Yergin on Energy

Two talks about rock resources and truth

Two Band-aids talk about rock resources and truth.


LOL.....
Marco G.

Westernzagros Hits Oil at Mil Qasim and shares pull back

Me thinks a few traders do not believe in the value here and got out.

Marco G.

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WesternZagros targets multi-billion barrel oil resources in Kurdistan, starts production
4:30 pm by Richard Badauskas
WesternZagros (CVE:WZR) is a Canadian oil and gas explorer that is successfully exploring and developing crude oil and natural gas resources in the Kurdistan region of Iraq.
Results generated by the drilling of Sarqala-1 in the Garmian Block, and Kurdamir-1 on the Kurdamir Block, indicate that the two Blocks cover multiple prospects that have the potential to develop into giant oil fields that could host over 3.6 billion barrels of oil equivalent (BOE) of independently audited prospective resources.
These excellent results are allowing WesternZagros to transition from being a pure exploration company into an explorer and production company that is producing over 5,000 bbl/d from the Sarqala-1 oil discovery and targeting over 1 billion BOE in the next five months including the Sarqala-1 oil discovery, and drilling of Mil Qasim, and Kurdamir-2.
The Kurdamir and Garmain Blocks cover 2,120 square kilometres, and are among the largest exploration areas that were granted by the Kurdistan Regional Government to any entity.
WesternZagros is the operator and holds a 40% interest in the Garmian Contract Area that covers 1,780 square kilometres; and holds a 40% interest in the Kurdamir Contract Area that covers 340 square kilometres and has Talisman Energy(NYSE:TLM) (TSE:TLM) as operator. The Kurdistan Regional Government retains a 20% working interest in both Blocks.
The Production Sharing Contracts require the operators and partners to carry all development costs and make payment of a 10% royalty from total crude production, with up to 45% of the remaining oil available for cost recovery. The profit on the remaining oil is split between the parties on a sliding scale from 16% to 35%, and is based on a formula that assesses revenue over cost. The PSCs negotiated on the Kurdamir and Garmian Blocks carry among the most favorable terms when compared to other PSCs negotiated with the Kurdish Regional Government.
Sarqala-1 was drilled and completed in the second calendar quarter of 2011 at a total cost of $20 to $25 million, which included casing repair operations, sidetracking and testing operations.
The well was drilled in the middle of the Sarqala structure that extends over a distance of 15 kilometres, and was sited on the flank of an Upper Fars Sandstone reservoir that is located above the crest of deeper Jeribe Dolo-Limestone, Oligocene, Eocene and Cretaceous reservoirs. It was penetrated through the Upper Fars reservoir and crest of the Jeribe and Oligocene reservoir, terminating below a prospective oil formation at 4,357 metres.
A sidetrack was completed through the Jeribe Formation, and tested at over 9,000 bopd that flowed 40°API oil, with no stimulation or water recovered. An independent audit completed by Sproule Associates estimated Gross Unrisked Resources for total mean oil of 24 MMbbls, with gas of 31 MMBOE within Jeribe.
Total mean oil for the Jeribe and Upper Dhiban, along with Oligocene, Eocene, and Cretaceous reservoirs, on a Gross Unrisked Resource basis, was estimated at 296 MMbbls for oil, and at 463 MMBOE with gas.
Sarqala-1 commenced oil production through an extended well testing in mid October and produced 220,000 barrels of oil by the end of the 2011 calendar year. Sarqala-1 was producing at a rate of 4,000 barrels per day in December and is projected to produce at an average rate of 5,000 barrels per day through the first half of calendar 2012. The company is also sourcing and installing permanent facilities to increase production beyond 5,000 barrels a day, and to have a gas conservation solution in place to deal with the natural gas.
Western Zagros is contractually committed to provide 100% of the exploration and development costs on the Garmian Block and Sarqala-1, and is entitled to collect 100% of the current oil revenues, which may total as much as $60 per barrel, or approximately $10 million per month until a third party participant is assigned on the Garmian Block.
Mil Quasim-1 was recently drilled and completed on the crest of the Upper Fars reservoir, located about 3 kilometres from Sarqala-1. The well was completed at a final depth of 2,425 metres and an open hole test conducted in the lowermost part of the wellbore successfully flowed oil to surface with no water. Further testing is underway in the Upper Fars, with final results due for release on completion of testing.
The well is estimated to cost $30 to 35 million, with total mean oil for the Upper Fars reservoir on a Gross Unrisked basis at 106 MMbbls, and with oil equivalent of 121 MMBOE.

Breakout - Brent Up - Gold Up - Not IMHO

Louise Yamada opines that Brent is moving up and Gold should consolidate before moving up futher.

IMHO, gold is falling lower before any movements.

