TAP - Tap Oil

[porkpie324]

I've traded TAP twice using CFD's, taken a small loss both times,however has been sold down on low vol, has picked up yesterday on some increased vol, but slipped again today, could have been dead cat bounce or perhaps TAP is finding support, but they are buying there own shares.porkpie

 

[Beethoven]

Anyone know why it's stock price isn't following the same path as other energy producers? Anyone think it's a good buy?

I've trade this stock as well and made a small loss everytime. TAP has continued downhill since no oil was found in the jacala drilling. If they found oil from the jacala drilling this stock would have been worth $3 and imo i think a lot of investors got burnt trading it at the time so im not going to be too quick into jumping into this one unless they find a large deposit.

 

[vicb]

Must be close to the bottom now. Will be looking to buy for a short turn over

 

[Sean K]

I haven't a clue of the fundamentals of this but I agree that it's looking to bottom out I reckon. Long term chart shows a likely base between $1.30 and $1.60 ish.

Any comments on the fundamentals and resons why the big sell off?

 

[Philippe]

Isn t this a double bottom potential on the daily chart?

 

[Sean K]

Isn t this a double bottom potential on the daily chart?

Not that I see. Can you show that?

 

[oily23]

Tap Oil

Sorry for the gratuitous ramp up (yes, I hold shares), but isn't Tap Oil looking ridiculously vulnerable to takeover at the moment?

Steady production from N-W Shelf, highly prospective exploration (Marley, Barque, Thailand, Amulet, etc), plus $110 million in cash and no debt.

Surely the likes of ARC Energy, Beach (BPT) and even AWE are sniffing around this one. No need to raise cash through a dilutive rights issue, just buy Tap Oil at $1.95 instead!!!

 

[ROE]

Tap oil look cheap, trading below their book value and historic earning look great.

 

[TheRage]

I was questioning Tap's future earnings under another thread this morning. Their forecast earnings for FY07 and Fyo8 are considerably lower than Fy06. Do you have any ideas why. I suspect some of this has to do with fluctuating oil prices but more likely oil reserves.

 

[Bush Trader]

I was questioning Tap's future earnings under another thread this morning. Their forecast earnings for FY07 and Fyo8 are considerably lower than Fy06. Do you have any ideas why. I suspect some of this has to do with fluctuating oil prices but more likely oil reserves.

The Rage & ROE

I cannot fully answer your questions, however I am happy to give you an insight into my own research, before I purchased the stock. I too thought it looked cheap and am after long term, value oil exposure in my portfolio with good exploration upside. However I am only a fundamentals amateur.

Exploration is of high importance to the success or failure of TAP. Without new discoveries the companies producing assets will gradually decline. IMO this is what the market has focused on of late, this decline. Note the recent half yearly results, which confirmed a production fall from 1318 million barrels the previous year to 866 million barrels YTD. This was a culmination of reservoir decline and Cyclone activity in the Carnarvon basin.

Revenues have been maintained relatively intact with a higher Oil price offsetting the decline in production. Income only fell by 10% for the period to A$48 million. Net profit fell 23% to A$10.9 million due to an extraordinary exploration write-down of A$6.8 million. (See also ARQ – these write-downs are in vouge in the Australian Oil Industry)

The advantages of the stock IMO are:

They are not hedged! They average for the 6 months up to September A$95.57/barrel. (This might be a problem short term if oil does not for some new technical supports). There is little further downside in the stock as the market has already accounted for a declining P/E Ratio for 2007 and again in 2008, combined with a fall in ROE from 12% to 9%. What the market has not considered is the companies exploration value. Projects such as the Harriet JV, and the SC41 project in the Philippines are interesting prospects. SC41 covers an area of 5000 km², and TAP mgt have indicated after initial research that it could produce 50 to 150 million barrels.

If Tomahawk reads this post, he may enlighten us with his expertise in Oil Stock Valuations.

Cheers

 

[theasxgorilla]

The only thing going for this stock technically right now is that the weekly ForceIndex is showing higher lows (bullish divergence) against price which continues to form lower lows. I was expecting it to find support at the 50% retracement of the all-time-high, but it fell through. Right now nothing would surprise me with this stock.

