Xtract Energy - looking for oil in shale. Feasible and cost effective? Anyone in these at present?

From T1ps this week (EK):
"Xtract (XTR) advanced on Friday and again today. At the back of my mind is the dream of a vast multiple of this current price, 2.5p say. But, more immediately, Western Coal has now been taken over and Walter, the new owner of Western Coal and thus 40% of Xtract, may not yet have realised the gem hidden within a rather larger company."

A 40% uplift in one day - what's going on?!

been hanging on to these for years, about time they did something....lol

December 29th 2010
Evil discusses Kylie Minogue, Xtract Energy

If I start with Xtract Energy (XTR), some will then go yawn yawn on the grounds that we have had Xtract before. But, however I look at Xtract, it is a really stonking bet for the patient and insouciant. The reason is that the key long term asset, Julia Creek, really is worth 10+ a share if it comes off - even if it takes years and years to come to fruition. It is here worth noting that Julia Creek may well go nowhere in 2011 and that it is therefore improper to exclude Xtract from any naps list for 2011. But I take the view that sooner or later, Walter, having taken control of Western Coal, are bound to develop Xtract. It is purely a matter of time. Therefore it is far too risky to stay out of Xtract. Further, there is virtually no chance of Xtract proving badly managed or underfinanced. I am confident that others will press Walter to deliver in 2011.

Xtract may be one of those pretty common natural resources stocks whose prices have to fall off a cliff before recovery, when the 'real money' is made on them. If people think that the prices of these stocks, where they succeed, don't have massive knock-backs, they haven't looked at the 5-year charts. Xtract was 10p back in 2006.

XTR underperformed in 2010 because of the problem with the Sarikiz oilfield in Turkey. This oilfield is geologically complex, with various layers in it that contain water. It seems hard for the seismic to get to grips with this Western Turkey geology; it certainly tripped the company up. But it does not mean that the acreage is worthless. Besides, there are several other targets in the Turkey portfolio. These really need some clear heads and some good geologists and, as ever in exploration, good luck.

The oilshale assets in Julia Creek in Queensland and also in Morocco, albeit with no numbers as yet, are potentially worth a fortune. There is probably some 3 billion recoverable barrels of oil. This is not idle speculation. For Julia Creek has been surveyed. At an oil price approaching $100 a barrel, this could be three hundred billion dollars worth of oil. It needs mining, and processing, which is not cheap and, as matters stand must entail Xtract being heavily diluted. But even so, using the estimated production cost of about $35- $40 a barrel or thereabouts, the net of all costs profit is in the range 100 to 200 billion dollars. Kindly contrast this with Xtract's current capitalisation of 30m, given shares in issue of 850m standing at 3.5p offer.

Any "normal" company with such an asset would shout it from the rooftops. But Xtract plays it down. They now say it will be 10 to 20 years to do something with the asset. It is simply not necessary to run this business with so deferred an outlook. Sooner or later - and maybe sooner - someone in the mining game is going to get serious about Julia Creek.

As for the 51% stake in Elko Energy, this is potentially a blockbuster. The company described its potential at the AGM last week as "ultratransformational". It all turns on whether the oil has migrated from the source rocks some 50km away to the big offshore Danish structures seen on the seismic. This is a long way but oil can migrate further. If it has made it to those structures, and the reservoir rocks are good and there is a seal to hold the oil in, it could be of huge importance. Forget the Falklands. We are here talking truly mega bucks.

I think that, with the right awareness in the market about the Elko acreage, the Desire/FOGL/Rockhopper investors could decide to jump on board Xtract. If that were to happen, there would a buying and trading frenzy ahead of drilling - admittedly this is some way off.

This is not a straightforward investment. It probably has the greatest upside of just about any stock one could find. 3p could go to 30p. And 30p could go to 3. And 3 would be cheap if the Julia Creek and Elko assets are as good as they might be.

My position on Xtract is that it's daft to have none. But it's equally daft to have too many since, if it comes good, you don't need too many to make a fortune. I own 5m.

On the bounce after a good retracement. Level 2 very positive at the moment with 5 v 1
PRICE 3.45p spread 3.30 / 3.60p

A sudden movement up late this afternoon with volume

Expectations of the Danish licence being awarded and then ...
Buy Xtract Energy (XTR) at 3.3p - tipped in whatshot.com

I tipped lots of resource stocks in 2010, for which I make no apologies - the returns we have enjoyed speak for themselves. However, I am conscious that resources stocks may not be to everyone's taste, and prudence dictates that you should not put all your eggs in one basket (or sector). It is with that caveat that I begin my 2011 tipping year with yet another resources tip. Xtract Energy (XTR) is simply a story too good for a site such as WatsHot to miss out on. The company has several company-making projects, of which only one would have to come into play during 2011 to send these shares to the Moon. The shares are a speculative buy, at 3.3p.