Goombarh

Kurdistan Oil Boom

Good Video from Financial Times about Kurdistan Oil:



Looking for an entry with a stock?

Checkout this blog for ideas.

The Goombarh is in Westernzagros (TSX:WZR, USOTC:WZGRF)

Two Oils Moving - Westernzagros in Kurdistan & Petroamerica in Columbia

Hello Readers,

Dateline: Feb 13, 2012

Just noticed on my screens this morning, that Westernzagros in Kurdistan, is now moving out of their cup bottoming formation and breaking through the rim resistance. Let the chart following tell the story:

Also, Petroamerica in Columbia, is also moving and doing almost exactly the same thing, breaking out of their cup bottoming formation. Again, the following chart tells the story:

By the way the orange lines in the chart are the Tirone Levels, an indicator similar to Fibraconi lines. Here is an explanation of them:
Definition of 'Tirone Levels'
A series of three sequentially higher horizontal lines used to identify possible areas of support and resistance for the price of an asset. The position of the center line is plotted by calculating the difference between the highest high and the lowest low for the asset price over a period of time and dividing it by 2. The top and bottom line are drawn 1/3 and 2/3 of the difference, respectively, between the same high and low that are used to calculate the center line.


Read more: http://www.investopedia.com/terms/t/tironlevels.asp#ixzz1mHQUoIEl

Westernzagros CEO Interview

Since I got these videos on the blog, here's another with CEO Hatfield of Westernzagros.

The Goombarh holds Westernzagros

Oil Price going Up

Burnstone Gold Mine GBG - Stoping detail

v interesting,

Marco G.

Potash growth and high margins

 Excerpt of interview regarding Potash:
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TER: There’s also been some development on the African continent, and a couple of Canadian juniors are working on projects there that are projected to go online in about five years. How are they progressing?

JA: Allana Potash Corp. (AAA:TSX; ALLRF:OTCQX) and Ethiopian Potash Corp (FED:TSX.V; FED.WT:TSX.V) are both working to develop greenfield potash projects in the Danakil depression in Northern Ethiopia. Allana is the much better capitalized of the two companies. It has published a large NI 43-101 resource based on its successful drill program over the last couple of years. The projects in Ethiopia are interesting in that the high year-round temperatures in the Danakil may allow for solar evaporation, thereby materially lowering energy costs in the solution-mining process. Ethiopia is also located relatively close to China and India, two important potash consumers.

Ethiopian projects face a major challenge, however, in that the logistics of moving thousands of tons of potash per day from the project site to the port at Djibouti some 600 kilometers (km) away over roads of varying quality may be a significant hurdle. We believe the transportation costs will end up being materially higher than current estimates.

Both Allana and Ethiopian Potash have seen their share prices languish over recent months and are both near 52-week lows. We believe both stocks have room to move up as the projects are derisked and as Allana moves toward a feasibility study in August of this year. While Ethiopian Potash has more leverage to positive developments given its smaller enterprise value, it is a much riskier investment given its very low cash levels. Allana, on the other hand, has more than $65M in cash on its balance sheet, providing it with a lot of time and resources to derisk its project and make it more attractive to potential suitors.

TER: Will Allana rely on a rail link to be built in order to get its product to market?

JA: There are plans in Ethiopia to build a rail network in the country, and that rail network is planned to approach Allana’s project site. We’ve met with the minister of transportation in Ethiopia on this topic. That project is probably a number of years away from completion, and for at least the first several years of production, Allana is going to need to find a way to transport its product by road via truck. You can’t assume the rail network is going to be ready in the next few years, in our view.

TER: What effect will trucking the material have on the project economics?

JA: Trucking will be much less economic than a rail network. Allana has published its own cost estimates for transporting the product from its project site to the port at Djibouti. We find its estimate of $12/t to be very low. We see a number closer to $50/t, based on the figures we’ve seen at other operations in existence today, such as those in Saskatchewan.

TER: Do you have any other interesting stories that our readers might find useful?

JA: The potash industry today is generating very high cash flow and strong returns on capital for incumbent producers. Potash Corp. generated a gross margin in its potash business last year of 68%. Apple Computer, by comparison, posted a gross margin of 41% in its fiscal 2011. The levels of free cash flow generated by this business and the strong secular trends in agriculture are going to attract capital and will ultimately lead to new greenfield production. With so many companies chasing so few quality projects though, we would caution investors to think carefully about the merits of each individual project. The size and grade of the deposit, the infrastructure in place, the proximity to major potash-consuming countries and the geopolitical risk are all critical drivers of value.

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rest of this report is at:  http://jutiagroup.com/20120209-whats-next-for-potash-producers-jaret-anderson/

Key take aways, are low operating costs and high margins in potash.  Also continued growth in markets until decade end.

