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

$72 for oil which might move SEY to 72p. Who knows when, maybe this year.

If you look at the shares that dropped the most today it was the ones which have risen the most recently.Twice as manys sells as buys. I think the post about mm's dropping the price and stop-losses being taken out, which in turn gives the mm's another reason to drop the price i.e. more sells was a good one. However, there's no doubt also some profit-taking. I've been watching sey since about 19p, this current rise seemed to accelerate from about 23-24p so it's been one hell of a rise very quickly. Profit-taking's inevitable I would guess.

I suppose it depends what happens in America today for a start. Optomistically, it could just be a blip which clears out the hype and gives the market a stronger base from which to start its next run up, but I wouldn't like to bet on it. I think as long as the shares one holds have good valuations then they should recover okay.

Yes and no. Oil price risen from average $50 to $70 recently. SEY should move at least 50% to reflect that. I'm not considering future developements.

I assume any rise in oil price is pure profit for oil producing companies like SEY -thier expences won't change with oil price.

Yes, but it depends on whether sey have hedging in place. Most oils do. The only company I know of that doesn't is dana. The rest are locked into agreements where they sell oil and gas at a guaranteed level for a period as insurance against falling prices. Also, it depends if concerted opinion in the oil industry is prepared to countenance long term oil prices of 50 70 $. I think it is only this year that they've begun to base their calculations on oil at 40$. I may be wrong on this point. They want to experience the price at a higher level for a longish time before they're prepared to price it accordingly or make deals, for example take overs based on a higher price.

Remember since the spike of the early 80s when oil was slightly higher than it is now, it has had a long general period in the dolldrums, throughout the 80s and 90s. Even after the 2003 iraq war oil was only about 25$ I think, so it's only been rising for 3 years, not enough for the oil companies to bet on when compared to the last two decades. An interesting footnote to this is how it has affected Britain's oil. During the 80 and 90 s when oil was at 10$ - 15$ a barrell, britain was obviously getting a poor price for its oil compared to now. However, the coming onto the market of north sea oil was ironically one of the reasons why the oil price was so low. The finding of such giant fields plus Norway's flooded the market. In response Saudi Arabia also increased output partly to help America as did Britain. Norway, on the other hand, did not yield to American pressure and extracted the oil more slowly (partly because the population was 90% smaller) so they are now benefiting from the increased price for a barrel of oil. If the leaders at the time had only had a bit of foresight and a more long term view Britain would be reaping the benefits economically now. Ah well...

And just for the record, Saudi is not pumping at remotely full capacity either ...... Aramco are holding off expanding existing sites etc, despite their protestations to the contrary

Lets lay the argument about who has control over the Kurdistan or indeed any other oilfields in Iraq to rest. Article 108 of the constitution states that producing fields come under the Federal government while new fields are the responsibility of the regional government. That means what Sterling have with the regional government of Kurdistan in relation to its MOU and Sterlings right to negotiate a PSA is legal and binding.
If anyone wants to read the full article then follow the following link:

http://www.krg.org/

Otherwise the relevant piece is as follows:

Article-108 of the Constitution of Iraq affirms that the federal government and the oil producing regions together will manage oil fields currently in commercial production. The revenue of this oil is to be distributed equitably among all regions and all people of Iraq.

But new oil fields, those not at commercial production at the time of the drafting of the Constitution, will remain the management responsibility of the regional governments where they are located. These governments will make the management decisions regarding investments and also the contractual arrangements regarding exploration and production.

as chico said

its buy time

well i have and to hold until death (or market collapse) us do part!

in fact, i bought some more MRP this morning when I meant MPH (which I also then bought!), so i hope my stupidity is not highlighted in due course!

fido,

Thanks for the information re Kurdistan.

Nice recovery this afternoon, and this morning's dip may have provided a good buying opportunity for the brave IMO.

May be of a little worth

fido don`t know if you have already but it is worth subscribing to KRG web site for the daily news letter.

Bit more on Kurdistan

Regards

Interesting piece in his speech Dr Square. Indicates that the regional government has the right to ocntrol all new drilling and exploitation. Could be good for SEY. Good post - thanks.

'Article-108 of the Constitution of Iraq affirms that the federal government and the oil producing regions together will manage oil fields currently in commercial production. The revenue of this oil is to be distributed equitably among all regions and all people of Iraq.

But new oil fields, those not at commercial production at the time of the drafting of the Constitution, will remain the management responsibility of the regional governments where they are located. These governments will make the management decisions regarding investments and also the contractual arrangements regarding exploration and production.'

In my opinion the turmoils of the last few days has been more to do with speculators than the companies themselves. With the oil sector having been driven to new highs the speculators decided it was time for a fall and massive shorting positions were built up against all oil companies. The fall duly arrived and as is the norm stocks like Sterling became oversold. We are now seeing a rise back to fair value before the uptrend resumes. On a general note, the oil sector is in a long term uptrend and Sterling has some of the most exciting prospects within this sector. Sterlings fall was more to do with Hardmans projections for the Mauritania operation where they were predicting 75K bopd as opposed to Sterlings 55K bopd. My understanding is that the fall in bopd is more to do with equipment failure and some technical difficulty`which are now being resolved asap. Also our chairman is correct in saying that in any new production there is a learning curve and it takes a little time before flow rates are optimised. As such, what problems there are are only temporary and 75k bopd is still on for the near term.
With regard Kurdistan, there is a lot of international investment coming into that area and it is doing this because the prospects are so good. Sterling are already in position and in the months ahead it will be seen what a fantastic move that was on the part of Sterling. Also Kurdistan proves what excellent dealmakers we have in our board and I am looking forward to more excellent deals to be done. Sterling are one of the best long term plays on the market and are destined to become a much bigger company.

you dont half get around old fido

lol

deadfred, but in terms of buying equities, is this the right time? I just feel that it cant be. and we should stay away until things stabilise. i am desperate to get in sey with next salary. but im not sure whether i will b e stung as i have been over last two bloody days!!!!

jameel06

Listen to your gut feeling. All the information available can not be digested fully so your brain tells you without the light bulb going on sometimes. Just my view. If you are not sure don`t do it. SEY will be here next month / year etc you may miss a bit of profit or a bit of loss so what. Be sure of your investments.

By the way look at the split between assets for SEY. GOM % and Mauritania %

Regards

$ is up, but Oil price hasn't fallen. It's good for oil producing companies IMO

ahoj,

It certainly is, we've fallen less than the explorers! LOL!

Hopefully a turnaround soon, some producing oil and gold plays looking quite cheap now, fundementally speaking.

Andy,
If the DOW doesn't tank again this afternoon then I am hoping that this is the bottom. Lots of oilies loking very cheap at the moment - including my BUR and VPC. Surely someone is going to start picking up large quantities of stock at these prices?
It will be interesting to see if AMVESCAP has picked up a few million more SEY during the carnage.

Pond Life - I too hold SEY and BUR and quite a number of others ...... Please be very cautious in your buying (if any), for though the market has taken a hammering (as if we hadn't noticed!) and there is very likley to be a (significant?) bounce, that is no certain indication that the storm has passed for good ...... The severely overbought position is copper futures is a very great worry, for if there are significant casualties from the correction (it must come), then the market will nosedive again

Below is an article from Oil Barrel which talks about the Mauritanian project. But before you read it let me just first give you my reation to it.

What this article shows is the technical challenges that face every oil company in the world. Oil extraction is not an easy business but it is a highly profitable one. Far too many people concentrate on the minor problems and don`t focus on the real issues. The problems in Mauritania will be overcome in the near term and what people should be focusing on is the upside that exists when new fields are brought into the project which is still young by any standards.
Rather than focus on the failure of a compression unit which is going to be fixed pronto, people should be focusing on other areas of the article like:

The exploration campaign is expected to get underway in July with a hole on the possible 170 million barrel Colin prospect in PSC A and Flamant in the Dana-operated Block 8, which could hold 5 trillion cubic feet of gas.

In the fullness of time it will be items like this and all their other exciting projects that will be coming on stream that is going to value the company, NOT a faulty compression unit.

And now the article:

18.05.2006
Production Worries At Chinguetti As Hardman Drills Ahead In Uganda
The science of finding, drilling and draining pockets of hydrocarbons, cooked over many millions of years in deep underground kitchens and hidden under several miles of subsurface rocks and ocean, often proves to be inexact. The past hundred years or so have seen the oil industry become increasingly skilled at finding and extracting oil and gas in ever more extreme environments.

