I think it`s about time CSH had a thread, an AIM oil co. that is producing oil and quality stuff at that. These are vastly under-valued, market cap. 30 mill., they are going up on news NOT hype. check them out.
Dexter

Just seen this on another bb: apparently not from caspian, but another co. in the area.
Dexter

transportation infrastructure. Management believes that the Company is
strategically well placed to serve its existing markets, and that the proposed
pipeline linking Kazakhstan with China, announced in May 2004 will, if
completed, provide improved access from Kazakhstan to the potential Chinese
market.

The Caspian Basin has one of the world's largest hydrocarbon reserves. The
extraction, production and transportation of oil and gas are a significant part
of the Kazakh economy. Kazakhstan has explored reserves of approximately 28
billion barrels of oil and condensate. Kazakhstan is not a member of OPEC.

This is a follow on from the above, although the name is spelt wrong,



Kashagan will be second largest in the world. The field is so big that new pipelines will be required to deliver the oil to western markets. A neighbouring onshore field is producing 271,000 barrels a day, making it the fifth largest in the world. This oil is feeding into existing pipelines running to the Black Sea port of Novorossiisk from where it is exported in tankers.

this is where were working could be the secon largest in the world
wuth a neighbouring fild already pumping out 271,000bpd

question..
would we be able to use other peoples pipelines??
for a fee ofcourse..

this can only suggest there is a heck of alot of oil here..

This is taken from the other side from a well respected poster who puts in a lot of research.
Dexter

ASSET VALUATION

OK, lets start by responding to a deramper comment of last week that went something like, share price is not about valuation, its about demand and supply. That comment can be true in an over-excited marketplace where a share gets ahead of itself and the share price is not underpinned by true company valuation. However, the converse is true with CSH. The asset value is significantly ahead of the share price. The suppressed position is largely as a result of the company (until 10 days ago at least) being one of the best kept secrets on the stock market.

I cant say Im an expert oiler. I do however believe business principles apply regardless of asset. To simplify the Zengeldy position I use the housing market as a simple analogy. A housing developer buys a parcel of land. If it transpires that the number of houses that that developer can get on that parcel of land increases with no detrimental affect on valuation, the profit generated, or the value of that parcel of land increases. Equally, if the housing market moves, and the selling price of the houses increases, then the resultant profit, and again, the value of that parcel of land increases.

This brings me to Zengeldy, the Ecopetrol estimate, and asset valuation.

Ecopetrol, the company that prepared the Competent Persons Report for the Prospectus, estimated a technical value range for the asset at between $25m and $100m. These figures exclude any fixed assets. They go on to refine their valuation as being in the order of $50m to $75m.

Reading behind these numbers, Ecopetrol define the minimum value of the asset stating if the property is purchased, then the purchase price is the minimum value assigned to that property by the purchaser. We are well beyond this stage. I have not considered the $100m valuation, since any comment made would lose credibility. I want to be as realistic as possible.

That then leaves the range of valuations between $50m and $75. I believe from drilling reports to date, from the fact that pay zones are greater than anticipated, and from strike rates, that we are at the top end of expectations. I would like to base the following therefore on an asset valuation of $75m.

However, for those cynical ones amongst us, Ill start with $50m since it sets a scene.

At $50m technical value and an exchange rate of $1.89 to the pound (todays rate) and with 78.4m shares in circulation, that provides a value of asset per share of 34p. The company also has cash in hand of 4.4m, and presumably other assets. I have assumed these other assets to be minimal and have taken cash per share therefore at 6p. This gives a value of 40p per share.

Now, take a technical value of $75m and adopt the same perameters as above. This results in a value per share including cash of 57p.

AND THE UPSIDES?

Take a look initially at the Ecopetrol basis of valuation. They state an oil price from the official BRENT (US$38/bbl) July 15 2004 has been assumed, and discounted to US$28.50

The first major change is that oil quality has been discovered to be WTI quality, which at present trades at $2.40 a barrel more than BRENT.

Lets ignore the oil price position for the time being and just look at this quality issue. Arguably, this should be easier to extract and therefore there should be a saving on production costs. I have ignored this saving. The price premium however, is all bottom line. The company will have a 30% Corporation Tax bill to pay, but that is it. The result is an additional $1.68 per barrel straight to bottom line.

Now consider the original basis for valuation. All valuations are a product of profit. If the field were not generating profit, it would have no value. Now, lets assume that the valuation is based upon 9.8m barrels of oil actually generated. It is safer to use this lower figure since the higher production may give a distorted end result.