The Goombarh is holding Eithiopian Potash (FED on the TSX, ETPHF)

Marco G.

Kurdistan & Iraq Oil Agreement with US pressure

Kurdistan & Iraq Oil Agreement with US pressure

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U.S. Energy Influence in Iraq

February 9, 2012 | 1254 GMT

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Summary

SAFIN HAMED/AFP/Getty Images

Engineers at the Khurmala oil field south of Arbil, Iraq

On Jan. 31, Baghdad withdrew its opposition to a deal between ExxonMobil and the Kurdistan Regional Government, a move that reflects the conflicts between and among Iraq's various political actors. Energy negotiations with the United States are one arena where the al-Maliki government has been forced to make significant concessions recently. Iran typically holds the upper hand when it comes to influencing Baghdad and controlling Iraq's sectarian conflicts, but it cannot compete with the investment capital and technologies that U.S. firms can bring to bear.

 

rest of article here:  http://www.stratfor.com/analysis/us-energy-influence-iraq

 

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If this analysis is true, then the fortunes of the oil explorers in Kurdistan has just taken a turn for the better.

 

Marco G.

Petroamerica (TSX: PTA, OTC: PTAXF) - Breaks Out - Again

Petroamerica (TSX:  PTA,  OTC:  PTAXF) - Breaks Out - Again

Source:  http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=8374484
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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.

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The Goombarh is holding warrants on this one.

Total moves in Kurdistan for Oil

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Total prepares to move into Iraqi Kurdistan-sources

Thu Feb 9, 2012 11:10am EST
* Total said in serious talks with KRG

* French major seeking to build on Iraq presence

* Exxon still silent on its Kurdistan deal

By Patrick Markey and Peg Mackey

BAGHDAD, Feb 9 (Reuters) - France's Total is preparing the ground to become the next oil major to move into Iraqi Kurdistan, negotiating over two blocks following Exxon Mobil's deal with the semi-autonomous region last year, Kurdish and industry sources said.

Any contract between Total and the Kurdistan Regional Government (KRG) risks exacerbating a feud between the Kurds and the Arab-dominated central government, which has already warned that Exxon's deal violates Baghdad's control over oil resources.

Since Kurdish officials announced the deal with Exxon last year, other majors have watched its outcome as they mull their own possible forays into Kurdistan or opportunities to snatch up smaller players already working there.

So far Total has signed no agreement, but KRG sources and oil executives say the French company has been in serious negotiations over two blocks, Pulkhana and Taza, which border disputed territories claimed by Baghdad and Arbil.

"The deal is very close, but Total may want to wait to see how things play out with Exxon," said one oil executive in Arbil who is aware of the talks.

more at the link: http://www.reuters.com/article/2012/02/09/iraq-total-idUSL5E8D952O20120209
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Marco G.

Kurdistan Oil

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France's Total makes move in Kurdistan - Junior Oils to Appreciate

http://www.iraqenergy.org/news/?detailof=4454&content=Total-Makes-First-Move-Into-Iraqi-Kurdistan

excerpt below, for full news click on link above:

Energy News Update

Total Makes First Move Into Iraqi Kurdistan

Sources say French major signs deal for four oil blocks.

France’s Total has signed an agreement with the semi-autonomous Kurdistan Regional Government to develop four oil blocks, two of them previously allocated to foreign operators already active in the province, Kurdish sources said February 4.

The sources told Platts that two of the blocks were previously allocated to ShamAran Petroleum, a Canada-based independent with a focus on Kurdistan, and to Petoil, a Turkish company which has four exploration and production assets in the province.

The two other blocks are located in Khalikan, in the south central part of Kurdistan, the sources said.

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Perhaps this is cause for Westernzagros's (WZGRF, TSX:WZR) movement up by over 10% in the last few days!

Goombarh

Happy Investment in 2012 - Get In My Email List

As another example of what you may expect, if you get in on my email list, here it is, a recent flash:

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Goombarh  Flash 37,  - Feb 6, 2012

Good Morning,

Westernzagros  (WZGRF, TSX:WZR)is nearing news about their drilling of their Mil Qasim well in Kurdistan.  After much accumulation over the past few weeks the stock price broke decisively above the resistance at about 70 cents Cdn this morning.  

Here are links to their latest corporate presentation and interview of Simon Hatfield CEO.

·         http://www.westernzagros.com/documents/CorporatePresentationJan2012_000.pdf

·         http://www.proactiveinvestors.co.uk/companies/stocktube/986

The Goombarh is holding Westernzagros shares and smiling.

Until next time,

Marco G.

http://goombarhsedge.blogspot.com/

http://seekingalpha.com/author/marco-g/articles

Happy Investing in 2012

Happy New Year and Investing in 2012!