But the fact remains that this incredibly high tech, high cost business can still throw up a curve ball that can wrong foot the best laid plans. This appears to be the case at the Chinguetti oilfield off the coast of Mauritania, Africas newest oil province. The field, operated by Australian oil major Woodside, was discovered back in 2001 and came onstream in February 2006. It was then expected to ramp up to a plateau production rate of 75,000 barrels per day, a rate that was briefly achieved in early March.

But this week it emerged that the project has hit what investors will be hoping is a mere production glitch. Production averaged 66,000 bpd in March and 53,000 bpd in April. These production hiccups were first highlighted by joint venture partner Hardman Resources, which has a 19 per cent stake in the field. Hardmans quarterly report for the first three months of the year indicated problems with the commissioning of gas compression equipment on the Berge Helene FPSO, delaying the re-injection of produced gas into the Banda reservoir.

This is not a major issue: equipment problems can be fixed in time. But Hardman also gave warning of more fundamental issues with the performance of the reservoir. While the four wells in the southern portion of the field are performing as expected given the problems with the gas-handling equipment, the two wells on the northern fringes of the field, drilled on the periphery of the main channel axis, are performing below expectations.

Over the first ten days of May, output dipped to an average of 45,000 bpd. With the gas handling equipment still out of commission, the partners cant use gas lift to sustain production levels and volumes are going to remain reduced until such time the partners can either side-track the problem wells or sink new wells.

This work is unlikely to take place until the final quarter although the work could get underway sooner if the partners can source the right completion equipment and are prepared to delay planned exploration work. The exploration campaign is expected to get underway in July with a hole on the possible 170 million barrel Colin prospect in PSC A and Flamant in the Dana-operated Block 8, which could hold 5 trillion cubic feet of gas.

This is a concern for followers of those companies carrying exposure to the US$708 million project. In addition to Woodside and Hardman, the partners in the project are the Mauritanian state oil company (the recently renamed Societe Mauritanienne des Hydrocarbures, which has a 12 per cent interest in the field) and London-listed BG (10 per cent), Premier Oil (8 per cent) and ROC Oil (3 per cent). Sterling has what amounts to an 8 per cent economic interest in the field as a result of financing the state oil firms share of the project costs and its chief executive was putting a brave face on the news this week.

Some initial fluctuations in production are always to be expected as reservoir management is optimized, said Harry Wilson. The reserve estimates are of course unaffected and given the strength of the oil price, Sterling's realised cash flow continues in line with the Board's projections.

Hardman, which is most closely aligned with the project, having first spotted the potential of these previously untested waters and then brought in Woodside to share the costs and risks of the deepwater wildcatting, has seen its share price slip on the back of the problems at Chinguetti. Investors are always cautious about under-performing wells: as followers of Ramco Energy will painfully recall, production issues can be an indication of far more fundamental reservoir problems.

So far there appear to be no such concerns about Chinguetti. The partners say the problems with the northern wells do not impact the reserves estimates although additional investment may be required to access those reserves. Whats more, while it may take time to rectify this problem there is the hope of near-term production increases as the existing wells on the field reach optimum configuration and sidetracks are drilled, adding at least 10,000 bpd per well in the southern sector of the field and 5,000 to 10,000 bpd in the northern sector.

For Hardman followers, theres plenty of other newsflow in the pipeline. A development decision is due this quarter on the large but complex 1 billion barrel Tiof discovery in Mauritania. The company is also still drilling ahead on the Mputa-2 appraisal well in Uganda, which has a target depth of 1,500 metres. Success here will help Hardman and its 50/50 partner Tullow determine the reserve potential and commerciality for the fault block which is home to the Mputa and Waraga-1 oil finds, which is to be flow tested. The results will also help plan further exploration of larger, deeper prospects under Lake Albert.

And the Hardman portfolio is no longer highly geared to success or failure in Mauritania. The first months of this year have seen the London and ASX-listed firm add new projects in Suriname and Tanzania to the mix. However, investors will still be anxious for further updates about progress on Chinguetti and will be glad this company is one of the better communicators among its peers.