At 9.8m barrels total, and a valuation of $75m, this would suggest that the profit per barrel in arriving at this
valuation is $7.65. If this is being increased by $1.68 due to better quality oil being found, then the resultant increase in profit and therefore valuation is 22%. If the $75m is based upon a 13.2m barrel total delivery, then the profit per barrel will be $5.68, and the resultant increase in asset value 30%.

Lets ignore the $28.50 assumption at this stage, and consider the impact of the above.

Take the $50m valuation which equates to 34p per share. Uplift this by 22% and add 6p for cash and incidentals. Asset value per share equates to 47.5p.

Take the $75m valuation, uplift for oil quality and add cash and incidentals, and you arrive at an asset value per share of 68p.

WHATS NOT INCLUDED?

I dont believe I can be accused of ramping with any of the above.

Lets look at the upsides on the asset valuation. If we were talking of a property company, this asset approach would be a dangerous one, since until recently, many have traded at a discount to net asset value. This is not the case for oilers.

The company is new to the market and will develop a reputation. It isnt there yet, but a few more positive RNSs and this will trade at a premium to net asset value on potential upside alone.

The oil price assumed in my calculations above is on the basis of an average across the 8 year extraction term of $28.50 Brent plus a $2.40 Texas Intermediate weighting resulting in $30.90 a barrel. Lord Brown of BP states that the days of the sub-$30 barrel are gone. It will be interesting to see BP accounts shortly, or indeed examine some of the other major oilers to establish how they are now valuing their asset base moving forward. CSH will certainly be seeking to revalue their own asset since this will have a major affect on their virgin accounts and their standing in moving forward. I have a suspicion that the Ecopetrol estimate was used in purchase negotiations (although this is completely unfounded), and that CSH will be looking to re-establish asset value and reserve base by March. I am fully expecting a company re-rating at this time.

Estimates of reserves are not yet confirmed. From information provided to date however, signs are more than encouraging, and it is likely that the Ecopetrol assumptions were conservative. This again, will result in a reappraisal of the asset value and consequently, the company share price.

The extension area negotiations are I suggest in an advanced stage and news is awaited. This is not factored into the valuations above, which are trading at a discount to asset value. With the potential upsides that this will offer the company, this will bring a large premium to share price when it happens.

wilbs,
do you listen to virgin radio?, if you know any good jokes there is 25k up for grabs. check there website www.virginrado.co.uk

dexter,
The best joke I know is Petrel Resources!!

I listen to virgin sometimes but Radio 2 is my main choice.I may have a go, the web is full of great jokes.
Have you entered?
wilbs

wilbs,
Very cutting!!,yes i have and i`ll probably enter a few via text as well. I was lucky enough to win a holiday to Beverly Hills 2yrs ago and they did`nt skimp on luxury, with dinner thrown in at the Beverly Hills Hotel, trouble is it spoils you!!.
dexter

dexter,
Blimey!! Beverly hills eh. Thats where I was planning to retire on my profits from PET but I guess Diss will have to do. Ive not had a hol for 10 years ang that was when I lived in spain. Think I better treat myself. I am currently doing some research on a few companies I think may have some great potential over the next few years. I would like your opinion, I may start a new thread on them or just post on one you frequently use.
Oh well, back to the hotel Diss for my egg and chips!!
wilbs

wilbs,
i won`t depress you with my other radio wins then!. i would like to see what other companies you are researching, and i will do likewise.
dexter

dexter,
cheers. I dont usualy hold for long term but I think this is the way forward and will be happy to hold for long term. Gotta think of old age!! Better cook my egg and chips now. I treated myself to a bit of ham to have with them. Can't wait!!
wilbs

Beverely hills billys, crude, black gold i mean. TV oldie remember?

With a shortage of shares the MM's might start to play they games.

aldwikk,
Texas teade!
The mm's are desperate for are shares. IMHO I think the next few weeks will be good for CSH. News must be round the corner and the share price will rise. I hope the mm's loose out big time. That will teach em!!
Anyway, my ham, egg & chips are ready so gonna tuck in.
wilbs

A couple of posts from the other side, they make interesting reading,
Dexter
*******************************************

Bit of background stuff about Kazhakstan, intersting final parapraph

"EBRD chief urges Kazakhstan to diversify economy and join WTO

Wednesday December 8th, 2004 - The president of Europe's development bank on Wednesday urged the government of oil-rich Kazakhstan to work toward diversifying the economy, ensuring further growth and accession to the World Trade Organization.

"Our very strong view is that the stress must be put on the diversification of the economy," said Jean Lemierre, president of the European Bank for Reconstruction and Development, or EBRD.

Kazakhstan is one of the most economically advanced former Soviet republics in Central Asia. But its economy depends heavily on extracting raw materials, with most investment concentrated in its oil and gas sector.

