LKO - Lakes Blue Energy

BESBS Player said:

Hi Joules,

You make a relevant point that needs to be considered when playing with small speccies. In theory and at a basic level, the more shares on offer, the more can leak as 'sells' and keep the SP run from accelerating.
However, remember the following key points (following on from Chasero's relevant comments):

1. In Lakes Oil's case, many of the shares are in the hands of long term holders (it is the oldest explorere still going on the ASX). These guys buy in SPPs and add to their holdings. Some of the directors and 'old guard' still hold many while Armour hold quite a chunk.
This is seen in the SP rise. Despite 7b shares on offer, the SP has risen from .004c to .009c since January. A rise of 125% in 4 months is still good SP action.

2. When Wombat-4 drilled last time, the SP rose from .004c to .016c. While I am not saying this will happen again (although it could do so and much more if Morey and/or Holdgate are successful), it shows that the shares on offer are not a huge issue.

3. If Wombat or Holdgate came off as winners, I would think that LKO's market capital would be very cheap at current prices.

With this in mind, it is no wonder that LKO has risen.

Cheers,
BESBS

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point 1, shares in the hands of longterm holders doesnt mean what you think, only that youre choosing to see that longterm as being in your favour, whereas, longterm is often holding onto hope for a lot of them,so, soon as price begins to lift theyre more likely to exit at 'best' price available so they dont get stuck any longer and many will see how much they can get back not how much they can make...shares in the hands of longterm holders are just as unlikely to buy more because of the spp's, not supporting the bid side adding to the sell side

point 2 (purely debateable)......the market cap is only of investment grade when divided by the number of stocks issued, at 7 billion compared to peers or even lesser non-producers, how is lko an investment grade? What exactly would the sp need to be to make it attractive to instos?

point 3 aside from the recent rise in price, where is the evidence that there has been a substantial demand in the stock prior to it lifting? where are the footprints of the smart money? would 400 million stock attract fast liquidity or would a 7 billion stock attract the same people who move price ?

your points are good points, however, think as a trader whom is on the other side of your trade rather than just flying the "i'm already in super cheap" flag

it's a trade in an auction ......

i'm not a holder, never have...... if someone wants a stake in the play, Armour is a proposition to consider at 51%

while a huge dilution of value has limited real at-market bearing as a function on any given day, i think this is an important moment to consider risk as it actually exists

just ideas

Hi Joules,

You make some interesting reflections and good points. Continuing conversation, I'd add the following to your 3 points:

1. It is true that one can only assume the behaviour of longterm traders. Nonetheless, I do base my suspicions upon historical behaviour. LKO is a very old oil explorer. Many Longtermers would have sold out long ago (wearing a loss and collecting a taxloss offset) if they'd had a gutful by now as LKO has been a dog for a long time. Others have simply 'averaged down' over many years and treat LKO as a tatts ticket. If long/termers were offloading at a regular and heavy rate, we'd see a more consistent sell pattern. This one plays as a straight BESBS play; heavy sales linked to obvious drill timetable. We can never prove this but it seems to fit my strategy.

2. I understand your comment about market cap and investment value. Nonetheless, when dealing with high-risk/high potential reward 'penny dreadfuls', I don't see much of the trading activity placing much emphasis on it. Put simply, if fundamentals were driving this, you wouldn't buy LKO. For many traders, the role of institutionals would not be too relevant as they trade in and out quickly. If they see the charts rising as the stampede trade in for the 'next big thing', they buy. The one that is relevant is any CR to a group like Pattersons. They will sell and dampen the SP run (as happened last time at Wombat when they bought in at .005 or .006c and sold out around .008c. That created a 3 week speed hump as drilling approached).

3. Needless to say, as a Buy Early Sell before Spud player, I like stocks that have no interest in them, little money turnover and a SP within 10% of an annual low before I buy. This way I can be sure that SP rise is linked to the upcoming drill.
I take your point about smart-money etc and some traders do follow fundamentals and are disciplined. Nonetheless, in these types of stocks, many traders get emotionally involved. 'The next new thing', low SP with heaps of leverege, and before you know it, they join as the stampede starts into a stock (and then some join as the chart triggers a SP spike in price & volume.
So while you say to consider "the trader who is on the other side of the trade," I respond "I do." So many traders follow the psychology of what I have stated (unlike you who have put forward a rational and disciplined approach) and it is understanding the mentality of many of the "traders on the other side of the trade" that ensures that I make money as a BESBS player.

