This company has KNOWN oil deposits in the ground which have been independantly valued at $12 million.
Now that oil is increasing in value and a world shortage this valuation must now be worth considerably more. THE SHARE PRICE IS TOTALLY UNDERVALUED and will have to be re-rated upwards. Any views or up dates on this suggestion.

Bruce Rowan's Sunvest Group have a stake of 8.000.000 million shares or 10.8% Bruce Rowan is involved with Share Shop PLC An investment company I beleive.

Texas Oil and Gas are making real money.

stockdog.... thank you for the information about the results timing - likewise I have been watching them closely as well since RHPS recommended them -
I'm not going to wait..will buy in next couple of days... SP is near the bottom of it's trading range so downside ought to be minimal... however,,, when i go into a share it normally goes down fo a variety of reasons I hadn't reckoned on... so ... in for a penny in for pound as they say !

I got a dummy trade quote of 15.19p this morning - I think that's as good as it will get, although it would be aesthetically pleasing to get under 15p.



Forget all that - just checked the price and bought at 14.7p!

sd

If TXO are posting their end of year results soon, and the share price at this stage is at its lowest, I feel that it may be a fair indication that the results may not be that great. What do you think?

They will not be brilliant for last year, since they have only started to bring their newest acquisitions into commission late in last trading year. But the trading update for the first few months of this year should be highly encouraging.

I am keeping to a tight stop loss on these in case you are right.

sd

Well, I'm in ! had to pay .155p... as always, the offer ticked up as I made my mind up to buy in ... this is normal for me and the stocks I go in for...Also, another warning.!!!!.. the shares i buy that are tipped to double..... usually loose 50% of their value in the first few weeks/months and then do nothing ! don't know why I bother most of the time...
Let's see if it's different with this one ! :)

Thanks Skyhigh for that encouraging commentary - would you mind if I made my profit before you bought in and jinxed them next time please!

This is a bit of a speculative one for me - I like the story and, at $50-60 a barrell, makes good money. But can't read the market in these shares which is very thin most of the time as to timing. If we do fall through the recent 14p support on results then we could go back down to 11.5p, but I set my hopes on a bog standard expected result for last year and healthy forward looking prospects for the current year which may well lift the SP back up through the 200dma to the 17-20p trading range where it may mark time until the half year trading update at end of September before moving higher towards double its current price within 12 months from now. Any intervening good news will accelerate this process.

Anyway, that's my game plan. My actions will be governed by the deviation of reality from it.

BTW don't fret about paying 15.5p - the extra .5p is irrelevant to the broad success or failure of your investment. Enjoy the ride.

sd

What's happening today?

Spread widened to 18%! bid stays the same at 14.5p, offer goes up to 17.5p - don't MMs want to sell whilst we wait for results in next few days (end July I was told by both the company and their PR co - that's today, but I don't see it yet - probably Mon or Tue)?

Any ideas?

sd

Can't be bad... bid has now moved up as well ! looking good since i went in last week.... hoping for big leap in SP on results release... :) also oil socks strong today...

nice end to the week on a strong note, ready fior action next week on results, I hope. Chart looking perky too.

stockdog,

well i think id like to see the downtrend pierced before any purchase!!!

on the watchlist for now

aimtrader - agree these are quite speculative at present. But the downward pointing triangle - bounded on top by the March peak to the recent July peak whilst the lows have fallen less fast - was technically broken upwards in the last couple of days.

I guess you could wait for the SP to break decisively up through the 200dma and the 25dma to break up through the 50dma for a more certain signal.

The forward looking statement(s) in the results will tell all soon enough. I'm optimistic, but impatient that they missed publication in July as promised in their emails to me. Can't be long now, though.

sd

Results finally published today. Solid growth reported to 31/3/05 as expected, with slight disappointment that Trinity South West project proved uncoommercial (9% holding by TXO).

The real interest is the increase in proven reserves to 10,449,756 barrels with an NPV of $52,576,370, assuming an oil price of $46.50 per barrel, which equates to approximately 36p per share. At $55 per barrell, this must be approaching 50p per share.

The capital resources of the company looks solid with not too much dilutive disadvantage to exisitng shareholders, giving them enough capital to develop their remaining acquired wells.

Market seems largely indifferent. A few sells and fewer buys, whilst the bid is marked up .5p.

Any other views?

sd

I was thinking of going in on BLR and will probably do so this week.... operating costs/expenses were higher than forecasted and that's why there is more urgency in getting production / output up.... I still don't think there is too much downside so will go in.....

