Sound? Echos of a punt?
The bru haha over sound oil continues the blog has been swamped with comments and emails asking for an opinion of the company.
Having taken a long hard look at the company I’m afraid to say that as an investment they just do not cut it for me. They have major hurdles to overcome, COS, shares in issue, and a funding problem that will have to be resolved via further placings and a capital reorganisation. The difficulty they have at the moment is lack of Broker interest EMV doesn’t cut it hence the coverage on them is sparse a sure pointer that there are just too many issues to be resolved. I wasn’t too taken aback by the CPR re’ Indonesia. It’s full of gems like the one below:
“The Bankanai PSC holds potential for future gas and possibly oil discoveries but currently the work to define the opportunities is immature. The West Kerendan prospect up-dip of Kerendan-2 is considered to be the most mature opportunity but carries a major risk on reservoir quality.”
There are also delays at Citarum re’ the drills.
I also noted that Synergy never actually visited the sites and relied upon information widely available to most investors?
Italy looks to be their best bet but again the costs of the campaign will have to be met via further placings. They have approximately $16/17 million dollars on account. They have 17 licences all at various stages most at permit or assigned permit status a long way from where they need to be. The company in all truth seems to be chomping at the bit and eager to progress the assets as quickly and efficiently as is possible. Italy is the key getting the assets on production will bring revenue. There is potential but again it’s some way off. A punt.
Viva!
Daniel
I have no current interest in Sound, but seeing as you are on topic of Italian Drilling…….I do have a possible future in PCI.
What are your views on the Italian Drilling Maratorium?
Do you think it will get overturned? if so when do you think it will come up for reviewal?
I know there is an anti-offshore drilling sentiment, however due to Italys Energy Deficiency currently (90% imported) I think it will have to get overturned if reviewed….this will release PCI’s largest prospect for operations.
I think PCI are a good prospect, and believe they were mentioned by you a while ago, however I am stuck with a timeframe as to when!?
What are your thoughts?
Also, to any EO. followers……the tugs that are set to pull Galaxy II to burgman left their port this morning on their way to Catcher to pick up the rig.
Also, Also Dan……how do you access your email, to send you emails without posting a comment?
A contact email address? It’s on the Blog.
Thanks
Dan
Oh dear. Your comments appear to put together in a rather hasty fashion, with little reference to the actual facts. I would strongly suggest you read the latest report again…..slowly. It is like the GKP iii board circa 2009 all over again Dan.
Hey, Viva the revolution though. The revolution in your bank balance that is.
BDM – Did he read the right reports?
Compairing BDM’s assessment with information on the Sound Oil website and RNS’s, there appear to be quite a few discrepancies_
BD – “They have major hurdles to overcome, COS, shares in issue, and a funding problem that will have to be resolved via further placings and a capital reorganisation.” –
Sound have $16-$17m on account which fully funds Italy and Indonesia until Q3 2012, by which time, Production from Marciano (99%) and Gas sales from Indonesia will be comming on line. A farm out on Badile reduces Sound’s commitments with significant upside and Seismics are running Q1 & 2 this year.
BD – I wasn’t too taken aback by the CPR re’ Indonesia. It’s full of gems like the one below:
“The Bankanai PSC holds potential for future gas and possibly oil discoveries but currently the work to define the opportunities is immature. The West Kerendan prospect up-dip of Kerendan-2 is considered to be the most mature opportunity but carries a major risk on reservoir quality.”
I would hardly call drilling programs in 2011 immature opportunities – seismics are in and locations being hardened up, and I hardly think partners would spend $9.2m on Kerendan, $4.2m on Jupoi etc if they didn’t think there was a good COS of reservoir quality.
BD – There are also delays at Citarum re’ the drills.
Every other share BDM has featured has significant delays so why be so concerned by 6 months slippage.
BDM – I also noted that Synergy never actually visited the sites and relied upon information widely available to most investors?
Not being an oil expert, I’m not sure what to make of this comment. Unless you are a mole, I’m not sure of the benefit of a site visit. Far more useful are the extensive seismics and other data they would have to hand. How would a report be completed in the N. SEA ? – Company submarine?
BDM – Italy looks to be their best bet but again the costs of the campaign will have to be met via further placings. They have approximately $16/17 million dollars on account. They have 17 licences all at various stages most at permit or assigned permit status a long way from where they need to be.
The campaign is funded to Q3 2012 and by then, there should be oil and gas sales to swell the coffers. I conceed some licenses are a way off being approved and off shore will have to overcome the 5?km embargo from land, although the best is gas and may ease though.
The only one partially correct statement in the whole blog – “There is potential but again it’s some way off. A punt.” – BDM’s tip for San Leon last month may take longer to see action than Sound’s re-entry and production from Marciano.
BDM might have done better to talk to some of the better placed posters like Captain Nelson Forte on ADVFN or The Mysteron on iii before making rash judgements.
What do I know?
DYOR
M33
Mr Garvey. You are quite entitled to your opinion. However you clearly have not taken on board what Sound themselves are telling investors in their 4 Jan General meeting. There is a funding issue . I spoke to sound oil yesterday and they confirmed via reference to page nine of the General meeting circular this“Enlarged Group Work Programme 2011-2012
Subject to satisfactory completion of the Acquisition and the Placing, the Group intends to commence a
multi-well programme over the next 24 months on its Italian and Indonesian licences, part of which is
dependent on securing additional financial resources during this period”.
You’ll note that Sound are telling you that they will be requiring additional funding over the next 24 months. That is in addition to the placing. I can also confirm to you that it is generally mooted that Sound will be consolidating their share capital some time this year. Sound’s cash-burn on their assets is dependent on bringing assets into production to help with cash-flow that’s not me telling you it’s the company any EMV has to be realised as quickly as possible hence their rush for production. Regardless of success re’ production they will still have a funding gap. The Italian assets are low risk low yeilding that’s why Consul sold out. There is value there but the value can only be released over many many years.
