MPO - Molopo Gas

[Ashsaege]

Today MPO announced a production milestone of 1MMscfd from a multi lateral well in a sole risk part of their mungi field. This is good for MPO as they get 100% of this production, but more importantly shows the benefit of this technology in this field. The SP jumped 10% after this release but has settled. This technology and similar approaches can only benefit CSG producers. ESG is trialling similar multi-laterals in its bibblewindi pilot to extract greatest gas with the smallest geographic footprint + cost benefits. It should also provide a dollar or 2 to AJL who with their Lucas/Mitchell drilling division are the largest CSG and coal drillers in Australia. I draw some comfort from our holdings in MPO,ESG and AJL that these companies are still doing tangible things and hopefully adding value that will at some time be fully recognised by the market

We have hit the $1 mark. We have gone through the $.92 resistance soon after opening, then settled back and has now shot up higher. Nice to see this one going against the market trend!

 

[Ashsaege]

MPO finished at its high today. 23.3% increase.
Considering the All Ords is heading south, MPO is going very strongly. Plenty of Cash, and is developing efficient ways for extracting gas.
I'd love for a technical analysis expert to have a look at MPO's chart.

 

[Logique]

Been looking into this,
and MPO seems a long term prospect, but will need to be to justify a 20% sp increase last week. Shorter term the concern is that the "smart money" who got in at 50c, having doubled their investment, what if they decide to cash out. Ditto if the the Bailleau clients suddenly decide there are better prospects elsewhere. Not the be-all and end-all, but there are some big Sell orders in the queue atm.

The market obviously liked the recent multi-lateral fraccing announcement, achieving 1MMscfd flow at Mungi. But that's just one announcement, it doesn't prove that multi-lateralling will work in all fields, or even in the rest of Mungi.

A positive is that the Quebec holding in particular, but also the South African operation, seem like they can add value long term.

I'm perhaps being too negative, since I'm giving serious consideration to becoming a holder. Let's see how the price action goes next week.

 

[pointr]

Half yearly results announced today. Nothing particularly new in the directors report apart from stating that WilsonHTM was acting on their behalf on possible sales of non-core assetts across the protfolio of projects and that some interest was firming in this regard for the china assetts. The intention to drill several wells in Quebec this year was reiterated. On a general CSG note I read today of a banks analysis that Chevrons big LNG project happening in WA may slow LNG projects on the East Coast and elsewhere because of its sheer size meeting much of the markets needs.

 

[Logique]

A lot of favourable factors are combining, so I picked up a cautious small holding last week.

Reading the June 2008 presentation, the potential of the Quebec fields, right next to Montreal, is very exciting. Add to that the success of the preliminary foray into dual multi-lateral drilling at Mungi near Gladstone, the pile of available cash, a well regarded management team, the recently announced share buyback, and no debt. But before I'm accused of ramping, MPO is still largely at the exploration stage, thus not without risk.

 

[pointr]

At last glance about 20% rise in 2 days. No new announcements apart from financials released last week. A bit of volume for a small cap in the last days moves as well.

 

[Miner]

Not that I put any high value on Keith Nelson's recommendation but he recommended MPO so was Wilson HTM broker MPO as buy

DNH

Cheers

 

[Logique]

Not me with all that buy volume, when I said small holding that's what I meant. To the limited extent that this one is driven by it's chart, there is a possible ascending triangle with breakout there. But a more significant factor is probably that oil has risen above $USD50/barrel, leading the market to look more favourably at a range of energy stocks. In my view MPO is more a fundamental story than about the chart.

 

[pointr]

MPO is continuing to advance drilling methods at its Mungi project near Gladstone. Their announcement today is that they have connected over 5klms of lined laterals to a single vertical well. This is part of a sole risk project within this shared lease. The price is holding today after recent rises, but $1.20 is the next psychological if not TA level to get through. Their advances in drilling technology here will have potential benefits at their other projects and they are cashed up following their sale of Gloucester. We hold some

 

[pointr]

MPO was included into the ASX 200 this morning on S & P rebalancing the indices, associated by a nice little jump through the $1.20 mark. So now to see what the close brings. I stil see this company only doing good things, its Canadian shale project is a long term thing, so by the time it is a producer from this area ( all things going well) the Nth American gas price should have rebounded from its current doldrums.