Well, TXO's results have set the SP off like a damp squib. So what is the company worth? I had a couple of questions which I fired off to FD Andrew Glendinning which he graciously answered within a couple of days, which I have incorporated into a model I've been building for the year to March 2006 and beyond. It goes something like this:-

At end March 2005 they had 18 100% owned wells in production and 58 50% owned, using 2 rigs which I have, on an informed guess, allocated as to 1 wholly working on the 50% owned and 1 split 50/50 between 100% owned and 50% owned - this would fit pretty much with the increase in number of wells of each type in production since March 2004. They are getting a third rig which I have assumed will be allocated fully to 100% owned wells, coming into commission from the start of Q2.

Projecting historical rate per rig of putting wells into production, the number of wells in production will rise over the year to 54 100% owned and 102 50% owned - an effective 100% owned equivalent average of 73 over the year. Taking historical rate of production of 68.5 barrels per well per month, this will yield 60,004 barrels for the year.

Last year the average price can be back-calculated as $43.76 per barrel at an average exchange rate (courtesy of AG) of 1.853 $/, yielding gross income of 766,824 from which must be deducted a 20% royalty (as confirmed by AG) to arrive at turnover for the year of 613,459 (as per recent results). Multiplying the projected 60,004 barrels for 2006 by an estimated oil price of $55 per barrel at an exchange rate estimated at 1.80, less a 20% royalty gives turnover for 2006 of 1,466,768.

The gross margin for 2005 was 35% and the administrative costs were 502,654; net interest payable was 75,002. Let's assume the equivalent figures for 2006 are 37.5% (small improvement in margin), 552,919 (10% increase for more activity + inflation) and 75,000. This gives us a loss for the year of 77,881.

This is a big improvement, being about one fifth of 2005's net loss, but still not making a positive number. However, at 31st March 2006 there will remain (of their current estate) only 3 50% owned wells not in production. So, after the first month of the year, the entire effort of the three rigs can now be turned to commissioning 100% owned wells. By end of March 2007, there will be the full 105 50% owned wells and 139 100% owned wells in production yielding 121,858 barrels worth annual turnover of 2,978,745 with net profits of about 522,000. For year to March 2008 all currently owned wells will be producing, with a net profit of about 1.09million

With 83,413,116 shares in issue (and assuming that the 25.5 million warrants issued to DKWS are only exercised in respect of funding new acquisitions) that's an eps of 0.625p per share giving, at the current SP of 15p a PE of 24 for 2007, and a PE of 11.5 for 2008.

So what price the shares today? According to the NPV of the reserves of $52,576,370, the company is worth about 35p per share - equivalent to a PE for 2008 of 29. Perhaps a 2008 PE of about 20 for this rapidly annual increasing profit profile in a continuing ambience of strong oil prices and growing demand versus restricted supplies (China requiring more and more new sources), suggesting an SP of 26p, a 25% discount to NPV.

To the above must be added the prospects for Trinity South East (25% interest) which are in the above numbers for free and the acquisition of further wells or interests funded by exercise of warrants or new share issue(s).

I will be intrigued to see how the promised quarterly updates compare with my modelled results and how the SP reacts over the next 12 months. On balance I think this is a fairly low risk mid-term hold which should see the price increase by two thirds by Xmas 2005 and double by end of March next year. Any results substantially better than I predict above should see this rise accelerated.

Any comments or counter-views welcome.

sd

Come on, guys. I pour my little heart out a week ago now and not a single response. Is it because:-

a) You are all in agreement with me and are stunned with admiration for my perspicacity?

b) You all totally disagree with me and don't think it's worth a response?

c) You all know something I don't and have sold up and moved on?

This dog wants someone to throw his stick for him. Meanwhile, up we tick.

sd

I'm with option a) above.... just wtg for the SP to rocket ! not much more to say really.

skyhigh - thanks for that. Let's hope I'm right. I feel the downside is very well protected at least on this one.

Stckdog your calcs are in the right direction. I am optomistics about txo. I have been holding on to these, without concern, from my 19p purchase some time ago.

S/DOG,your calcns.sound great, hopeTXO come up to your s.p. projections.

RHPS weekly update says Panmure have published a slightly downbeat note on TXO, but set a value of 27p on their shares - 1p more than my own estimate in post #25 above. Tom B says BUY.

sd