yep it looks like they are going to expand oil transport on a regular basis, so one would imagine they have a staggered order of oil tankers over the next year so as to avoid any delays. I thought it was very positive presentation with a lot of high expectations of future production. Will look forward to seeing the new reserves update due in december.

 

[MS+Tradesim]

Ignoring capex for the moment, say they are getting about US$70bbl (discounted to sweet crude due to high paraffin content) and opex $6bbl and at fully diluted about 680m shares then eps should be about 2400bopd x US$64 x 365 = US$0.082 or AUD$0.091 (at exchange rate of 90c for AUD) late Jan once full production is available for sale. (And we still don't even know the flow rates of the current two wells) Basic PE of say x10 gives rough sp of around 90c. Even taking into account capex we are currently significantly undervalued IMO.

 

[doogie_goes_off]

Inore and MS+Tradesim have hit it on the head (pity I cant express myself better). The fundamentals are - current and expanded production in Dec/January excluding current drilling (which is an unknown) should produce a nice little profit that could keep rolling in for a while yet. How long this will be for will become evident once they announce the reserve estimates. Bring on the new dicoveries!

 

[wipz]

AGM was great, im getting excited about BO RANG.
To be drilled in Q2 2008, cant wait!!

I asked a question about carnarvon basin action, and L20/50 application. Ted didnt give too much away, however the Rialto guys seemed pretty excited .

Cheers

ps. they were giving out free t-shirts, and i got one o/

 

[grace]

Thank you so much for the analysis on this company. I bought in a couple of days ago at 50c for the first time in this one. Had to weigh up between this and AED.....this one came up trumps in my books. It seems like their story is just beginning to unfold! This might seem like a dumb question, but will they eventually build a pipeline for this oil to the refinery? One should hope so. I just see no mention of that.

 

[wipz]

Thank you so much for the analysis on this company. I bought in a couple of days ago at 50c for the first time in this one. Had to weigh up between this and AED.....this one came up trumps in my books. It seems like their story is just beginning to unfold! This might seem like a dumb question, but will they eventually build a pipeline for this oil to the refinery? One should hope so. I just see no mention of that.

you've made the right choice.. welcome aboard

Its cheaper just to truck for the time being, the wells are approximately 300km away from the refinery which is about 3 hrs drive. The roads are of good quality.

Unless we have a very significant find and major increase in barrels per day, IMO that no pipe will be needed.
It is a very good question however, one that was not mentioned in the AGM. One to ask at next years AGM perhaps?

 

[INORE]

Thank you so much for the analysis on this company. I bought in a couple of days ago at 50c for the first time in this one. Had to weigh up between this and AED.....this one came up trumps in my books. It seems like their story is just beginning to unfold! This might seem like a dumb question, but will they eventually build a pipeline for this oil to the refinery? One should hope so. I just see no mention of that.

I beleive they wont be able to pipe the oil as it has a high wax content which would eventually restrict flow...however i am unsure if there is technology available to bypass this problem via an additive or heating the pipeline or regular maintanence....

 

[wipz]

I beleive they wont be able to pipe the oil as it has a high wax content which would eventually restrict flow...however i am unsure if there is technology available to bypass this problem via an additive or heating the pipeline or regular maintanence....

They do keep the oil heated on site before trucking to the refinery, i agree piping straight to the refinery will not be possible without some sort of heating.

 

[1234]

Next year does look good..

It's just a shame that cash flow from results of the next 10 drill results will not be seen until a major increase in storage/transport is achieved.

I see they will be meeting today's production req's in Jan, that's great although...... we could be producing an additional 5000bopd by then, nearly doubling todays' production.

This was always going to be a problem and a longer term 'fix' is needed. I see in each qtr they increase storage - but by how much? It doesn't bother me an over amount but it will affect how the market treats the stock.

I doubt we'll see the sharp rises in sp like before until the cash flow is realized..

Seems it will be a steady growing stock from now without too much influence from the volatility in the market..