Cheers,
BESBS

Drilling report out.
So far so good but slower than anticipated. Next week should be very interesting.

We should get close to target zones around mid-week. I also believe that Armour will announce that Holdgate-1 will be drilled shortly after Morey. I'd almost expect an immediate announcement if Morey is a duster; if not, LKO might leave it a day or two for the SP to run on success at Morey and then try to continue any positive SP momentum.

Hoping to see .01c touched next week if we can get some late trader entries...

Holding LKO at .0048c ave.

Hi LKOers.

Interesting to read a contribution from another poster regarding Beach and Wombat.
A basic review of his comments are below:


"With Wombat coming up soon, it is interesting to look at BPT's response to flow rates in the Cooper Basin at Encounter 1

http://bpt.irmau.com/IRM/Company/Sh...nter1Patchawarrafracturestimulationflowinggas

"ENCOUNTER-1 PATCHAWARRA FORMATION FLOWING GAS IN EXCESS OF 500,000 SCFD
Beach advises that... the Encounter-1 well has cleaned up sufficiently to flow through a separator at a rate in excess of 500,000 scfd. This flow is expected to improve as the well is further opened up and with the reduction of stimulation fluid over the coming days"

Beach took over ADE for $94m to get access to Encounter-1 (and PEL 218).

Compare this with LKOs Wombat flow rates
http://www.lakesoil.com.au/assets/Uploads/Announcements11/Wombat2-Update-2Feb2011.pdf

Beach Energy Ltd (Beach) has today advised that downhole gauges have been successfully recovered from Wombat -2 ... Following a two week flow test across a previously fractured zone at 1,470m, Wombat-2 flowed gas through a separator at an average rate of approximately 0.8 mmscfd on a 1” choke. The pressure data is currently being interpreted."


If Beach are excited about a 0.5 mmscfd at PEL 218 and made a $94m hostile takeover bid for ADE which only had a 10% interest in the Permian part of PEL 218 you can see why they were excited by LKOs PRL-2 and were willing to pay $50m to earn their share.

___________________________

(my comment)
Even with LKO's large shareholding, BPT (and Armour I suspect) can see the potential value in LKO's assets hence the large cash outlays.

BESBS Player said:

Drilling report out.
So far so good but slower than anticipated. Next week should be very interesting.

We should get close to target zones around mid-week. I also believe that Armour will announce that Holdgate-1 will be drilled shortly after Morey. I'd almost expect an immediate announcement if Morey is a duster; if not, LKO might leave it a day or two for the SP to run on success at Morey and then try to continue any positive SP momentum.

Hoping to see .01c touched next week if we can get some late trader entries...

Holding LKO at .0048c ave.

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hey BESBS, I appreciate your contribution and clear explanations of your strategy. Just curious...since the Morey drilling is taking longer than expected, you still prepared to unload some of your parcels if no early hydrocarbon/gas shows before TD reached?
Ive been in and out of LKO and recently sold my .007 parcel for .008 as I needed to shuffle some cash around. At least a little profit made in the sell. If Morey's a duster I hope to re-enter on any sell-off that may result.
cheers

BESBS Player said:

Hi Joules,

You make some interesting reflections and good points. Continuing conversation, I'd add the following to your 3 points:

1. It is true that one can only assume the behaviour of longterm traders.

2. I understand your comment about market cap and investment value. Nonetheless, when dealing with high-risk/high potential reward 'penny dreadfuls', I don't see much of the trading activity placing much emphasis on it. Put simply, if fundamentals were driving this, you wouldn't buy LKO. For many traders, the role of institutionals would not be too relevant as they trade in and out quickly.

3. Needless to say, as a Buy Early Sell before Spud player, I like stocks that have no interest in them, little money turnover and a SP within 10% of an annual low before I buy. This way I can be sure that SP rise is linked to the upcoming drill.
....in these types of stocks, many traders get emotionally involved. 'The next new thing', low SP with heaps of leverege, and before you know it, they join as the stampede starts into a stock (and then some join as the chart triggers a SP spike in price & volume. .....
.

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brilliant, thanks for the conversant reply.....just wanted you to put out how you're actually playing the auction process so others can take in the ploy/strategy and in this way youve brought balance.....more an understanding of what youre doing.....
i'm an ardent fan of supporting a stock i'm involved with (duh!) and still recognize that lack of knowledge for most new to the game is the number one reason they get trapped in a stock and not the knowledge of valuations or company's function or technical jibba jabba, rather, how price is used against them, after which, they can swash-buckle all they want.....

good luck with and top posts too !

newanimal said:

hey BESBS, I appreciate your contribution and clear explanations of your strategy. Just curious...since the Morey drilling is taking longer than expected, you still prepared to unload some of your parcels if no early hydrocarbon/gas shows before TD reached?
Ive been in and out of LKO and recently sold my .007 parcel for .008 as I needed to shuffle some cash around. At least a little profit made in the sell. If Morey's a duster I hope to re-enter on any sell-off that may result.
cheers

Click to expand...