Dan
Hi Dan,
Off Board – I note your comments but would question whether Matra, RRL or other small cap oil companies have sufficient funding beyond the current year, so this should not be held against Sound. I appreciate the two mentioned have high impact but also high risk drills with no guarantee of success.
The RNS in December 2010 does not indicate why they were sold, but the lack of activity would suggest they lacked finance to exploit the assets, so a sale may have been a necessity. In addition, Gerald Orbell, a vendor of Consul is a Director of Sound, so the seller was a buyer also.
I am merely giving an opinion based on what I believe and have researched in reply to the masses of email requests/comments. You can’t compare Matra, RRL, Cad, Encore etc or any other company like for like. Sound have a good board with some decent low risk Italian assets and a few chancy ones in Indonesia that over time should accrue value but funding and production revenue are key. The value has been mapped out by Sound over a number of years. It’s interesting to note that the sp has responded positively over the last few months and this should be seen as a healthy pointer for the future. I’ll revisit them in 6 months or so. I wish all in Sound oil well.
Good Luck
Dan
when are you going to discuss roxi and encore oil? youre just pumping like hell you dont own rrl! you certainly wouldnt be holding thru the drills though
It’s a blog. I post my thoughts and opinion. I can’t post everyday on every share. I post when I see fit and when time allows.
Strange chap.
Dan
All Dan has said is that it is a ‘punt’ – that is exactly what it is. You ask him for his opinion he gave it to you. That’s an end of it. Disagree continue to hold. Agree, get out. What’s the big deal? Everyone over on the ii board needs to take a cold shower.
Respect to you Daniel.
You gave your opinion and stuck to facts. They are a punt.
I am in these for 5k at 3.2p. Thought I’d researched them chok o block. Must of been speed reading kicking myself now after going back over their research notes. How I missed the info on page 9 i’ll never know? Still I did invest knowing the y are a punt but as you say they are a decent one.
Cheers mate
Yo Danno. They’re goin crazy for ya blood on the boards. I think they all thought you’d come out and endorse the herd mentality. LMAO. They’re a punt Bro an the truth is killing them. Italiano drills 17 of them will cost millions per drill onshore drills are cheaper than offshore even though they come in at 3–4 million per drill. Looks to me like some never researched there investments.
Terrific blog controversy reigns. Must admit i missed the info on the funding shortfall for the two years til 2012. Phew !
Pickle
Hey buddy, can you provide your thoughts on MXP (Max Petroleum) please?
Thanks 🙂
Dan
You still reckon news on Matra this week?
Lt
The news is known by the company. They should release after their Nomad /Pottinger get it. Could come at any time.
Dan
Dan,
Might be worth taking a look at XTRACT ENERGY, XTR.
XTR have lots of assets all over the place.
Turkey
Julia Creek in Queensland
Danish North Sea
Dutch North sea
Kyrgyzstan
Morrocco
Just one of these assets if they came in would make a mockery of the current £36 million market cap at 4p.
XTR’s JVP in Denmark, NORECO are giving a presentation to investors tomorrow at 7am and will update on their operation timetables etc.
In Julia Creek in Queensland, every share you buy in XTR currently you get at least 2 barrels of oil, probably more like 3. The XTR is 4p, would you sell 2 barrels of oil for 4p when oil is at $100+? XTR issued share capital is 915 million shares and the JORC standard resources at JC is 2.12 billion barrels of oil.
Xtract is sitting on what, at $100 per barrel oil, could be as much as $300 billion worth of oil. Even given extraction costs at the higher end of estimates at $40 per barrel, net profit over the life of the project would still be north of $100 billion. Shall we call it £70 BILLION? 1 billion shares in issue say for ease (actually 915 million currently) which equates to £70 per share. Obviously there will be dilution alonfg the way by funding or farm outs but £70 a share is nearly 2,000 your money if you get in around current 4p offer. £4,000 invested for 100,000 shares today on those figures could be worth £7 million minus dilution but would still be comfortably in the £millions!
That is just 1 asset.
In August 2008, the Queensland Premier announced a 20-year moratorium on a proposed oil shale development in the Whitsunday coastal region, and a 2-year review period for oil shale developments throughout the state during which no new mining activity would be permitted. Although Xtract’s mineral rights were not affected, the review nevertheless creates uncertainty over the future of oil shale in the region.
Xtract has talked this asset down now for some time now, saying it could take 10 to 20 years for something to happen. There seems to have been some activity in other companies with assets in the same area these past couple of weeks and any mention of a lift on the ban will send XTR’s sp into orbit. Can’t see it being long.
The ELKO Energy potential was recently described as “ULTRATRANSFORMATIONAL” to XTR!
Take a look and see what you think.
Start here:
http://www.extractenergy.co.uk
Looks the one share on the market today with the most potential upside to me.
gl and dyor
Paul Jethwa.
Your talking bollocks mate. It STATES IT CLEARLY ON PAGE NINE OF THE CIRCULAR TO SHARE HOLDERS. sOUND OIL WILL NEED FURTHER FINANCING DURING THE NEXT 24 MONTHS IN ADDITION TO THE RECENT PLACING!!!!. You prick. If you can’t understand that then you shouldnt be dabbling on the stock market you moron. Dan has stated his opinion that sound are a punt where in the fsa does that constitute a breach?
Run along now sonny jim and stop tryin to cut it with da big boys!
Pickle
An AIM resource company says it will require further financing at some point in the next 24 months, i.e. by Feb 2013…
Hold the front page.