Lemierre said Kazakhstan must develop non-energy branches of its economy and maintain openness to investors if it wants to be part of the global economy.

"WTO is an element of openness. It's part of the (investment climate) picture," Lemierre told reporters. "WTO must be ... on the road map of Kazakhstan. It's clear that some reforms must be driven by this target to make sure it's a success."

The WTO regulates international trade rules.
Lemierre also said that, at his expected meeting with President Nursultan Nazarbayev on Thursday, he would raise a question about a new Kazakh law adopted last month giving the Kazakh government priority in buying stakes in the country's energy projects.

Observers see the move as part of effort to increase the national oil company KazMunaiGaz's participation in Kazhakstan's oil and gas sector, and to elbow out the foreign investors that now dominate it.

The EBRD has invested about US$320 million (240 million) in Kazakhstan this year, and is planning to put in at least the same amount next year, Lemierre said.

Lemierre on Wednesday also signed deals with the Kazakh CentreCredit and ATF banks to lend US$10 million (7.5 million) to each to develop small and medium-sized businesses.
Kazakhstan produces about 1,000 barrels of oil a day, aiming to triple output in the next two decades to become one of the world's top five oil exporters."

********************************************

From the CIA's website (really!)

http://www.cia.gov/cia/publications/factbook/geos/kz.html

Economy - overview:
Kazakhstan, the largest of the former Soviet republics in territory, excluding Russia, possesses enormous fossil fuel reserves as well as plentiful supplies of other minerals and metals. It also is a large agricultural - livestock and grain - producer. Kazakhstan's industrial sector rests on the extraction and processing of these natural resources and also on a growing machine-building sector specializing in construction equipment, tractors, agricultural machinery, and some defense items.

The breakup of the USSR in December 1991 and the collapse in demand for Kazakhstan's traditional heavy industry products resulted in a short-term contraction of the economy, with the steepest annual decline occurring in 1994. In 1995-97, the pace of the government program of economic reform and privatization quickened, resulting in a substantial shifting of assets into the private sector. Kazakhstan enjoyed double-digit growth in 2000-01 - and a solid 9.5% in 2002 - thanks largely to its booming energy sector, but also to economic reform, good harvests, and foreign investment.

The opening of the Caspian Consortium pipeline in 2001, from western Kazakhstan's Tengiz oilfield to the Black Sea, substantially raised export capacity. The country has embarked upon an industrial policy designed to diversify the economy away from overdependence on the oil sector, by developing light industry. Additionally, the policy aims to reduce the influence of foreign investment and foreign personnel; the government has engaged in several disputes with foreign oil companies over the terms of production agreements, and tensions continue.


Mentions the Governments potential intervention again!

Siskinbird - 1 Feb'05 - 11:09 - 81 of 105


JTK

From the CIA's website (really!)

http://www.cia.gov/cia/publications/factbook/geos/kz.html

Economy - overview:
Kazakhstan, the largest of the former Soviet republics in territory, excluding Russia, possesses enormous fossil fuel reserves as well as plentiful supplies of other minerals and metals. It also is a large agricultural - livestock and grain - producer. Kazakhstan's industrial sector rests on the extraction and processing of these natural resources and also on a growing machine-building sector specializing in construction equipment, tractors, agricultural machinery, and some defense items.

The breakup of the USSR in December 1991 and the collapse in demand for Kazakhstan's traditional heavy industry products resulted in a short-term contraction of the economy, with the steepest annual decline occurring in 1994. In 1995-97, the pace of the government program of economic reform and privatization quickened, resulting in a substantial shifting of assets into the private sector. Kazakhstan enjoyed double-digit growth in 2000-01 - and a solid 9.5% in 2002 - thanks largely to its booming energy sector, but also to economic reform, good harvests, and foreign investment.

The opening of the Caspian Consortium pipeline in 2001, from western Kazakhstan's Tengiz oilfield to the Black Sea, substantially raised export capacity. The country has embarked upon an industrial policy designed to diversify the economy away from overdependence on the oil sector, by developing light industry. Additionally, the policy aims to reduce the influence of foreign investment and foreign personnel; the government has engaged in several disputes with foreign oil companies over the terms of production agreements, and tensions continue.


Mentions the Governments potential intervention again!

From UK Analyst Tuesday 1 February 2005:

Buy Caspian Energy at 46p
Suggests Stewart Dalby of Oilbarrel.com
We wrote last November that although the market seemed to love pure exploration plays but perhaps investors should look at oil development development companies.

Caspian Holdings floated on London's Alternative Investment Market (AIM) on the 4th November 2004 raising 4.4 million pounds before expenses and giving the Company a market capitalisation of 19.4 million at the strike price of 23p.