Oil

As you are probably all aware, I am an oil bull, as per my comment in a recent weekend editorial:

"Latent factors underpinning a steadily increasing oil price are spearheaded by the fact that the OECD now accounts for under half of global oil consumption, meaning that the faster growing emerging economies are now in the driving seat. This is a hugely important development considering that Chinese oil demand is growing at a rate of 7.5% per year - fully seven times faster than the United States! Over the short-term supply will be constrained by the fact the OPEC won't increase production until it meets in six months. The potential for a new war in the Middle East compounds the situation even further. We should also not forget that higher oil prices are completely necessary in the long term to facilitate new exploration and development that would otherwise not be commercially viable."

Barring some unforeseen economic disaster or a slip back into recession, I cannot see how oil can go anywhere but up in the current climate. Indeed, the stage may be set for an almighty spike as global competition for scarce resources heats up in the next few years. A higher oil price would also be conducive to the development of certain of Xtract's assets, but more on those later. First up is the jewel in the crown...

Elko Energy (Xtract: 50.02%)

Xtract is certainly not given to blowing its own trumpet, so the fact that it described the potential of Elko as "ultratransformational" should be taken seriously. The firm's Danish acreage - the largest offshore exploration licence in Denmark - contains a substantial number of high risk leads (hydrocarbon presence risk ranges from 1.2% to 8.6%), which could be charged by either oil or gas. The licence area offers P50 un-risked net prospective resources of 1.8 billion barrels oil or 8.4 Tcf of gas (independently evaluated by Tracs International in May 2008). Elko owns 80% of the licence with 20% held by a Danish government entity. Whilst this is a high-risk play which will be pretty capital intensive, the upside is potentially huge. The company is currently on the lookout for farm-in partners, but another option would be to seek a stockmarket listing, which was aborted in 2007 due to market conditions. Indeed, I note that at the time of the results it was revealed a "business review is in progress involving the independent directors of Xtract and Elko in which the two companies have agreed to form a joint task force to identify the strategic options open to both companies. The end goal is to unlock the optimum value for all shareholders in both companies." Either development would help the market put a value on what is clearly a highly prospective asset. We should also shortly be hearing news of whether or not the company has been successful in its application for an adjoining licence area.

In the Netherlands, Elko holds a 60% operating interest in gas-bearing Blocks P1 and P2, where seismic reprocessing and remapping has improved seismic definition and revealed several large undrilled structures in the eastern part of Block P2. As with the Danish assets, resources have been independently verified - an independent engineering report was prepared by TRACS International during 2008 on the hydrocarbon resources contained within the P1 and P2 Blocks. The report estimated hydrocarbon gas in place at over 250 bcf (billion cubic feet) within the Slochteren sandstone with additional prospects identified which could contain a further 500 bcf. In September the firm signed a deal with Chevron Exploration and Production Netherlands B.V. whereby Elko will receive an overriding royalty up to 5% of the sales value from Chevron equity gas delivered into the Dutch National Transmission System and Chevron equity condensate delivered onshore. The choice of partner speaks volumes as supermajors like Chevron don't bother developing things willy nilly; they are only interested in stuff that can provide them with material upside. The deal offers Elko a cheap way of extracting upside from an asset that will no doubt prove very capital intensive to develop. Chevron anticipates drilling the first well some time this year.

Julia Creek, Queensland (Xtract: 100%)

Next up is the firm's oil shale assets, starting with julia Creek in Queensland, Australia. Whilst Julia Creek is potentially even more valuable than the firm's Elko stake, I place in second in terms of importance given that it could very well provide zero newsflow in 2011. Using the JORC standard, total indicated and inferred resources in place are 2.12 billion bbls but that number could very well increase with further work. However, in August 2008, the Queensland Premier announced a 20-year moratorium on a proposed oil shale development in the Whitsunday coastal region, and a 2-year review period for oil shale developments throughout the state during which no new mining activity would be permitted. Although Xtract's mineral rights were not affected, the review nevertheless creates uncertainty over the future of oil shale in the region. Nevertheless, Xtract is sitting on what, at $100 per barrel oil, could be as much as $300 billion worth of oil. Even given extraction costs at the higher end of estimates at $40 per barrel, net profit over the life of the project would still be north of $100 billion. Xtract has talked this asset down now for some time now, saying it could take 10 to 20 years for something to happen.