Hi NA,

At this stage, I'm hoping for a small LKO rise early next week prior to target zone. If I can get out (I have all my .006 & .007c on sell orders), I'll do so and wait to buy back in as a Buy On Bad News (BOBN) play leading directly into Holdgate (although it will take a little time to get the drill to Gippsland). If Morey is a duster, I might get a slightly cheaper entry. If Morey is successful, then I'll still get the gain on my .004c stock and still buy back in. The reality is that the BOBN drop might not be much, given the upcoming activity is now so close. Assuming that Wombat is going ahead in June/July, then a lot of activity is approaching fast. At this stage, I'll stick to my disciplines regardless as this is the strategy that makes money over time. Of course, if LKO make an early announcement of good news before I get out, then I might get lucky.

All the best. Hopefully you can get back in as a BOBN. Holdgate offers real speculation that oil might have migrated across from offshore to onshore. Wombat offers a wonderful opportunity for LKO...the future to make money from LKO looks great if played appropriately.

Cheers,
BESBS

Joules MM1 said:

brilliant, thanks for the conversant reply.....just wanted you to put out how you're actually playing the auction process so others can take in the ploy/strategy and in this way youve brought balance.....more an understanding of what youre doing.....
i'm an ardent fan of supporting a stock i'm involved with (duh!) and still recognize that lack of knowledge for most new to the game is the number one reason they get trapped in a stock and not the knowledge of valuations or company's function or technical jibba jabba, rather, how price is used against them, after which, they can swash-buckle all they want.....

good luck with and top posts too !

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Hi Joules,

No problems at all. I try to be transparent, the reason why I always post any 'buy' I make on the day of my final purchase (hence the stated SP paid) and the reasons for the purchase.
I hope that the selling strategy/ies I use make sense.

All the best with your investments.

BESBS

BESBS Player said:

Hi NA,

At this stage, I'm hoping for a small LKO rise early next week prior to target zone. If I can get out (I have all my .006 & .007c on sell orders), I'll do so and wait to buy back in as a Buy On Bad News (BOBN) play leading directly into Holdgate (although it will take a little time to get the drill to Gippsland). If Morey is a duster, I might get a slightly cheaper entry. If Morey is successful, then I'll still get the gain on my .004c stock and still buy back in. The reality is that the BOBN drop might not be much, given the upcoming activity is now so close. Assuming that Wombat is going ahead in June/July, then a lot of activity is approaching fast. At this stage, I'll stick to my disciplines regardless as this is the strategy that makes money over time. Of course, if LKO make an early announcement of good news before I get out, then I might get lucky.

All the best. Hopefully you can get back in as a BOBN. Holdgate offers real speculation that oil might have migrated across from offshore to onshore. Wombat offers a wonderful opportunity for LKO...the future to make money from LKO looks great if played appropriately.

Cheers,
BESBS

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Hi NA,
Just following up the play so far.
As I stated above with my orders, I managed to get some stock sold at .009c but most dropped to sell at .008c. This was my .006 & .007c purchases only, a profit of just on 27% . I retained my .004c stock as planned.

At this stage, Morey is not looking good so a quick BOBN (buy on bad news) opportunity should arise. There should be enough sell-offs and charts triggering if bad news is confirmed to get my fill It doesn't sound much but I now have an additional 27% extra funds (based on my original .006 & .007c stock) to re-invest. While a few people might get nibbles at .005c if Morey is plugged and abandoned, I'd be very happy with a .006c entry. Why?

1. I'm adding the additional 27% profit into new stock
2. Assuming I can get back in at .006c, I'll be getting an additional 15-16% or so extra because my previous .007c stock will now be purchasing at .006c.

It might not sound a lot but if I can increase my holding by an extra 35-40%, this then adds to the benefit if, as I suspect, we will see a small SP run as the SP recovers into the Holdgate-1 pre-spud run.
If Morey surprises and hits gas on the lower target areas, then I benefit from the .004c stock and will simply buy back in at a higher price.
I hope this makes sense...
All the best to LKO holders.

