The tiny Irish stock on the brink of landing 'the first' post-sanction oil deal in Iraq. Ref 'Fleet Street Letter' 12-04-04..

just been reading this from PET`s website, i know it`s old but some parts are very relevant ie.the bit about placings to avoid dilution.

Dexter

PETREL IN IRAQ

Petrel entered Iraq seeking a concession to develop and/or refurbish existing oil fields in Iraq. In 1999 we submitted a detailed tender to refurbish the Subba/Luhais oil fields in the Basra area. The feasibility study envisaged the following:

Capital cost $355m.

Daily output of 180,000 bbls rising to 240,000.

27-36 month refurbishment period.

The tender was well received and over the following months a detailed evaluation took place between the Iraqi Oil Ministry staff and Petrel staff and consultants.

As a small junior oil venture Petrel lacked a track record. The Oil Ministry suggested that we cut our teeth on an exploration block and indicated that we should apply for Block 6 a choice block in the Western Desert which lies between Baghdad and Jordan. Only 9 blocks in the area were offered for tender. Outstanding exploration areas in the North and South were not offered.

Block 6 is a 10,000 sq kilometre block about halfway between Baghdad and the Jordanian border. It had some work done in the early 1980s and has pipelines running along the edges of the block.

Over the following two years long and torturous negotiations took place to agree a work programme and then to negotiate commercial and financial terms. In Spring 2001, we signed an agreement with the Oil Ministry. Together with other applicants such as ONGC of India and Petronas of Indonesia we awaited the Proclamation of the Agreement. In December 2002 we were informed that the Proclamation was approved and would be made on December 15th 2002. That is where events remain.

Where are we now? We are open for business in Baghdad. We have presented an interim work programme on Block 6 to the current executives in the Oil Ministry. We have re-affirmed our interest in the development of the Subba and Luhais oil fields. If we get approval we proceed. If we do not we fight. It is as simple as that. We will be flexible not intransigent. I hope and expect that commercial sense prevails and that all realise how we can develop oil projects far quicker than new entrants. It is not as if there is a scarcity of projects. There is oil development work for the next generation. We would like to have a local Iraqi partner as well as the Oil Ministry. We are not averse to taking in an international oil industry partner. The opportunities are so good that to use an old expression half a loaf is better than no bread.

Rest assured that we are, and will remain, at the head of the queue.We have laid down our markers.

FINANCE

Petrel has been run on a shoestring for the past three years yet even the lowest level of operations cost money. It costs in excess of 100,000 stg. a year to maintain an AIM listed company. In recent years small placings mainly with the directors and friends has funded ongoing activities. In the Spring of 2003 we agreed a small placing with a City institution which raised 136,000 stg. Since then our price has quadrupled. We will continue a policy of small placements to minimize dilution until we need to raise money for development and/or exploration.

PEOPLE

I cannot complete this report without commenting on the people involved in Petrel, particularly our directors David Horgan and Guy Delbes. They have taken significant personal risks and suffered hardship to venture into Iraq to re-establish our operations. Our success will be in large part to their efforts. I am delighted to welcome Stefano Borghi to our board. It will be my pleasure to propose him for re-election at our Annual General Meeting. Stefano is an experienced international manager with Iraqi oil experience. He is currently managing an Italian venture capital company. His experience, contacts and advice will be valuable.

John J. Teeling

Chairman

June 27, 2003

Tokyo, dexter

Just looking at the numbers above, one significant factor will be the capital cost during the first year of operation. Whilst, from Dexter's post, this would involve additional share capital, the issue price is likely to be quite high given the likely explosion in the price on winning the tender. Again, the risk sharing agreement may involve partners who already have much of the equipment and infrastructure.

The other, albeit slight, concern from the post is the unwillingness to risk a major play with Petrel that resulted in them being allocated Block 6. Do you see that we are past those concerns with the risk sharing agreement, implying a tendering group? Possibly working the other way is the extent to which the Iraqi Oil Ministry might feel an obligation given that Block 6 is not in the immediate plans.

Eric

Nice to catch up. Not at work anymore hence the lack of posts. Waiting on news and watching PET/ASOS closely! If only some PET news then I could have a flutter elsewhere! Keep up the good work guys...

Following is in todays shares magazine as a buy recommendation at 1.07p.

Petrel Resources
(PET:AIM) 107p
Market cap: 62 million
Relative strength 1 mth: n/a
Relative strength 1 yr: n/a
Spread: 4.673%
Success rating: ★★

The interesting pitch
Investment. Iraq. The two may sound like peculiar
case of chalk and cheese but if Irish energy
explorer Petrel Resources gets it right the returns
could be massive. The oil and gas company had
signed a working agreement to explore Block 6 in
Iraqs Western Desert during Saddam Husseins
reign, and in spite of the political unrest in the
aftermath of his toppling, Petrel believes it can
play an even greater part in bringing huge
quantities of oil on stream.

Reading the financials
Petrel is currently attempting to develop a trio of
oil fields in Iraq, while also renegotiating its
Western Desert arrangements with the new Iraqi
government. The company has submitted
tenders to develop significant oil fields in Kirkuk,
in the north of the country, and Hamrin in central
Iraq, while a final tender went in last month to
redevelop and refurbish oil fields in Stubba and
Luhais in the south. All three projects are
expected to produce in excess of 100,000 barrels
a day.