 

[Logique]

Got a little nervous and jumped out, better short term prospects in coal stocks. MPO is having a third fall to that base at ~ a little under 1.00, and bouncing away less than before. Looks a little like a descending triangle forming. Also the report from Macquarie on the Egoli site was not encouraging about the forthcoming results in early Sept, MPO the first stock they mentioned.

The following words are from Egoli at link: http://www.egoli.com.au/news/post/A-Memorable-Results-Season.aspx:

20 July 2009
A Memorable Results Season
The market is readying itself for corporate results season, both in Australia and overseas.
Quantatative analysts at Macquarie recently compiled their own lists.
On the list of potential disappointers we find the likes of Molopo Australia ((MPO)), Aquarius Platinum ((AQP)), Iluka Resources (again!), Elders (ELD)), St Barbara ((SBM)), BlueScope Steel ((BSL)). Boart Longyear, Sunland Group ((SDG)), Arrow Energy ((AOE)), PaperlinX ((PPX)), Murchison Metals ((MMX)), Macmahon Holdings ((MAH)), OneSteel ((OST)), Australian Agriculture Co ((AAC)) and FKP Property Group ((FKP)).

 

[pointr]

I will take some comfort from the fact that the report included the word 'potential'. As an explorer / developer I suppose MPO will always at this stage of its life use cash more than it makes cash. My main concerns with MPO is the increasing focus on overseas projects ie can they make money in Sth Africa and China. If the Canadian shale project drills sucessfully later this year this should place the company back in the minds of the buyers. They are also having technical sucess on CSG fields adjacent to Glastone which can't be a bad thing you would think. If the SP drops they may commence the buyback spoken of some months ago. On a personal note we should have sold and bought this company about 3 times in the past year however my hindsight is always better then my foresight.

 

[pointr]

MPO released an announcement today on good interim gas flows from another of its multi-lateral wells that it is drilling on a sole-risk basis at its 50% owned Mungi field near Gladstone. While this is not company making news in itself it does show increasing technical skill in lateral CSG development. I think it will need something strategic to get MPO back up to its $2.00+ SP, but in the interim ongoing sucess at its projects can only be a good thing.

 

[pointr]

The Chairman Don Beard wrote a message to share holders today:
http://www.asx.com.au/asxpdf/20090827/pdf/31kc2zgqv50vp6.pdf
This announcement is worth a read, a little cryptic but referring in my opinion to many good things happening that are not ready for release to the market at this stage. Who knows if the lead up to this announcement has been responsible for the SP increase over the past few days. The announcement also gives a per share dollar value to the Mungi and Quebec projects, and says where MPO will not spend any more $$'s. So to me positive but no great driver to the share price today.

 

[pointr]

Another announcement today revealing that MPO is intending to use some of its QLD CBM to generate electricity by developing its own onsite power stations. The nature of such gas turbine installations allow for quick response to peak loads. The project will also have 'green energy' credentials and perhaps credits. To me the only drawback is that they will be funded by by equity as well as debt The market liked MPO today

 

[pointr]

Another price sensitive announcement from MPO this morning. They have gone into a trading halt pending an announcement regarding a "material acquisition". They expect to make an announcement before the start of trade on Wednesday.

 

[Mad Mel]

Interesting announcement about moving into conventional oil in Canada. Saskatchewan is definitely an up-and-coming province for O&G development. Historically, the left-wing provincial government stifled development, but they've opened things up quite a bit in the last couple of years because of the stagnant economy leading to a mass exodus of young people. Don't know much about O&G in Manitoba though.

 

[pointr]

The Canadian project I think would be better described as 'tight' or non-conventional. I have confidence in MPO's team and can only assume they know what they are doing in Canada. So far we have only seen dollars get invested in Canada, it will probably take some sucess with the drill bit and the prospect of returns to drive the SP higher. The announcement also hinted that MPO was close to exiting the non core projects, hopefully they will get some return on monies invested

 

[Mad Mel]

The Canadian project I think would be better described as 'tight' or non-conventional.

Hi pointr. I didn't take that from the announcement, based on the statements about adding exposure to oil prices and targeting oil plays. The new projects are very, very different geographically and geologically than the Quebec project. But of course, I stand to be corrected. If I remember my years working in Calgary well enough, I think there is shale gas in the Bakken, so perhaps that is where you're coming from.

 

[pointr]

Hi Mad Mel, having re-read the appendices to the Canadian oil announcement yesterday I think there is a degree of accuracy to both of our descriptions. I did some quick calculations based on MPO's projections and payback from this investment could occur relatively quickly provided the drilling / fraccing is able to be sucessfully performed.