www.blackrockoilandgasplc.co.uk
www.vsaresources.com
www.oilbarrel.com
Presentation from Thursday 6th July 06 can be seen on oilbarrel !


Monterey appraisal well suspended pending Wintershall evaluation. 1/12/06
BLR and Kappa in dispute.
BLR to meet with Kappa within next two weeks 1/12/06

I know what you mean - I cashed in a load of SBE on Monday and bought some BLVN on the assumption that it's undervalued, only to find that nobody seems to agree with me (yet!). Still, I was able to get a good chunk of BLR recently as well, plus my long-held NOP is doing the biz nicely. But it's BLR I'd pick as having the most potential at this point in time. IMO/DYOR of course.

Glad you're on board this one though - am expecting a few others to join us in the course of time!! Bruce Rowan (of Starvest) reputedly doesn't muck around and if he believes in a stock then I certainly consider it worthy of my attention.

st, I met Dr John Cubitt the Technical Director at Master Investor 2006 and was highly impressed. This share is now on my watch list. As soon as I have free cash I'm buying in. What impressed me most was the drive for production to fund further opportunities already under licence. There is some very sweet light crude in their holdings and they will be going after that in the near future. Steaming plant on track for May 06. The only downside would be the number of shares in issue. The future looks bright, well done for getting in early.

Nice one, Silvermede - thanks.

You are right about the number of shares in issue being a potential drag, particularly as they will have to issue a few more to fund them through to decent cashflow, HOWEVER at the current SP, which appears to me to be very much undervalued, and given the co's excellent prospects, I'm convinced you can still come out a winner on this even if the number of shares in issue goes to one billion, as I have argued in previous posts.

Interim better than expected, will be in in the next few days

BTW - since we're on the subject of BLR issuing more stock . . .

It has been said already that BLR will have to issue more shares to pay for current development work, but no indication has been given of when the placing is likely to be. Given that Arce is expected to go into production next month, I get the feeling that Mr. Burgess is going to first announce initial production and production rates with perhaps a bit of a fanfare, let it sink in with the press and the market and then make the move to place stock when the SP has gone a bit higher, thus reducing the dilution. It's just a thought, but makes a lot of sense.

I hope this is what he has in mind, because on the strength of Arce's initial 4 wells producing 300 bbl/day net to Black Rock, WH Ireland reckon that BLR could take home 1.45 million profits in one year - something which, if the PR angle is managed correctly, could see a dramatic re-rating of the stock even before the co presents financial reports. (UPDATE) Like doubling the SP, preferably.

WDIK/IMHO, etc.

soul traders - 31 Mar 2006 09:35 - 202 of 209 ----30 wells at ARCE

Hesitate to pour cool water but balance of opinion over on ADVFN is that 30 wells may be required in the eventthat the steaming is LESS successful than hoped and that 150bopd is NOT achieved.

Dr John Cubitt the Technical Director said that steaming is common practice in Columbia to extract better rates of thicker Crude (API 14 or 16?). Steam and leave to soak and then start to extract after a week or so. (June 06?) Either way, if they can generate enough cash to pay for extraction of Light Sweet Crude in existing licences then we're definately on to a winner. WDIK/DYOR. :-)

diydave,

I think you have made a valid point, but would draw your attention to this quote from the WH Ireland Report:

>> The smaller Arce field is a different matter. It is assessed at 5mb recoverable using cyclic steam injection. It was discovered by Texas Petroleum in 1984 and has had three wells drilled on it. The oil is heavy at 13 degrees API and Arce 2 flowed at up to 60 barrels a day (b/d), but generally stabilised at around 30 b/d. The third well, drilled recently by Kappa and Black Rock, produced results which were on the face of it rather ambiguous but also suggested a flow of 30b/d. The companies are evaluating a pilot steam injection project which would put the field into production in a matter of months, although there has been no definite decision announced yet. It appears that the Arce 1 well would be used to inject steam while production could come from wells 2 and 3. Two further wells would probably follow.

The production wells would be the familiar nodding donkeys. Cyclic steamflooding typically increases production rates five or tenfold compared with the unstimulated well test results. Let us assume only a fivefold increase. This would mean 30 x 5 = 150b/d from each well. If there are four producing wells, 600 b/d altogether, half of which would be for Black Rocks account. The oil would presently sell for about $25 a barrel net of costs, meaning that by mid 2006 the company could be generating $7500 /day of cash flow, equivalent to 4000 a day or an annual 1.45m per year - significant in the context of a 7m company.

If the pilot project is successful, full development of the field using continuous steamflooding and many more wells could double the reserves and get output up to maybe 3000b/d in due course. It is possible that the market did not see the significance of the recent Arce well because the well flowed more water than oil and the flow rate was low. <<

Quite a lot of activity today, all of a sudden, most of it sales. SP off 0.1p. My broker quotes 1.38p to buy. End of financial year playing a role, or is there something blowing in the wind?

Fair comment soul. But the schedule has already slipped somewhat. Lets hope it happens before cash demands for the North Sea become apparent... which looks increasingly unlikely.
p.s. don't forget WHI are BLR's own broker! For another, more recent, perspective see http://www.proactiveinvestors.com/registered/articles/article.asp?BLR. You have to register but its free, easy and carries no baggage.

Very useful information, diydave - thanks very much! I hadn't used Proactive before so I'm doubly pleased you posted the info.

I realise that the schedule has slipped, but this is a fact of life with natural resources companies. Cash burn and stock dilution are more of an issue; these you have to factor in when projecting the co's profitability in a range of likely scenarios - I tend to reckon with at least 800 million shares ultimately being in issue (compared with 430 millon today), to give some kind of cushion.

I agree that the specific mention of the 30 wells in Proactive's article relates to the possibility of steam flooding not working at Arce. That said, if steam flooding is successful, the co will drill a number of other wells (which if 3000 bbl/day are produced at 150 bbl/well, will still add up to 20 wells). It is worth noting that the figure of 150 bbl/well/day is the more conservative of a bracketed set of estimates, so that there is possibly further upside to be gained if the steaming is successful, but which cannot be counted in when assessing the project's economic viability.

Will BLR hit its target of being in production in May? I'm hopeful that when you get down to a two-month time-frame, these things can be predicted with reasonable certainty (barring disasters!). Maybe that's just my youthful optimism!! As I've said before, I think that the announcement of oil finally coming out of the ground - at least, if steaming is successful - ought to provide the SP with the lift it has needed and make fundraising just that bit less painful in the future. I don't think they'll be able to avoid placing more stock altogether this year, unless they are able to do some kind of debt deal. The possibility of BLR offering a lender a cut of early Arce production or simply discounted oil in return for cash-up-front has crossed my mind and I wonder what the likelihood is of the company being able to raise funds in this fashion. I imagine a higher production rate as a result of the steaming might increase the likelihood of a loan on favourable terms.

Proactive's detailed discussion of some of the other plays impressed me, and reminded me that the reason I keep coming back to this stock is that it just has so much to offer provided that the company meets with a modicum of success. The next few weeks could be quite exciting!!

It's good to get some balanced and informed viewpoints on all of this; I hope you don't think I'm being too relentlessly bullish! Please keep them coming!

In again at 1.36p, increasing my holding by two-thirds. Roll on, May!!

Its your money, Soul. Be as bullish as you like!! At the moment, I'm balanced on a pole. More BLR, more SEY or a punt on SER which sounds so tempting but has done so for a long time. Can't afford to risk all three!

Glad you mentioned SER, Dave. I nearly posted something last night but withdrew it. The gist of what I wanted to say was that there seems to so much more substance and less speculation when you look at BLR. I haven't read the SER threads elsewhere, but on this BB the talk always seems to be about chart technicalities and whether the fact that the CEO is now taking his coffee black is a screaming buy signal. When I look at co's like BLR, NOP, VOG, I can't see what all the fuss is about with SER. I think there's as much upside and a lot less risk to be had elsewhere. Maybe I just have a blind spot here, but I feel I know what I'm getting myself into with BLR and the rest.

SEY is probably a good grower. I haven't looked into it all that deeply as I've been concentrated on other things, but the trendline seems encouraging. It's a bit of a biggie when mentioned in the same breath as BLR and SER, though!

There we go, rant over!! What I'm hoping for over the coming weeks is a big jump on VOG, after which I may channel some of my takings into another chunk of BLR. Perhaps I'll spend some time examining SER a little more closely, though, too. And I'd be interested to hear what you settle on in the end.

The main attraction with SER seems to be that they are already producing in a small way, profitably, no debt, not looking to raise funds yet looking for new pastures. My problem is whether they can do anything significantly big to be significant... and yet the sp has already been up over 70% this year... you just have to buy them in 100's of '000's to get a significant holding and there don't appear to be too many sellers available to the PI.
Again, some useful info on proactive site.
Sorry to bore true BLRers!

BLR skids slightly today - latest buys went through at 1.2p. Sales at 1.05p. At this price, I might have to raid Grandma's hip-op fund for some cash to buy some more shares.

Sorry Granny, you'll thank me for it one day . . .

Talk of a memorial service this w/e over on ADVFN. Bring your own sandwiches and a kettle 'cos BLR seems to have lost theirs!!!!!

Where there's tea, there's hope, eh??

Seriously, though, has anyone got any justification for writing this one off other than the soggy share price? I'd be interested to hear it. The fact of the matter is that nothing negative has come up in the fundamentals, the E&P news is getting better, and the only two potential risk areas are 1.) that Arce production turns out not to be particularly exciting (and even then there's still a big chance it will be cash-generative) and 2.) that BLR has to place loads of stock to raise funds. Even then, how many shares would they place or how much cash would they raise in one go? A million pounds' worth or so, initially, I should think. Then the SP will rise on good news and things should look a lot more rosy.

Meanwhile other areas including Baul and Monterey are being explored with a view to drilling, and never mind the rest of the North Sea plus the prospects in the USA, all of which look to me to be low-risk as they have already been shown to be hydrocarbon-bearing.

I know that any dilution will initially be hard on anyone who has bought in at a much higher price, but I think it's worth gritting one's teeth for a few more weeks as this is about to turn the corner.

It would not surprise me at all if investors like Bruce Rowan increased their stakes at the next placing, and I wouldn't want them to have all the fun and for me to miss out.

Ok, 'nuff said - I'm starting to sound like a ramper. Disagreements welcome, as ever.

It does occur to me, though, that any failure of the steaming at Arce is going to be hard on both the SP and the amount of stock needing to be issued to raise further funds.