VIL - Verus Investments

[banska bystrica]

After reading the financial report released after market, it is very obvious VIL will have to raise more cash soon. This will put further short term pressure on the price. I would be prepared to re-enter around the 2.5c mark.

 

[pilots]

This post was posted by Nathan21(nick name) else where, I thought it would be a shame that you guys missed out on his analysis as has some pretty good points

When reading the announcement one needs to have an understanding of the oil and gas industry as well as business/corporate protocols. It is also extremely important to seperate FACT from FICTION.

Now what do we know as fact?

1. They have stabilised the flow rate at 0.5 mmcfd and have declared this as COMMERCIAL. THE flow rate MAY increase after an initial period (Comment - i would state there though this flow is nominal, it is positive that the operator has managed to STABILIZE this well and undergo further testing).

2. Analysis of testing indicates that this IS CONNECTED TO A MUCH LARGER HYDROCARBON ACCUMULATION and that THIS WELL HAS ONLY PENETRATED THE EDGE OF THE LARGER ACCUMULATION (Comment - this is the fact that many have lost in translation. That is, this is a ANOTHER WHOLE NEW SYSTEM THAT THEY HAVE STUMBLED UPON AND HAS NOTHING TO DO WITH THEIR CURRENT PRIMARY TARGETS OF WHICH OIL AND GAS INDICATIONS WERE PROMINENT during drilling. This new system must be QUITE SUBSTANTIAL for the JV to temporarily forgo their current targets and try to understand).

3. More acreage obtained (Comment - it seems to me that the JV already knew about this new system when drilling and raced to acquire the new land to ESTIMATE THEIR STRUCTURE SIZE - indicated in their previous news release).

4. The reason of the JV declaring the lower zone commercial is twofold - to GENERATE EARLY CASHFLOW and TO HAVE MORE TIME TO EVALUATE ALL THE DATA FROM THIS ZONE AND OTHER ZONES HIGHER IN THE WELL BORE (Comment - business mentality kicks in and it is indeed the most prudent thing to do. Many traders and investors are crazy if they think the JV is going to forgo a possible NEW HYDROCARBON ACCUMULATION SYSTEM to test the higher zones when they can always drill another well a few feet away to access those primary target zones. This is why the JV is in the oil and gas game...the number of times that i have seen firms just STUMBLE ONTO NEW SYSTEMS and have a company maker is remarkable. Now i am not saying that they have something substantial but one must admit that the facts and their business moves indicate so. Do not be surprised if we get some form of resource delineation in the next couple of weeks that comes straight from left field).

5. The JV has now decided to build infrastructure including permanent access roads, production facilities and pipelines (Comment - it is quite apparent that the JV are gearing up for an extensive appraisal drilling program - even the most negative investor or traders is able to this clearly).

6. Once all data has been fully evaluated, JV will decide to either test the primary targets OR drill a new well ASAP (Comment - Now many feel that this will take all of two months and i must state that is quite inaccurate. The JV will be able to understand and intepret the formations from
the data and do straight risk/reward scenarios from the production performance of the deeper zone in a shorter period of time and will update their shareholders accordingly. History speaks for itself).

----------------------------------------------------

Now that we have seperated the FACT from FICTION, we can start having proper arguments based on the above. From what i have noticed from my exile, the following is obvious. There are currently;

1. Day traders and investors who bought low and sold high and are thinking of getting back in soon but evaluating their positions.

2. Traders and investors that have bought high (5-7 cents) and are holding.

3. Traders and investors who had NOT done their relevant due diligence and rather depend on other posters for information regarding possible investments. As such, once announcements are released, their inabilities and emotions are brought forward in the open in crazy sells and comments.

4. New investors and traders who are hoping for the next run but have not done any DD as yet.

5. New investors and savvy traders who have done their DD and are comfortable with their probably entry positions.

6. Negative rampers looking to come in at lower prices (this is perfectly understandable).

Now there may be other categorizations but i will leave it at that. In the next few weeks, you can be certain that we will be getting information and data regarding the JV's plans and any other updates the JV feels pertinent. There is also a chance that investors and traders might be caught out with a significant announcement. This is a possibility only cause the JV has already indicated that a NEW SYSTEM has been DISCOVERED and will NEED TO BE INTERPRETED.