 

[reece55]

Guys
I believe there is a lot to like about this stock. In fact, of all the oil stocks in 2007, this is my preferred pick (although, the way sector is being destroyed at the moment, one would argue why you would enter it at all). Here are my reasons:

1. Cash backing - For every $1 you purchase of the company at the present stage, 2/3 of it is cash. I don't think I know of any other producing oil stock with such a valuation.

2. Exploration at present is 100% funded through cash inflow from existing reserves.

3. UBS as substantial holder has increased in November, which coincides with the present support level established.

On top of this, technically, from my limited knowledge of Elliott Wave, I believe that Tap has gone through the complete market cycle (welcome for anyone to provide analysis here if I am wrong). There is strong support at about 1.41 and most indicators lean this stock on the bull side.

However, TAP NEED TO STRIKE SOME OIL SOON! They have an excellent inventory of exploration leases, but by far the biggest factor driving them down is their declining reserves.

Still, risk/reward wise, I really like this one. I regularly watch, patiently awaiting my entry point.

Cheers

 

[reece55]

Theasxgorilla
Thanks for your take here - initially I had the highs in Jul 05 as a wave 5, but in review, what I labeled as a wave 4 in May 05 actually retraced greater than what I labeled as wave 1. Just learning here! I normally focus on mechanical trading, with support and resistance. But starting the long journey into ew.

Cheers

 

[Bush Trader]

Another possible scenario is that with the companies current cash reserves, sound exploration upside, combined with strong chance of further industry consolidation in the mid term, could see TAP be considered another potential HDR and therefore an attractive takeover target.

Question: If supports are broken at A$1.41 where do you see the next supports?

 

[theasxgorilla]

Reece, I didn't put an EW count on TAP as I couldn't really see one. If however the sharp move up into the Aug 05 peak was an extended wave-5 (ie. longer than wave 3) then the consolidation that preceded it might be a wave-4. This being the case TAP has retraced back into that zone. It's typical for an A-B-C correction to retrace back into the price-zone of wave-4 from the preceding impulse move.

Bushtrader, I'd guestimate next support at $1.30.

 

[TheRage]

Gentleman thank you for all of your intelectual replys. Does anyone have the facility to post up a chart on crude oil and if so what is there take on it.

 

[Bush Trader]

Gentleman thank you for all of your intelectual replys. Does anyone have the facility to post up a chart on crude oil and if so what is there take on it.

Source FNArena : "Momentum as defined by various measures is now near decade long extremes for crude oil futures and Barclays chartists note that various retracement levels, moving averages (including the 200 week) and the psychologically important US$50 per barrel area are all very close.
This should make for fertile ground for one of those strong rebounds for which the crude oil market is well known, the chartists believe. Barclays Capital is currently looking for WTI to weaken further until the US$50/49 region has been reached for a subsequent bounce – probably as high as 15%.

Investors should not forget this bounce would still only be a correction within a bear market, the chartists note, while arguing this sort of bounce is now becoming increasingly overdue.

Barclays Capital believes recent damage to oil's long term uptrend has created a new trading range between US$45-70, but possibly lower."

An enlightened tech trader might offer their views.

Cheers

 

[porkpie324]

TAP has been my bunny every position I've taken has been a loser, even though its a recomended hold by a large tipster.
But has it bottomed?, its showing MACD divergance on increased volume, but I'm a bit gun shy with TAP at the moment. porkpie

 

[theasxgorilla]

I'm with you PorkPie. I've done extensive back-testing (admittedly using ONLY my own system) with TAP and got slaughtered. It doesn't play nice

 

[Uncle Festivus]

I'm thinking here 'the trend is your friend', however there is no trend, just bubbling along the bottom, so I would think that nothing much will happen until either 24 Jan when the quarterly is released or oil makes a dramatic reversal. May be able to keep a close eye on the volume leading up to the ann for insiders trading?. The best you could say for the chart is that there is a double bottom forming on the daily. All that cash though!!!!. Interesting :dunno: