This blog is a journal for my research, findings and Insights. The term “goombah”, comes from Latin “cumbà”, is an older or senior advisor, or quite literally godfather. The term also has gangster connotations, but that is not my intent. I have misspelled it deliberately, adding an “r” to make the sound more my own.
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But after a recent visit to China, I remain staunchly optimistic that it will continue to be the world’s greatest machine for economic expansion. While developed countries bump along with little growth, China’s gross domestic product is expected to increase by 9.2 percent in 2011 and an equally astonishing 8.5 percent next year.
The country pulses with energy and success, a caldron of economic ambition larded with understandable self-confidence.
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The Goombarh has come back from a quick trip to the Orient, last week also and I have similar feelings about China.
Outlook
With Balay-1 and Balay-2 continuing to produce on long-term test the Company is anticipating that it will continue to realize production revenues. Additionally, the Company and partners envisage finalizing the development plan for the Balay discovery, with approval for the first phase expected in the fourth quarter of 2011. Sanctioning of the second development phase will depend on the results of Balay-3 which should enable the joint venture to properly assess the size of the Balay oil discovery.
The Company plans to evaluate and appraise the Las Maracas discovery in 2012. This will include placing the discovery well on long-term test and the drilling of several appraisal wells. Subject to the outcome of the appraisal results, the Company and current partner are committed to fast tracking the development of this discovery. The Las Maracas discovery is viewed to be an extremely positive event for the Company.
The Company will continue its strategy of rationalising the portfolio to leverage some of its high working interest positions into more strategic and cost effective holdings. This strategy, which began with the relinquishment of the COR-12 and COR-14 Blocks early in 2011 and has continued with the sale of the VMM-3 block and equity changes in the El Eden block, is expected to enhance the Company's competitive position by allowing it to free up working capital, recover past costs and to enhance the risk/reward balance of its portfolio. The Company is also considering reducing its working interest positions in the LLA10, CPO1 and SSJN5 blocks.
Furthermore, the Company will participate in an extensive exploration program in 2012 with the drilling of seven exploratory wells targeting net mean unrisked prospective resources of 45 million barrels of oil equivalent ("BOE"). All of the prospects to be drilled in 2012 will be covered by 3D seismic, thereby significantly reducing the exploration risk.
Overall, the 2012 outlook for the Company is expected to be one of rising production and revenues, as the Balay development and Las Maracas appraisal programs get underway, and significant exploration upside exposure by way of a seven well drilling program.
Exxon’s entrance was six weeks after ex-BP PLC chief executive Tony Hayward’s Vallares PLC put up $2.1 billion US to acquire Kurdistan’s largest oil producer, Turkish-based Genel Energy PLC.
The political situation started improving late last year when the Kurds backed an Iraqi national government appointment in December. An oil and gas-sharing pact first drafted in 2007 between Kurdistan and Iraq now anticipated by the end of the year is expected to let oil flow from Kurdistan to other countries, lifting the price per barrel from just over $50 to the global benchmark Brent price — more than $100. The long-standing dispute over how to divide oil revenue meant majors active in Iraq couldn’t drill in the northern region of Kurdistan without penalty, limitations expected to end with the deal closing.
The Exxon development, which raised the ire of the Iraqi government, added a twist. Reuters reported that Baghdad has said any oil deals signed with the Kurdish Regional Government are illegal and has suggested the firm’s contract to develop an oilfield in south Iraq is in jeopardy.
Stevenson predicted mergers and acquisition activity will ramp up as firms look to gain a foothold in Kurdistan, which according to Bloomberg, Kurdistan’s Hawrami said could contain 40 per cent of Iraq’s 115 billion barrels of oil reserves — more than the Gulf of Mexico.
WesternZagros is about a year away from potentially becoming a takeover target, according to Calgary-based analyst Josef Schachter. The company’s highly anticipated Kurdamir-2 (K2) well, being drilled by its operator-partner on one of two Kurdistan blocks for WesternZagros, Calgary’s Talisman Energy Inc., is targeting the Oligocene carbonate reservoir, among the most prolific in Iraq.
“The big home run is what they get at Kurdamir,” Schachter said.
Schachter has a one-year target on the company’s share price of $2.10, far above the closing share price Monday of 72 cents.
WesternZagros, about 20 per cent owned by Abu Dhabi National Energy Co. (TAQA) since a share purchase late last month, reported third quarter financial results Monday, including a net loss of $2 million.
The firm is producing and selling oil in Kurdistan from its Sarqala-1 well, which it expects will produce 5,000 barrels per day before the end of 2011. WesternZagros has more than 3.6 billion barrels of oil equivalent per day of audited prospective reserves, more than half of that crude oil.
Analysis: Exxon Kurdistan foray tests Iraq's centralist resolve
By Patrick Markey
BAGHDAD|Thu Nov 24, 2011 12:10pm EST
(Reuters) - Exxon Mobil's venture into Iraqi Kurdistan challenges Prime Minister Nuri al-Maliki's resolve against growing regional separatism and tests the investment strategy of the oil majors in Iraq.
In the Goombarh's opinion, it would be worthwhile to put a few Kurd oil explorers in your pocket, and await the resolving of a few political issues, which seem on the way to resolving.
Have not sent anything for a couple of months.Just sitting tight and waiting.
Meanwhile, the Kurdistan oils have come awaken.I hold Westernzagros (WZR.v, WZGRF) and Vast Explorations (VST.v, VSTFF).There are some notes referring to recent press news on the Goombarh's blog site.
After-tax Net Present Value of US $1.85 billion; - After-tax Internal Rate of Return of 36.8%; - Total development capital expenditures including mining, processing facilities, port and logistics infrastructure ("CAPEX") of US $796 million; - Total operating expenditures ("OPEX") on a per tonne basis (including production, transportation/handling, port, loading costs) FOB on the Vessel of US $90.54 - PEA is based on Annual Production of one million tonnes of MOP per year using solution mining; - Potential to expand production to two million tonnes per year of MOP; - SOP production potential to be examined during the ongoing feasibility study.
Allana is next door to a Goombarh holding, Ethiopian Potash (FED.v, ETPHF).FED's drilling presently for their own PEA due maybe Q2 2012.However, the Allana enthusiasm was enough to wake up FED.Here is FED's chart:
Ethiopian Potash seems to have bottomed and now broken out upwards.I hold many warrants.
I have spent the past few days touring the oil-rich semi-autonomous region of Kurdistan in northern Iraq, visiting oilfields and interviewing its officials and foreign executives. It is boom time for Kurdistan, which optimists hope could soon produce more oil than some members of Opec. As I am leaving, Kurdistan is celebrating thearrival of ExxonMobil, the first of the so-called supermajors to enter the territory to explore for oil.
But the future will not be a simple trajectory.
Exploration success. The oil and gas map of Kurdistan five years ago was largely blank. Today, dozens of oilfields dot it as companies discover hydrocarbons in commercial quantities in eight of every ten wells they drill. But drilling is not as easy as it appeared to be a few years ago, due to the complex geology of the region, and budgets are overrunning by more than a third in some cases.
The accord will be approved by the Iraqi parliament’s Oil and Energy Committee as soon as it’s received, committee member Bahaa al-Din Ahmad was cited as saying in the Radio Free Europe/Radio Liberty article.
The agreement “neither undermined the powers of the central government nor undercut the rights of†the Kurdish authority, Ahmad said, according to the article.
Kurdistan includes three regions in the country’s north: Erbil, Dohuk and Suleimaniah, governed by an elected parliament and 19 government ministries overseeing everything from agriculture to education to tourism, according to the regional authority’s website.
The central government counts the Kurdistan Regional Authority as one of its 19 administrative divisions, according to the U.S. Central Intelligence Agency’s website.
The accord has ended the risk that foreign oil producers such as Exxon, Marathon Oil Corp. and Gulf Keystone Petroleum Ltd. (GKP) would be stripped of some oilfield projects as punishment for signing contracts in the Kurdish-controlled region, two people familiar with the talks told Bloomberg News yesterday.
Exxon, the world’s biggest company by market value, is the latest Western entrant into Kurdistan. Others include Vallares Plc, the explorer founded by former BP Plc Chief Executive Officer Tony Hayward, Afren Plc (AFR), Hess Corp., Murphy Oil Corp., Marathon Oil Corp. and Repsol YPF SA.
The accord will be approved by the Iraqi parliament’s Oil and Energy Committee as soon as it’s received, committee member Bahaa al-Din Ahmad was cited as saying in the Radio Free Europe/Radio Liberty article.
The agreement “neither undermined the powers of the central government nor undercut the rights of†the Kurdish authority, Ahmad said, according to the article.
Kurdistan includes three regions in the country’s north: Erbil, Dohuk and Suleimaniah, governed by an elected parliament and 19 government ministries overseeing everything from agriculture to education to tourism, according to the regional authority’s website.
The central government counts the Kurdistan Regional Authority as one of its 19 administrative divisions, according to the U.S. Central Intelligence Agency’s website.
The accord has ended the risk that foreign oil producers such as Exxon, Marathon Oil Corp. and Gulf Keystone Petroleum Ltd. (GKP) would be stripped of some oilfield projects as punishment for signing contracts in the Kurdish-controlled region, two people familiar with the talks told Bloomberg News yesterday.
Exxon, the world’s biggest company by market value, is the latest Western entrant into Kurdistan. Others include Vallares Plc, the explorer founded by former BP Plc Chief Executive Officer Tony Hayward, Afren Plc (AFR), Hess Corp., Murphy Oil Corp., Marathon Oil Corp. and Repsol YPF SA.
The above news has added about 80% to the stock price of Vast Exploration (VST:TSX) and 10% to Westernzagros (WZR:TSX), the smaller explorers that the Goombarh owns.
Other larger companies such as Gulf Keystone have soared up to 25% on this news.
From a comment to an article about Middle Eastern changes:
I recently spent an evening with Ambassador Richard Jones, the Deputy Executive Director of the International Energy Agency in Paris, who had some eye opening things to say about the energy space. The IEA was first set up as a counterweight to OPEC during the oil crisis in 1974, and has since evolved into a top drawer energy research organization.
World GDP will grow an average 3.1%/year through 2030, driving oil demand from the current 84 million barrels/day to 103 million b/d. That means we will have to find the equivalent of six Saudi Arabia’s to fill the gap or prices are going up, possibly a lot. His conservative target has crude at $190 in twenty years. Some 39% of that increase in demand will come from China and 15% from India.
A collapse in investment caused by the financial crisis means that supply can’t recover in time to avoid another price spike. More than 1.5 billion people today don’t have electricity at all, but would love to have it. The best the climate negotiations can hope for is for CO2 to rise until 2020, and then plateau after that, because once this greenhouse gas enters the atmosphere it is very hard to get out.
This will require a massive decarbonization effort reliant on nuclear, hydro, alternatives, and carbon capture and storage. Up to half of the needed carbon reduction can be achieved through simple efficiency measures, like ditching the incandescent light bulb, driving more hybrids, and closing dirty, old coal fired power plants. Natural gas will be a vital bridge, as it is cheap, in abundant supply, and emits only half the carbon of traditional fossil fuels. The total 20 year bill for the rebuilding of our new energy infrastructure will exceed $10 trillion. Richard, who comes from a long diplomatic career in Kuwait, Kazakhstan, and Israel, certainly didn’t pull any punches. I have been a huge fan of the IEA’s data for 35 years. Better use any weakness in oil prices to accumulate long term positions in crude through the futures, the offshore drilling companies like Transocean (RIG), and oil and gas plays, and (OXY) (click here for the link). When oil comes back, it will do so with a vengeance.
CALGARY, Alberta, Oct 17 (Reuters) - Abu Dhabi National Energy Co will invest C$46.6 million ($46 million) in WesternZagros Resources , giving the Canadian-based oil explorer much-needed financial breathing room as drilling draws near for its next big well in Kurdistan in northern Iraq.
Shares in WesternZagros jumped more than 17 percent on the small-cap TSX Venture Exchange on Monday after the Abu Dhabi company, known as TAQA, agreed to take a 19.9 percent stake.
The Goombarh feels slightly vindicated, as his investing in Westernzagros (TSX: WZR) has just received a vote of confidence from a connected Middle Eastern Oil company, yet his investment in Vast Exploration (TSX: VST) has tanked, from their uneconomic well in Qara Dagh.
My moves forward from this is that I am holding onto both of these oil explorations; one because of the above news and the other, is because I would be a buyer at these prices (.04~.05 cents).For those of you who were influenced by me, and have loss money, I am sorry, for those of you who have not, well here are two prime suspects for price appreciation.
Now, as to the general markets, it looks like the worm has turned, so to speak.The bottom may have been a week and a half ago.Note, that the Goombarh, as usual was overly optimistic and called the bottom a month or more ago.Whatever the case, now is the time to be getting back in, if you are not already back in.The gains you make are dependent upon your entry prices to your investments; the entry prices presently are very good.
Ken Fisher is a noted billionaire and financial advisor for the wealthy. Though he is criticized for being a pernenial bull, his firm's analysis of the macro economic situation always makes good sense, at least to the Goombarh.
Following is a capsule summary of his latest quarterly analysis.
As for my stocks, quite a few have crashed, in fact the whole portfolio has cratered, but I can not sell at the lows. Therefore, I am still sitting tight from my summer positioning and grinning and bearing it.
I have not sent any notes recently, because I have nothing to say. I notice that it has been over one month since my last note and it is now officially fall. In fact, I may not have made any trades at all for the last 3/4 weeks. The markets are roiled, but it is just that, eventually everything will get straightened up and it will be business as usual, the world is not coming to an end. What will happen is continued slow growth in developed markets and faster growth in developing markets.
Following is quite a rational piece by Jeff Miller, about the likelihood of an upcoming recession:
You know me, I am an optimist, and I am positioned for a rise this fall. I am sitting tight and just waiting, with my junior oils and such.
For those of you, that are fortunate enough to have some cash available, there are just so many bargains in the markets presently. This is your second chance, since March 2009, to make a killing on superior stocks.
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or "the Company") has received encouraging results from a recently-completed study of the drill cuttings from its Kurdamir-1 well utilizing advanced technology. The study, by Weatherford Laboratories in Houston, confirmed the potential of a gross oil and gas interval over 1,900 metres thick in the Kurdamir-1 well. These results significantly increase the Company's confidence of encountering oil in the Eocene and Cretaceous reservoirs in the upcoming Kurdamir-2 well, which would add to the oil already encountered in the Oligocene reservoir.
WesternZagros expects Kurdamir-2 to be spudded in the fourth quarter of 2011 on the Company's Kurdamir Block which is operated by Talisman. Kurdamir-2 is located approximately two kilometres away from Kurdamir-1 and will target the Oligocene, Eocene and Cretaceous reservoirs on the flank of the structure where the combined potential oil interval is likely at maximum thickness. The combined audited mean estimate for all three reservoirs is 585 million barrels of prospective oil resources as at January 14, 2011.
The advanced geochemical study was comprised of both Total Scanning Fluorescence (TSF) and Thermal Extraction Gas Chromatography (TEGC) analyses of approximately 100 drill cutting samples and six oil and condensate samples from the Kurdamir-1 well. TSF is a technique applied to organic solvents from drill cuttings by exciting a sample using UV light and measuring its fluorescence intensity. TEGC provides a rapid automated determination of hydrocarbon compounds. In combination, these techniques can differentiate between oil and gas in potential reservoirs.
"This is a further positive step in our evaluation of the potentially large oil intervals of the Kurdamir discovery," said Simon Hatfield, WesternZagros's Chief Executive Officer. "We are excited by the upcoming opportunity for the Kurdamir-2 well to test the potential for over 580 million barrels of recoverable oil in the Oligocene, Eocene and Cretaceous reservoirs."
Vast Explorations - VST, VSTFF
partnered with Niko Resources with Niko drilling
found oil in Qara Dagh, albeit low flow with damaged skin
Niko drilling deeper to test the Kometan formation
Calgary, Alberta, - Vast Exploration Inc. (“Vast” or the “Company”) (TSX-V: VST)is pleased to provide the following update on the Niko Resources Ltd. (“Niko Resources”) operated Qara Dagh Block in the Kurdistan Region of Iraq.
Drilling of the Qara Dagh well has reached a total depth of 3,908 meters, has been log evaluated and, as previously reported, the well has been cased to 3,558 meters with a 7 inch casing string. The following intervals have been evaluated where the results to date are summarized below.
Open Hole Interval - Shiranish Formation
This interval from 3,558 meters to 3,908 meters was acidized and flowed light oil confirming an active hydrocarbon column. The interval achieved maximum production rate of 550 barrels of oil per day and 800 mscf/d of gas, although these rates were not sustained for the entire duration of the test. The oil produced is 48 degrees API with no H2S.
From the data interpretation, and the significant spike in observed well bore pressures before the drilling was stopped, it is believed that the well has potentially entered into the first 10 meters of the next reservoir, the Cretacous aged Kometan formation, which is one of the primary target zones previously identified. It is important to note that the Kometan formation is regionally known to be a naturally fractured reservoir which has produced significant quantities of oil.
Mr. Ahmed Said, President & CEO, commented “We are pleased with the recovery of light oil from this section. Although the reservoir quality appears to be naturally tight, the establishment of an oil column is significant. The possibility of drilling deeper to further evaluate production potential of the Kometan formation is currently under consideration.”
Shiranish / Tanjero Interval
Certain sections in this cased interval was perforated and then acidized. The well had intermittent flow of light oil. The maximum rates achieved were 400 barrels per day of 42 to 47 API oil and 520 mscf/d of gas confirming a second active hydrocarbon system with no H2S.