Many in here might call this a ramp (i.e. positive) and it does not matter to me as i have only stated my opinion based on my experiences in investing in this industry. I am in disbelief (though not surprised that positive news such as these would cause a huge downturn). In my opinion, many have lost their train of thought and have evaluated the Fausse Point project's NPV and subsequent company's share price based on the flow rate. This is crystal clear. If the flow rate had been 1.8 mmcfd, the share price would be much higher...BUT one has forgotten that this flow rate is from a NEW FIND (and a possible linkage to a HUGE HYDROCARBON SYSTEM) and not the primary targets above.

Piercement Salt Domes are prolific producers (factually proven) but need to be understood well. The JV is being prudent in trying to obtain cashflow whilst testing the formations and area.

In relation to the VILO options, it is a risk but albeit should be a calculated one. 4 months is quite a long time to wait on a possible re-rating. The JV has a new find, oil and gas indications in their primary targets, commercial flow from a new find, build a whole new infrastructure and extended their acreage to a further 30% to estimate structure sizes...can anyone else join the dots?
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I thought I may as well include my thoughts on the chart at the same time.

You have forgot that they ONLY have 50% of the well, they have no money, it is flowing at half a mil a day. Now now mater how you look at it it is a D U S T E R, DUSTER. VIL has one of the best ramp teams working for them, once again it will be the new commers that get burnt.

 

[Trembling Hand]

I thought I may as well include my thoughts on the chart at the same time.

Shame you didn't give it a good go though. Clearly it can only be a double bottom if its at the bottom not stuck in the middle of the recent range

But that argument aside its a real shame you haven't labeled the most telling action of everything on that chart. Distribution.

VIL has one of the best ramp teams working for them, once again it will be the new commers that get burnt.

 

[banska bystrica]

Technically it looks bearish and fundamentally they need more cash. A double whammy on the share price. I will look to re-enter at 2.5c, possibly lower depending on cap raising details.

 

[Donga]

Technically it looks bearish and fundamentally they need more cash. A double whammy on the share price. I will look to re-enter at 2.5c, possibly lower depending on cap raising details.

Then you won't be holding this puppy again IMHO.

Say that as someone who sold after last ann and bought some back at a lower level. Diverted those profits to my offshore Sydney O&G play after recent activity there however believe VIL and GGP are onto a great field. May buy more depending on next ann, if not too late.

This site has so little understanding of what is happening at Fausse Point and for heavily traded dynamic stocks you need less TA and much more technical fundamentals invloved with O&G. Not that I have these, however is good to have so many experienced O&G buffs during these drill campaigns. ASF seem to have a lot gold and resource geos contributing but not many O&G from my observation, but could be wrong.

 

[banska bystrica]

Coming into the "We're commercial" announcement, I was free carried on VILO and my average cost for VIL was 1c. I sold immediately Monday morning at 6c down to 5.8c for VIL and sold all my free carried VILOs for 1.6c.
If I do not re-enter at 2.5c, so be it. It's been a terrific play. I think a cap raising is a near certainty based on how much Fausse Point will cost to fully develop. What price would they have to issue stock at now if they were to raise circa $5M?

 

[Donga]

Coming into the "We're commercial" announcement, I was free carried on VILO and my average cost for VIL was 1c. I sold immediately Monday morning at 6c down to 5.8c for VIL and sold all my free carried VILOs for 1.6c.
If I do not re-enter at 2.5c, so be it. It's been a terrific play. I think a cap raising is a near certainty based on how much Fausse Point will cost to fully develop. What price would they have to issue stock at now if they were to raise circa $5M?

Well done, did much the same but not at those highs Still a lovely run.

Be pissed off if they raise at 2.5c and haven't looked into that since taking a lesser holding. Added to my GGP though

Expect next anns will continue to see SP increase again a little though not as cocky short term as with other O&G atm.

 

[wanlad1]

Read the anns properly there is no immediate C.R required maybe later year to develop new developments

Most companies have C.R or funds at some point, it is worth considering why they set up the New Company (see ann) in the U.S. once commercial even though low flows currently they maybe able to fund new ventures with a loan eg LOC this is very common practice

Most of these spec stocks need to raise capital, at times and there is nothing wrong when they do. The last time VIL did a cap raise they were very fair in their discount. Market may not have been, however S.P. was at that time comming out of a long term down trend, we are now trending up with a secondary correction right to the 62$% Fib retrace

I would think now that price has retraced but trend gaining upside momentum overall a C.R would not hurt price much and considering funds not needed currently not an issue.

