anyone got any ideas about the block trades that went through today?

website: http://www.sterlingenergyplc.com/



weather: www.nhc.noaa.gov/refresh/graphics_at4+shtml/084938.shtml?50wind120

Thanks for the reply, Gav.

As I stated previously, I do see US growth this year as being the key issue which is likely to drive the share price in the short term. It probably goes without saying that if they had doubled their production by 1st Jan, then revenue growth (and therefore eps growth) would be around 100%, but if they aren't able to double it until December, growth will only be around 10% or 20%. Revenue growth for 2006 and beyond will likely come from Chinguetti, so US production increases then are not so critical.

Re the high oil prices, I'm not sure to what degree that will affect SEY as they are forward selling their production to guarantee a fixed and stable revenue. 2005 production looks to have been forward sold, although the 2003 accounts don't seem to show the price at which 2004 production was forward sold for comparison. They will, however, have got a significantly better price for 2005 production than they did for 2004 which was probably sold at around $4.70 or $4.80. This alone could account for a 25% or 30% increase in revenue for 2005.

As we did in 2004, for 2005 we have used the futures markets to 'sell' approximately $10 million of gas at prices averaging $6.20/mcfge. We intend to continue to use such contracts to cover part of our forecast production as part of our risk management.

I did notice that they were adversely affected by the fall in the greenback throughout the course of the year from $1.79 to $1.92. Cable is currently around $1.87, so any further weakening of sterling could presumably help them this current year.

Hope that helps.

seawallwalker,

The problem with articles like the one from the Times is that the journalist has not read the results properly. No financial journalist ever does, unfortunately. If he could read results properly, he would not be wasting his life writing for a newspaper.

He neglected to mention that last year's doubling of revenues from the US was as a result of acquisition and was wholly inorganic. Organically, revenues actually declined. Instead he gave the false impression that the doubling of revenues was about to be repeated again this year.

Morning Team

I see from the Traders Thread that the Questor column in the Telegraph rates Sterling as avoid, whereas the Times rates it as a buy. Curious. Hope more people read the latter than the former.

Average net production for the 1st Q was only 10.5mmcfge/d, and even if they reach 20 by year end, they will struggle to exceed 5bcfge for 2005 imho(3.4 for 2004). With the dilutive effect of the extra shares in 2005, the EPS could still be in the region of 0.4p, leaving a pretty pricey P/E unless higher prices/pipeline usage add significantly to profitability.
But surely this share is a play around 2006/2007 when the Mauritania assets start producing , when the P/E should fall to single figures and we will be hoping for EPS of 1p to 2p+ . The cash flow from the US assets is more about funding their exploration programmes. Providing it can do that and the African production comes on stream on time and ramps up quickly to expected rates, this share should be a good bet imho, dyor.
Any Comments?

just read the Times article. looks great to me. hopefully the Sundays will have something good to say as well.

And oil price has been above $50 all this year...$ recovered from it's lows + oil reserves are limited, so oil price cannot loose too ground regardles of growth etc...All IMO DYR

canary9 - ................But surely this share is a play around 2006/2007 when the Mauritania assets start producing , when the P/E should fall to single figures and we will be hoping for EPS of 1p to 2p+ . The cash flow from the US assets is more about funding their exploration programmes.

Correct.

You lads seem to have missed a bit of news that cetainly cheered me up


news from Dow Jones





12-05-2005 09:01:39

DJ MARKET TALK: Sterling Energy Should Trade Close To 26p


--------------------------------------------------------------------------------

0801 GMT [Dow Jones] Sterling Energy (SEY.LN) should trade closer to
26p/share on a combination of its core value and risk upside, says Evolution.
Feels stock currently trades closer to only core value owing to the market's
poor understanding of the value of the Gulf of Mexico assets, the company's
royalty interests and funding deal in Mauritania. "In '06, the boost to volumes
from Chinguetti production will transform profits and cash flow," Evolution
says. Maintains buy rating. Shares unchanged at 15.75p. (DWE)

Contact us in London. +44-20-7842-9464
Markettalk.eu@dowjones.com


(END) Dow Jones Newswires

12-05-05 0801GMT

051205 08:01 -- GMT
regards

Nice one Sheba.

goal! which reminds me 7-0 to the arsenal. i was there and it WAS seventh heaven (that must be the Sun's headline today!). One more year, one more year, one more year. Love ya Dennis.

evo note is positive but it seems to be having no affect.- but at least they are consistent with its rating.

Excellent results from SEY & of course Arsenal, personally I love the way Dennis plays & if he has the legs, give him two years. I trust Arsens judgment so we have to wait & see.

Prop

i thought the best song was to Everton - "Champions League - youre having a laugh"

As for SEY, results to me were as good as I expected and as most of us here know, this is not a share that we are looking to short term trade but one to tuck away, certainly till 2006 and probably beyond. As far as I see the building blocks are continually being put in place

Hilary,

Many thanks for sharing your thoughts the other day, much appreciated as always. I wonder if I could pick your brains briefly as to where you think cable might head over the next 6 months or so. I'm looking at a 12 month daily chart on Netdania and it shows cable trading in a range between around 22/11/04 to date. From the highs of around 1.9550, it seems to have fallen to around 1.8530, today's price, from where it has bounced a few times back up to what seems to be its current trading range. Would just be interested to hear your thoughts as to whether this is likely to continue for the rest of the year. TIA

Cheers

Gav

Fundy, what was funnier was they sang it right back to us!

the amusing song was 7 nil to the arsenal, 7 nil to the arsenal...

may not sing that again for a few years if not decades!!

Gav,

It's probably not a lot of use to you, but I only really look at cable with a view to where it's going today and I'm totally open minded on a longer term view.

Although it's off it's 1.95 high, it's spent the year so far oscillating + or - 5 cents around 1.90. That's not a fantastic range and reflects a degree of uncertainty within the market. Commentators are pointing to a break of the longer term support and the possible start of declines, but there are several factors which drive the FX market which could easily change between now and year end.

Underpinning everything else is the interest rate differential between the UK and the US. There is an expectation that the UK might cut rates soon to stave off recession, which would weaken GBP. There is also evidence that the US economy is not as bad as first feared and that US rates might rise further in the near future. Those expectations are driving the greenback up. I suspect that the economic data comprises much smoke and mirrors and it will be a while before a clear picture really starts to emerge.

You've also got a possible revaluation of the Chinese Yuan to digest short term and if oil is high going into the US driving season, that will weaken the dollar.

I would expect cable to find chart support at around 1.85 which is roughly where it's at now. If it goes over the next few days, there's thin air down to 1.78 where it was at last October. It's not an exact science though and doesn't say where it'll be by year end.

Hope that helps.

They got well and truly thumped! A bit embarrassing to say the least for all Evertonians!

Got the last Evo's note, if anyone wants a copy then email me off board.

Be nice if it's the cup final.

too true...a 7-0 victory....maybe that would put the willies up Glazer (so to speak)...

hilary - outstanding posts today here and on DOWN.

Thank you for taking the time.

(No, I do not want something. I mean it.)

;-))