Current Status and Forward Plan
The operator, Niko Resources, is currently in the process of testing the Aalijii Formation which consists of thick sequence of turbidities sand and argillaceous shales. While drilling this section in July 2010, it was reported that an increase in fluorescence, gas readings and free light oil in the mud system was detected.
Further, there are ongoing discussions between the consortium group to possibly deepen the well up to an additional 250 meters, subsequent to the completion of the current testing program. The primary purpose would be to drill deeper to further evaluate the production potential of the proliferous Kometan formation, the zone immediately below the Shiranish formation. Confirmation of the possibility and technical capability of re-entering the well and drilling deeper is expected over the next few weeks.
The Goombarh owns both, with a tilt towards Vast, as it is the lower priced one and with Niko drilling deeper to test the Kometan formation, which has already shown oil in the mud.
Received another update from George Roach: Present drilling is both testing of historic holes and expansion of the resource followed by conversion of a significant component of the current drilling program into indicated and measured categories.
George also reported that FED also wish to quickly start drilling Colluli in the central/eastern area of FEDs land holdings. Colluli is the area near South Boulder where there known mineralization both historically and through recent drilling by South Boulder.
That does not refer to drilling by South Boulder on their own land. Rather, South Boulder apparently did some poor mapping and hit mineralization on FEDs land. Apparently, South Boulder was using an old map to determine where the Eritrea/Ethiopia border and that map proved to be inaccurate. Thus, they moved the drills too far south and hit mineralization on FED land.
Hagai, you are correct. However, the land isn't under dispute any longer. As I wrote, the issue was South Boulder used an inaccurate border map that had since been changed. Doesn't matter what the GPS readings are under that scenario.
That's what I was told. South Boulder crossed the border and inadvertently drilled a couple of holes on FED land. As I said, there was reportedly good mineralization. STB had admitted it made a mistake.
Unusual but does happen. I have heard heard about this type of situation happening before.
TORONTO, ONTARIO, Aug 22, 2011 (MARKETWIRE via COMTEX News Network) --
Ethiopian Potash Corp. (the "Company " or "EPC") (TSX VENTURE: FED)(TSX VENTURE: FED.WT) is pleased to announce that it has completed five (5) holes and drilling of Hole 6 is ongoing with total drilling through 1,000 metres to date, of the planned 15,000 metre diamond drill program on its 481km2 Danakil Project, Ethiopia.
All of the holes intersected the regional Danakil Potash Formation and all holes intersected potash mineralization.
The holes were drilled along the western edge of the Danakil and targeted the on strike continuation of the Musley potash deposit. The drill core has been logged and selected intersections have been reviewed by Ercosplan who confirmed the intersection as being part of the Regional Danakil Potash bearing sequence and that potash mineralization was observed in the drill core. The drill core has been sampled and the samples are being processed for analysis. Drilling is continuing is the southwest corner of the Property in an area of historic drilling.
Mr. Wahl President and CEO of EPC stated "I am extremely pleased with the drilling results and looks forward to receiving the assay results which will be released on receipt. Ethiopian Potash looks forward to having a steady stream of news to disseminate in the Autumn."
About Ethiopian Potash Corp.
Ethiopian Potash Corp. (TSX VENTURE: FED)(TSX VENTURE: FED.WT) is a Canadian company based in Toronto, Ontario, and Addis Ababa, Ethiopia. Ethiopian Potash controls 481 sq km of shallow mineralization potash development concessions in the fairway of the Danakil Depression, Ethiopia. The Company has an existing 128 mil tonne resource at 21% potash and is intent on aggressively fast-tracking its properties to production.
The Goombarh is a veteran of the small cap wars, who has survived both the glory and collapse of the internet boom and the 2008 bust. Now he is focused on mining,oil and commodity stocks, as the world has turned with the rising tide of demand from the emerging markets. In this blog, he shares his findings and insights and sometimes his portfolio's contents. If this information and investing sector is of interest to you, drop him a line with your email address, and you will be added to his distribution.
The Goombarh has Neanderthal heritage and as such has an extra section in his brain that gives him his prescient ability. ...just kid'n.
Important Disclaimer:----The information and opinions contained here reflect the personal views of the author and should be viewed as food for thought only. The author may have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness. Independent due diligence and discussions with one’s own investment and business advisor is recommended. We do not request or receive compensation. This document may be quoted, in context, provided proper credit is given.
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