 

[wanlad1]

Shame you didn't give it a good go though. Clearly it can only be a double bottom if its at the bottom not stuck in the middle of the recent range

But that argument aside its a real shame you haven't labeled the most telling action of everything on that chart. Distribution.

Thanks for your chart Trembling, VIL if you go back VIl is just entering a new uptend since Oct 09 from a down trend starting from 2007. Yes price took off too hard and too fast and hit some solid resistance, however now back at 62% fib retrace strong support area that both fundamentalists and chartsists use.

We had a rounding bottom break out Jan 1st (weekly 3yr chart) Of course after such a prolonged down trend there will be some impatient sellers from the last uptrend trying to get out. I would say that burst in early Feb would have taken a substantial amount of them out even though the bulls retreated to the 62% fib... I would say from here momentum will build and re test that area. Then possibly a higher fall back before full steam ahead and top taken out.

"Clearly it can only be a double bottom if its at the bottom not stuck in the middle of the recent range" has only been there for 3days trading and yes confirmation needs to come to pass. There has been 2 inside days on low volume confirming a change in sentiment from downward pressure, however market still has to decide. P.S. Twin bottom maybe a better term

 

[wanlad1]

You have forgot that they ONLY have 50% of the well, they have no money, it is flowing at half a mil a day. Now now mater how you look at it it is a D U S T E R, DUSTER. VIL has one of the best ramp teams working for them, once again it will be the new commers that get burnt.

Read the ANNs properly they still have money to take them into production, plus as only "50% holder" they only have to come up with 50% of the $400 to go commercial. I would suggest they have more costs than that, however in Dec they had over 1.5mil

The 650k or whatever it was for advice was paid in oppies from what I understand

 

[banska bystrica]

A bank loan is out of the question. In the US, you need a minimum of two producing wells to even get to first base regarding bank finance. The credit markets are still frozen in the US especially at this end of the market.

 

[Solitus]

Read the anns properly there is no immediate C.R required maybe later year to develop new developments

Most companies have C.R or funds at some point, it is worth considering why they set up the New Company (see ann) in the U.S. once commercial even though low flows currently they maybe able to fund new ventures with a loan eg LOC this is very common practice

Was wondering when someone would mention the setting up of Verus Energy LLC - I read that as they're setting it up for sale.

As for cash raising - I'm still circumspect.

Yes, the fundamentals say they're going to need cash, however on the face of it, surely their preference would be to complete the exercise of VILO, as the value of cash raised would be an order of magnitude higher?

The closeness of the VILO exercise date, coupled with the seemingly deliberate lack of information to date on the well, and the potential spin-off would appear that they're working hard to line up the ducks for a double payday - realise the return from VILO and then turn around and sell the LLC to a large US-based oil co. while the values are still pumped.

I'm still holding a small parcel of both VIL and VILO - made enough out of this one that I won't be upset if the parcel turns to dust, and I think as an outside gamble it could still be very lucrative. However I'd say the risk is extreme.

Plus I'm a newbie at this speccie game, and have a habit of skim-reading, so don't trust what I say..do your own research.

 

[rabbit59]

Nice simple announcement to let everyone know the EXACT facts of what is currently going on at Fausse Point

FAUSSE POINT and VERUS UPDATE
Key Points:
ϒ Fausse Point #1 Well - commercial production declared.
ϒ Flow testing to recommence as soon as production facilities commissioned.
ϒ Current test interval was not an anticipated target in the planned drilling.
ϒ The discovery is potentially part of a very large regional accumulation.
ϒ Additional adjacent land acquisition being reviewed.
Verus Investments Ltd (“Verus”) is pleased to provide this update and upcoming plans for its
activities at the recently drilled Fausse Point (FP) Well in Louisiana, USA.
As reported in an ASX announcement on 8 February, 2010, the joint venture (JV) partners in FP,
Golden Gate Petroleum Ltd (GGP) and Pass Petroleum, have declared commercial production of
the FP #1 Well.
While the reported flow rates from this 10’ section of the lower interval

 

[banska bystrica]

Long term I still think the Fausse Point project has nice upside but I comfortably shorted another 1M VIL at 4.1c and happy to do so. I think the announcement by VIL was positive but it reinforced my opinion some sort of dilution is coming. Confident this will go lower than 4.1c in the short/medium term.

