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.

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

I'll take 25/27p thank you !

good work sd but interest seems low as I'm sitting in FTO waiting for some interest which is a long time coming--I'll watch this one for now.

A very subdued end of week across my portfolio - like everyone's on holiday. Can't wait for September to get started.

Got the full accounts delivered today. Nothing else much in them that I haven't already gleaned from the online RNS, although my thoughts dwell on the obvious questions surrounding Mike Chandler's role as CEO and 50/50 JV partner in a number of wells - not to mention his friend Hayden Stiles providing alot of the operating.

1) In bringing the JV wells into production is there provision for an equitable joint division of the costs involved between MC and TXO?

2) With 3 rigs now in use (owned?) what proportion of 100% owned versus 50% owned wells will be brought into production (hitherto it has been 3 50% to 1 100% ratio!)?

3) What mechanisms are in place by the board to ensure that MC allocates an equitable proportion of his and TXO's effort and resources between 100% and 50% owned wells?

4) There is also a hint that MC is the route via which all revenues from all wells flow. Shouldn't 100% owned wells' revenues, at least, flow direct to TXO to avoid the, however unlikely, possibility of revenues getting stuck in an MC administration?

I would be a lot happier to bring MC's 50% into the fold and put everyone on the same side of the fence after a once for all deal on the price to achieve this. What is his rationale in doing this and the company's in agreeing to it, other than to maintain an advantage that simple deal arithmetic alone cannot provide? I do not believe this current inherent conflict of interest, were it to become material in any form, can be effectively policed by the chairman and non-execs of the parent plc sitting in London.

I hope to attend the AGM in London on 26th September. I hope to be able to put some of these issues to the board then. I'll report back any significant news/attitudes afterwards.

sd

Stockdog,keep an eye out forTXO the next two monthes and also any views on another type mystery namelyGTL , ina reverse t/o and open offer at 1.25 pence. regards MB.

just looking at the chart, we have a support developed at 14p, 15p and 16p at beginning of July, August, September respectively.

This leads to a price of 26p by June 30th 2006, unless good news gets in the way and accelerates this progress!

sd

I'll settle for the 26p by June 2006 thanks.... does this mean 50p by june 2007?

Almost certainly!

If the three troughs at end April, June and mid July can be said to be an inverted head & shoulders with a neckline drawn from the interim peaks of 17p in May to 16p in July - say 16.5p average. Then when we break the neckline upwards (which we just about did today) we should carry on up to about 19p - the same distance above 16.5p as the middle trough at 14p was below it.

Good day for TXO.

sd

RNS Number:3400R
TXO PLC
15 September 2005



PRESS RELEASE

For immediate release: 15 September 2005

TXO plc

2005/06 Q1 PRODUCTION UPDATE

In line with the policy outlined in its Annual Report and Accounts for 2005
published earlier this year, TXO is pleased to announce the first quarterly
update on its oil production activities. This update covers the period 1 April
2005 to 30 June 2005.

Production in the three months to 30 June 2005 was 11,202 barrels, compared to
8,510 barrels in the three months to 31 March 2005.

Production in the three months to 30 June 2005 can be broken down as follows:

*April 2005: 3,419 barrels
*May 2005: 3,647 barrels
*June 2005: 4,136 barrels

At 1 April 2005, TXO had 76 wells in production. This number had risen to 90
wells in production by 30 June 2005, of which 25 were 100% owned by TXO.

Mike Chandler, CEO of TXO plc said: 'I am very pleased to announce this update
on our production activities. The increase in oil production from April to June
illustrates the success of our strategy of significantly increasing the number
of wells worked over.'


I assume the 11,202 barrels is what TXO own after allowing 50% interest on the shared ownership wells - a little ahead of my own forecast, due to equal number (7 each) of wholly owned and shared-ownership wells being brought into produciton over the quarter. I had conservatively allowed for the third rig to come on line next from July 1. Although total numbers are a little slower than I guessed with all three rigs in operation.

31% increase in production is nice - interested to see what reaction in the SP tomorrow. SHows a slight increaase from 68.5 to 71.4 barrels per month per well

btw - why would they sneak this out at 4.32pm after trading today - I would have thought it worthy of a 7.00am slot.

Any comments anyone?

sd