Petrel remains in the red for the time being,
running up a pre-tax deficit of E244,000 for the six
months to June, and it will probably remain loss
making for the foreseeable future but there is a
genuine will and need for the local authorities to
tap its vast oil resources and Petrel could cash in
big time.

As you are all still waiting after so many false starts, may I wish you all well.

It's time this happened!

Guys....with the above posting in Shares Magazine and also a further one in todays Daily Mail, looks like the media are at last starting to believe in PET.
Could be just the kick start this needs before contract announcements and I wouldnt be surprised if others follow suit and cause an uplift in price in next couple of weeks...if you are already in, then sit tight and enjoy the ride...if you are thinking of top ups then your time is running out...good luck and as Del Boy always says
'HE WHO DARES,WINS'

Missed this mornings excitement, although I can see the MM's trying to walk this down after the tip in shares magazine, trying to shake out the newcomers, maybe even rattle a few stop losses, and then as we have seen so many times over the last couple of months back up it goes, becareful not to set your stop losses so high. just a thought

Tokyo

Taken from This is London.............

Revived gossip that drilling contracts with the Iraqi government will be signed early next week helped Petrel Resources improve 2p to 106p. z

Good afternoon, well if rumours lifted the price, what happened today then? More MM shenanigans? :)

I really have learned a lot about MM activity thanks to Tokyo et al, but is this really the ONLY factor in intraday price shifts? Im keen to be educated!

Hey LT good to see you over here, we just need barty and the gang will be complete. I actually expect a little tree shake later today, we could see a little red later on, but as this share is still make or break on the contracts, a little red makes no difference one way or the other, unless you have enough cash for a top up, if it hits 100 pence or below tomorrow or next week, I'll try to free up some more cash, but I doubt it will. Like you I've been learning alot while beavering away with PET never been in such an intraday voitile stock, but considering again that this is make or break on these contracts & block 6, and that the MM's make their cash on the spread they will be able to and willing to walk this up and down until news is released.

moneyam has a free trial offer on level 2 at the moment, this really helps to see what is happening intraday with PET, as it is normally WINS that lead the charge when trying to walk PET down

IMHO

Tokyo

I have a stop loss at 94p on a spread bet is that to higth? they do say shares go down 4 times faster then up.

The MM's have walked it down to 97 over the last couple of weeks, 84 seems safe enough though, if it goes that far there maybe some trouble with the contracts, a few people panic at 100pence,as the 1 pound bid is a mental barrier for all of us
just my thoughts not intended as investment advice

aldwickk, really depends on what price you got in at and how much you are prepared to lose. From a TA perspective the 1.00 level seams to hold well for the mid price at the moment, so with an average of a 5 point spread 97 - 98p would be the the bid level. Therefore a break below this could result in further falls to the 80p level. IMO there a fair amount of short term traders playing the intraday movements in this stock at the moment and the 1 level seams to bring them back in. Only bad news is likely to knock it below that level IMO.

Again these are my thoughts and not intended as advice.

aldwickk

An alternative viewpoint. The share is bound to be volatile until the announcements are made. A negative rumour, nothing more, could drive the price down to 80's - the price was down there without any particular reason a month or so again (probably profit taking). As an example, there is a reported rumour above that the contract might be awared within the week - it doesn't happen so people get disappointed, sell-out and down goes the price. Or there is dreadful depression from casualties in Fallujah - God forbid! My advice would be to hold until 30th November, or the RNS is out, and make you decision then. It really doesn't matter a toss at what price one entered the share. Good luck! Good luck for you is good luck for me!

Eric

Editor of Shares

Dear Mr Lacey

Good to see the recommendation to buy Petrel Resources. But, within "Sleeping Beauties"? Beauty, yes! Sleeping? I couldn't imagine anyone who has slept less than David Horgan, during his trips to Iraq, negotiating to sound of mortar and then back home re-drafting his bid and keeping his clients sweet. Put it under the mattress for 3, 5 or 10 years? You must be joking. Three to four weeks is the maximum hold period with contracts to be awarded by the Iraqi Oil Minister, no less, by the end of November. Get it out from under, please, in your next issue; and advise your readers to get into bed for a once-in-a-lifetime opportunity right away!

Eric Robson

p.s. You do have your spies on this, and the ASC, BBs don't you?

Nice one Eric!

got the free trial of level 2 but it do not show what you can actually buy and sell inside the bid/offer

drunker - for that look at the latest trades on the right, and work it out from there, you can see when it is likely to drop or rise with what MM's are on what price, I'm quite getting into using this, thinking about upgrading!!

Tokyo

thanks tokyo - ho by the way i like reading your posts

Evening all,
Found this on another bb from a respected poster,a call that was made to PET earlier today. Dexter

Hi all, yes and had a brief chat with JT (no one else available). Sounded very upbeat but as expected unable to give any indication of timings of forthcoming announcements. Talked of a "sharpening of pencils" and quite normal procedure re the fine tuning of tenders during the Amman discussions. Ended by telling him he had my continued support throughout this period of uncertainty for which he said he was grateful! Don't think we'll get any more than that folks