 

[nunthewiser]

but I comfortably shorted another 1M VIL at 4.1c and happy to do so. .

Oh yeah .......... and who did you "short " VIL through bud? .

As in what provider?

I have just looked through MY providers and cannot see VIL as a "shortable : stock


Anyone else find a provider that will allow VIL to be shorted or is it national fantasy trade day today ?

 

[banska bystrica]

VIL has been heavily shorted for weeks. Look at the ASX list of short sales. You can short any stock so long as you can physically borrow it. My broker had no problems getting hold of stock and the interest rate is very reasonable. My broker has strict criteria on who they will allow to short. You must have the funds to cover a multiple of the position and you must be a registered sophisticated investor. Of course there are other criteria but this is not the place to be discussing these matters in detail.
I don't appreciate the aggressive, unwarranted attack nunthewiser.

 

[nunthewiser]

You are correct re ASX shortlist .

My mistake for not checking the most basic list first, it has had short sales

I could not find it through my providers.

My apologies IF you are actually trading them.


Have a good day

 

[Trembling Hand]

banska bystrica can ya tell us who that broker is please? Very interested. Give them a plug if for no other reason.

 

[rabbit59]

Second ANNOUNCEMENT for the day...a little more detail this time...

The Board of Golden Gate Petroleum Ltd (ASX:GGP) is pleased to provide the following update on the T.G.R.
Land Company, Inc #1 well at Fausse Point.
The T.G.R. # 1 well has concluded initial production testing from the lowest zone (8,370 feet) of six intervals
of interest across three separate gas and oil formations starting at 7,000 feet. The well has established a
commercial flow rate from a potentially very large hydrocarbon accumulation which could represent a new
play type not an original target in this well. Work continues on evaluating this potentially tremendous
accumulation and preparing the well for production.
Further analysis of the zone at 8,370 feet indicates that it could possibly be connected to a much larger
hydrocarbon accumulation, and that this well has only just penetrated the edge of this larger accumulation.
This zone was not an original target of this well and hence represents a significant new play type that will
need to be carefully evaluated with further analysis.
The following graph depicts the multiple hydrocarbon intervals penetrated by the T.R.G. # 1 well next to the
Fausse Point Salt Dome. Reservoir sandstones are shown thinning to zero onto the flank of the salt dome
truncated at the top by unconformity. These reservoir sandstones expand as you move away from the salt
dome and provide potential for large hydrocarbon accumulations.
~ 2 ~
The graph also shows the two primary target objectives of the well which include multiple zones of interest of
over 110 feet intercepted at the shallower depths and where hydrocarbon bearing. Given the significance of
the lowest zone and the very large potential upside consequences of a possible large discovery, the partners
agreed that the current focus must be on the lowest interval even though we still have primary target
objectives to test.
Moving up the well bore to test the primary objectives at this time could preclude us from returning to the
lowest interval. In the meantime, by bringing this deep zone into commercial production, the Joint Venture
will be able to generate early cash flow, as well as have more time to evaluate all the data from this zone as
well as the other zones located higher in the well bore
Fully understanding all these zones of interest across 120 feet and potentially other zones continues in order
to more precisely determine the geologic and petrophysics to assist with a full scale development of the
prospect. More acreage has been leased to comprehend the significant of the discovery.
A decision on the timing of testing of the shallower zones will be influenced by the production performance of
the deeper zone. Once all available data has been fully evaluated, the Joint Venture will decide to either test
the shallower zones from within this well bore or drill a new well as soon as possible.

 

[pilots]

Read the ANNs properly they still have money to take them into production, plus as only "50% holder" they only have to come up with 50% of the $400 to go commercial. I would suggest they have more costs than that, however in Dec they had over 1.5mil

The 650k or whatever it was for advice was paid in oppies from what I understand

$400K will not cover the cost of the wages of the crew to setup the well head equipment to get the well on line.