Extrem Energy (Xtract: 50%)

Xtract's Turkish joint venture (with Merty Energy) was responsible for much of the share price setback in 2010. However, WatsHot shareholders know from oil plays such as Tower Resources (TRP) that the market can become too fixated on the importance of one asset within a portfolio, only to ignore the potential of other potentially more interesting ones. In Xtract's case, the ill-fated Sarakiz-3 well was intended to access 5.75 million barrels of P50 reserves came up against difficult geology before turning out to be a duster. However, this is by no means the end of the world as far as Extrem is concerned; there are plenty of other targets in the Turkey portfolio, some of which offer much more exciting potential than Sarakiz-3. Of particular note is Candarli Bay in the Aegean Sea, where the company needs to spud a well before April 2011. It has hired IndigoPool, part of the Schlumberger group, to help the company find farm-in partners for the project, which could target a prospective in-place oil resource of up to 780 million barrels according to initial estimates.

Conclusion

Whilst Xtract has several other concerns in its portfolio, I do not consider them as material in comparison to those listed above. So the overall picture is as follows. Xtract has a portfolio of potentially very valuable oil and gas investments - any one of which could be enough to send the shares materially higher were it to come into play. There is now reason to believe that Xtract's slow-burning nature could change given that its biggest shareholder (through the recent acquisition of Western Coal) is now Walter Energy, a player with the financial muscle to get a project such as Julia Creek into development. Even assuming a 95% discount for potential dilution, that's still $5 billion net profit to Xtract over the lifetime of the project - or 100 times the current market cap of c.30 million. Whether or not Julia Creek comes into play, investors can look forward to some action from the firm's Turkish and Danish assets, both of which have blue-sky potential. Given the right newsflow, 2011 just might prove to be the year when the market realises Xtract's 30 million market cap is a joke. I wouldn't want WatsHot subscribers to miss out on that. Speculative buy, at 3.3p.

thanks mrsi hope it comes good.

Elko Energy has 33% and is part of XTR, announced not long ago ......

Noreco awarded new license in Denmark Stavanger, 1 February 2011:
Norwegian Energy Company ASA (Noreco) is pleased to announce that the 02/05 license group in Denmark has been awarded a new license 1/11, immediately to the west of the original 2/05 license area. Noreco is the operator and has a 47 percent interest in both licenses.

The license period is for six years and comes with a commitment to drill an exploration well within two years. The partners have already selected the specific well location and intend to drill the well in 2011. The well will be known as Luna.

The other partners in the license are Elko Energy with 33 percent and the Danish North Sea Fund with 20 percent.

RNS Number : 1088B

Xtract Energy plc

11 February 2011

AIM: XTR

XTRACT ENERGY PLC

("Xtract" or the "Company")

Exercise of warrants and TVR

Xtract Energy plc announces that today, following an exercise of warrants at an exercise price of 2.5p, 20,000,000 ordinary shares of 0.1p each (the "New Ordinary Shares") have been issued in the Company.

Application has been made for admission of the New Ordinary Shares, which will rank pari passu with existing ordinary shares, to trading on the AIM market. Admission is expected to occur on 17 February 2011.

There are no further outstanding warrants in the Company.

Following admission of the New Ordinary Shares, Xtract will have 914,965 026 ordinary shares in issue and each share has the right to one vote. Therefore for the purposes of the FSA Disclosure and Transparency Rules the total number of voting rights in the Company is 914,965,026.

The above figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify the Company of their interests in, or change to their interests in, Xtract Energy plc under the FSA's Disclosure and Transparency Rules.

Large top up today. Giving the company away. Taken a large position late today.

is it ever going above 4p and staying there??

Going to be the share of 2011

you sound like gibby.....all we need is a kkkkeeeeerrrrrrrrching.,.

Being serious it did fall hard today. As long as it does the reverse, it does look good
in the next few months.

Seen on another site, they are suggesting a large buyer in the back ground, bring it on.

The company has circ 914 million shares of which 3,697,459 were traded today.
The share price drops 8.45% someone is having a laugh. Am I missing something ?

Does anyone still own this stock.

unfortunately yes....my own fault we had a brief moment not long ago when sp was above 4p could have gone out with small profit but didn't.,.

This stock is going to be long term. How long, I can't tell you.

Some large purchases today, selling also. I think people are just starting to take notice of this share.