I'm now closing the bottom draw, with CVN tucked riiiiiggght up the back where no-one can touch it

 

[Dukey]

Ignoring capex for the moment, say they are getting about US$70bbl (discounted to sweet crude due to high paraffin content) and opex $6bbl and at fully diluted about 680m shares then eps should be about 2400bopd x US$64 x 365 = US$0.082 or AUD$0.091 (at exchange rate of 90c for AUD) late Jan once full production is available for sale. (And we still don't even know the flow rates of the current two wells) Basic PE of say x10 gives rough sp of around 90c. Even taking into account capex we are currently significantly undervalued IMO.

sounds great MS+T! - but.... hold on - current production is 6000 bpd (4500 delivered) isn't it??
...make the figures look even better!!
Not sure what kind of PE should be used for these new oilers though. Any suggestions there folks?

 

[doogie_goes_off]

Dukey - as the operator I think you'll find CVN own 40% of that 6000bpd which is 2400bpd, so the original excitement is all that is required!

 

[MS+Tradesim]

sounds great MS+T! - but.... hold on - current production is 6000 bpd (4500 delivered) isn't it??
...make the figures look even better!!
Not sure what kind of PE should be used for these new oilers though. Any suggestions there folks?

Hi Dukey,

They only have a 40% share, so 2400bpod net to CVN when they are delivering 6000bpod. POE hold the 60% share.

 

[Dukey]

Dukey - as the operator I think you'll find CVN own 40% of that 6000bpd which is 2400bpd, so the original excitement is all that is required!

Ahhhh I see - sorry folks - stupid mistake - forgot that bit didn't I !!!!!
Doh Doh Doh (ad infinitum)

padding padding padding...

 

[doogie_goes_off]

Don't worry Dukey, some of us even buy on such excitement and forget to research. I'm slowly getting used to sitting back and watching the stocks I think I should buy, sure you miss a few, but you snag the fundamentally good ones at the price you want!

 

[INORE]

looks like their future JV is getting confident on winning the new lease...

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Wednesday, November 28, 2007; Posted: 09:01 PM

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Sydney, Nov 29, 2007 (RWE via COMTEX) -- SNRDF | charts | news | PowerRating -- (RWE Australian Business News) Sun Resources NL (ASX:SUR) has resolved to place up to 25.88m shares at 9.5c each to clients of Hartleys Ltd, raising $2.46m.

The placement will be made pursuant to ASX Listing Rule 7.1, which relates to Sun's 15pc placement capacity.

Carnarvon Petroleum NL (ASX:CVN) and Sun are the sole bidders for the L20/50 tender block, onshore Thailand.

Operator Carnarvon has advised Sun that the joint venture will be required to have in place a $US4.25m ($A4.83m) bond at the time of the formal signing of acceptance of the bid contract for exploration of L20/50.

This bond reflects the bid first three-year work program and will be released as the work commitments are fulfilled.

The placement enables Sun to immediately submit its half-share of the bond in respect of the Thailand onshore block if and when grant is received, so that fieldwork can commence in the New Year.

http://www.tradingmarkets.com/.site/news/Stock News/865979/

 

[imaginator]

Does the current oil price of like $90 - $99 barel affect CVN?

i hope oil price will remain high, should I be hoping that?

 

[chewy]

yeah but as others have said they have a fairly high wax content so its sold at a discount - getting around $70 a barrel i think.

High oil price helps generate more $ per oil barrel but also has the effect of increasing costs/inflation in the general economy, which in turn hurts general market sentiment so a bit of a double edged sword. But really oil isn't going to get cheaper in the long term and demand is increasing whilst supplies are dropping so a good oil company like CVN is a no brainer imo.

(but I am a noob so could all be wrong!)

 

[grace]

In only 50 years we have used 50% of the worlds oil stocks, with the remaining 50% being the harder to find stuff. I can see only one way for oil prices to go in the long-term and that is up. I watched a documentary on the ABC about oil deposits etc and this is what I specifically remember from that.
The world would have to come up with a better alternative quickly for demand not to continue at current pace. Also, one analyst predicted that fuel at the bowser would be $10 per litre in about 9.5 years time.
This is why I am bullish on oil stocks. Hopefully my children will thank me for it...but they will also be asking.....how could you have possibly used all of that oil up in such a short time?????
I guess this post should be in the general oil thread if there is one!