As an example of what you may expect, if you get in on my email list, here it is, a recent commentary:

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Goombarh 73 - February 2, 2012

Good Morning,

It is time to get back to business folks, if you are interested in the stock market.

Since October, the general markets have recovered significantly.  The S&P500 is now at 1333, whereas the high was 1370 for last year, the highest since the 2008 crash.  That is if you were in the general markets, your portfolio should now be close to the highest since 2008, if you are an average investor.  Here is the headline from Bloomberg this morning:

http://www.bloomberg.com/news/2012-02-01/global-strategists-abandoning-bearish-views-after-missing-rally.html

This means there is a lot of big money, still on the sidelines that will come into the markets later and assist with driving things upwards.  Also, this is a presidential election year, and no, the president will not allow the economy to falter during his re-election push.

For myself, I invest in the riskier small cap resource stocks, and no I am not back to the highest since 2008.  The barometer for my portfolio may be the TSXV index which is at 1640 presently, a good distance of 33% off from the peak of 2464 achieved in February 2011, the highest since 2008.  In fact, I am a good 50% off from my own peak achieved in about March 2011.  What I hope to have learned from this latest episode of the markets gyrating downwards, is to take a portion of the winnings off the table, when the market is good.   This is a very important lesson to take to heart.  Preserve the cash, and redeploy later, when the markets are down.

Now back to business, the markets are moving upwards and the investor needs to be in and positioned to be able to reap the possible future gains.  Let me refresh myself as to my goals and market positioning guidelines.  Following are some guiding market thoughts collected over time.

Goombarh Strategy 2012

1.      Know something that will be valued higher in the future.

a.       shale oil - Bakken, Kurdistan oil (held back with politics)

b.      Folded porous carbonate structure allowing high producing level -Shoal Point Energy (SHP, SHPNF) - huge multi-billion barrel oil prospect; oil tests coming in 2012 and running right now.

2.      Track the trend of a commodity that is moving higher or may have a future shortage.

a.       oil, and metals; take a look at Zinc

b.      potash - Ethiopian Potash (FED, ETPHF) - shallow open pit capable deposit; 43-101 coming.

3.      Consider that the general markets are in uptrend before investing.

a.       S&P now moving upwards.

4.      Leverage carefully.

a.       Warrants, and such

b.      Petroamerica Warrants (PTAWF)

5.      Lower priced stocks move higher with easier gains.

a.       TSXV stocks, explorers and developers with solid management and properties

b.      Developers becoming producers - Silvermex (SLX, GGCRF) - producer growing larger, Great Basin Gold (GBG) - solid management and will come on stream with two producing gold mines, Westernzagros (WZR, WZGRF) - Sarquala producing 5000 barrels per day, Mil Qasm test and Kudimir 2 are coming in 2012.

6.      Consider marginal players, with bad news factored in and a change in outlook.

a.       Marginal stocks have the highest gains in a turnaround. - Petroamerica, (PTA, PTAXF) - turning into producer.

7.      Consider that market judges on growth prospects rather than absolute value

a.       market is not rational and will move on hype; so consider when to get out!  Already have getting out in mind, when you are getting in.

As to what is exciting recently, take a look at Shoal Point Energy.  Here is the chart from yesterday:

SHP has broken out and is now at .40 cents.  Here is a link to their latest corporate presentation:

http://shoalpointenergy.com/pdfs/SHPAGM%20Presentation%20Jan%2026,%202012.pdf

I am sitting on my hands (not selling), and if it is not too optimistic, this stock may be a possible home run.

Petroamerica (PTA, PTAXF) may be readying themselves for a big run. 

Ethiopian Potash (FED, ETPHF) has crashed lower, possibly on the decline in sentiment about potash pricing and sentiment about Ethiopia as being safe place to invest in, but they are presently drilling and should have a 43-101 within 6 months.

Westernzagros (WZR, WZRFF) is being accumulated by persons unknown and are awaiting news from Mil Qasm and Kudamir 2 (being drilled by Talsiman Energy).  This is a good longer term stock in my opinion.

Silvermex (SLX, GGCRF) will move with Silver prices higher.  They have strong management and will be able to deliver on their promises of increased production, but it will take more capital and time.

Oh, attached is my latest take on Great Basin Gold (GBG, which I have posted on Seeking Alpha.  This would be my safest longer term play.  Great management and gold production coming on-line. 

Until next time,

Marco G.

http://goombarhsedge.blogspot.com/

http://seekingalpha.com/author/marco-g/articles

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To be on my email list, send your email address to goombarh at gmail.com.  It is that simple, and I will not disclose your address to anyone.