Currently holding LKO at .004c

1st profit from BESBS (results): 27% :

BESBS Player said:

Hi NA,


At this stage, Morey is not looking good so a quick BOBN (buy on bad news) opportunity should arise. There should be enough sell-offs and charts triggering if bad news is confirmed to get my fill It doesn't sound much but I now have an additional 27% extra funds (based on my original .006 & .007c stock) to re-invest. While a few people might get nibbles at .005c if Morey is plugged and abandoned, I'd be very happy with a .006c entry.

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LKO reacted as expected. I've bought back in today at .006c.

Opportunity to re-enter LKO is here..and my $ is tied up again LOL. With luck and timing on my side I hope to make it back in at current level (with more funds however) Got a buy order @.5c in the mean time.

I don't know why but LKO seems to be dogged by bad luck. Yesterday it tried to conduct a DST at Moreys - 1 but was unsuccessful because the tool blocked. Nonetheless it will keep drilling. Hanging out for some positive news please.

Hi Philly,

Don't give up all hope at Morey. The fact they were going to drill stem test, and now the decision to drill on, suggests that management must still think that there is some hope for commercial gas flows. Time will tell.

Don't forget...Holdgate and Wombat are the main courses here!

BESBS Player said:

Hi Philly,

Don't give up all hope at Morey. The fact they were going to drill stem test, and now the decision to drill on, suggests that management must still think that there is some hope for commercial gas flows. Time will tell.

Don't forget...Holdgate and Wombat are the main courses here!

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Hi BESBS on todays ASX announcement the entree [MOREY] is still sitting there. Not sure I liked it but I've had worse. Thankfully it will be 10 days before the first main course [HOLDGATE] is served. The only comforting thing is that the meals here must be good otherwise why would ARMOUR pay so much for a seat at the table.
I hold LKO

Hi Philly,

Like you, I don't hold much hope for Morey. Even if the gas flow is finally commercial (and I doubt that), the SP action has finished with Morey.

Now for Holdgate...hope the meal is good!

As most would guess, I'll be trying to play Holdgate as a BESBS/during drill play.

Currently holding LKO at .004c
Currently Holding LKO at .006c

1st profit from BESBS (on Morey): 27% :

BESBS Player said:

Hi Philly,

Like you, I don't hold much hope for Morey. Even if the gas flow is finally commercial (and I doubt that), the SP action has finished with Morey.

Now for Holdgate...hope the meal is good!

As most would guess, I'll be trying to play Holdgate as a BESBS/during drill play.

Currently holding LKO at .004c
Currently Holding LKO at .006c

1st profit from BESBS (on Morey): 27% :

Click to expand...

Hey BESBS
nice profit from Morey given it was so slow and the SP never really took off.
The Otway Basin has proven a hard nut to crack but not short of oilies prepared to have a go. I see that COE is making a play for SNE which has good acreage in the area. It will be interesting to see whether LKO will have another go later [maybe some dessert]
Just a week away from HOLGATE hopefully it plays out as a true BESBS and I can join in the fun and take a little profit while waiting for WOMBAT.
Good luck to all holders - we deserve it

Hi Philly,

Yes, from all accounts, just a week or so away from Holdgate.
Provided that new players get in at .006c or lower (not easy but a few have gone at .005c), then they are a real chance for a BESBS play.

The wider market concerns at present are a negative but Holdgate is potentially much larger than Morey (although less likely as well). Time will tell.

I'l be happy with a 30-50% profit from a .006c platform or a 100-125% profit from a .004c base.

Lets see if the market still has its nerve. Wombat to follow does offer some security for speculators thinking about a punt on Holdgate.

Cheers,
BESBS

Currently holding LKO at .004c
Currently Holding LKO at .006c

1st profit from BESBS (on Morey): 27% :

LKO has announced that the Holdgate - 1 well spudded today. Two targets identified. Lets go LKO
I am a holder

Well so far despite almost daily announcements Holdgate-1 has failed to play out as a BESBS.
If I didn't know better I should be buying up at 0.005 and waiting for Wombat l

All IMHO & DYOR
I am a holder

philly said:

Well so far despite almost daily announcements Holdgate-1 has failed to play out as a BESBS.
If I didn't know better I should be buying up at 0.005 and waiting for Wombat l

All IMHO & DYOR
I am a holder

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general market is holding things down IMO. I wonder if Wombat will provide sufficient juice to lift out of the slump. I currently have two holdings and i'm psyched in to being trapped till the end of the year if need be. Next year come May i'll be the wiser.

holding .006