The Company is different to some of the crop of companies which have floated on AIM in that it is not promoting itself on the basis of possible huge exploration upside. The strategy of the Company has been to focus on shallow oilfields that combine the benefits of lower exploration and development costs, a shorter lead-time to production and higher returns on funds invested as compared to deeper targets that are traditionally targeted by the major oil companies.

This strategy has led Caspian to identify and acquire existing production in the form of the Zhengeldy oilfield in Kazakhstan. The Company plans to quickly develop and bring Zhengeldy into full production.

Thereafter, the Company will focus on identifying and acquiring similar type assets within the greater FSU region and Europe, particularly where synergies exist. In February 2004 the Company agreed to acquire a 70 per cent interest in Taraz LLP - the operating company that directly or indirectly owns the licences, leases and other assets that comprises the Zhengeldy oilfield. On September 1, 2004 Caspian Holdings entered into binding agreements to acquire the 30 per cent interest in the field.

The Zhengeldy salt dome was discovered in the 1930s and parts of the field were brought into production in the 1940s. Output was later stopped because of the small amount of oil production and the lack of infrastructure to transport the oil.

In the past six months an independent surveyors report has upgraded the proven and probable reserves from 4 million barrels to 13.2 million barrels of low sulphur (0.31 per cent). The estimate was based on the Z5 well, which was drilled to a depth of 718 metres. The well tested oil in the deeper Triassic layers. Other layers are Aptian, Necocomian Jurassic and Triassic I + II. It is believed there is scope to extend the reserve base by extending the lease area from 1.5 sq kms to approximately 30 sq kms.

Kazakhstan is one of the hottest oil provinces in the world. The Kashagan oilfield offshore in the Caspian Sea could have 40 billion barrels, which would make it one of the largest fields anywhere. The Tengiz field onshore can produce 1 million barrels of oil a day making it one the largest. Kazakhstan is vast (it is the size of Australia). It also borders the landlocked Caspian Sea. In the past, the large independent producers in Kazakhstan have been hampered by high transport costs and lack of infrastructure.

Caspian Holdings intends to show smaller companies can flourish in Kazakhstan. Two factors stand out. First, it is a shallow oil producer, which means the cost of wells is relatively cheap. The Company reckons it will cost US$350,000 to drill a well. Moreover the operating cost or lifting cost will be US$2.3 per barrel.

On the basis of five wells to be drilled in 2004 and 10 in 2005 Caspian is targeting 1,400 barrels per day by the end of 2004 / early 2005 and 4,300 bpd by the end of 2005, with each well producing an average of 288 bpd.

Second, Caspian Holdings is strategically well located. It is just north of the giant Tengiz oilfield. There is a 750 kms pipeline between Tengiz by way of Atyrau on the Caspian Sea which will become a 1,500 kms pipeline to Novorossiik on the Black Sea. This is run by the Caspian Pipeline Company. Zhengeldy is just 18 kms from Makat, the central loading storage depot for this and other pipelines. Alternatively there is transport by train. The field is 180 kms from Atyrau, from where it can be shipped across the Caspian. Pipeline processing and sales cost were put at US$9.50 a barrel in September 2004.

What the company needed was some news flow and now we have got that Despite some appalling weather three wells have been drilled and Caspian has started on the on the first of four new wells in its programme which should be completed by the end of April. Caspian is aiming to produce 4,300 b/d by the end of 2005, which will make it a cash flow rich company so at 46p it is definitely a buy.

Share price: 44 - 48p

Stockmarket: AIM

Symbol: CSH

NMS: 3000

Mkt Cap: 40 million pounds

beat me to it grevis2 !!

dexter01: Good article!

grevis2,
Are you in CSH ?, if you want some good research have a look on advfn CSH thread started by jaystom. I have psted some bits on here if you look back.
Dexter
are you out there today wilbs ?

Hi dexter,
Im here, been a bit busy doing some research and setting up my new laptop. Good posts. My portfolio seems to be rather quiet today. I have also signed up to betfair.co.uk. Have you heard of it? I learned about it off the Traders BB.
Hows your day been?
wilbs

hi wilbs,
I`ve heard of betfair, is`nt it one of those betting exchanges ?, what will you use it for?.
It`s been a bit quiet today, was hoping for a spike first thing as happened the last few days.
Dexter

dexter,
Not much volume on csh today, everyone must be piling into wlw. I used to hold in wlw but got fedup with them so sold about a year ago. Wish I had of kept them cos I bought in at about 38p. Hindsight eh!!
Im not a betting man really but betfair looks pretty good. I will have a few punts on the footie & see how it goes. There is a course running on it in Feb & one of the topics is how to suceed and make a living off it. I will give anything a go once.
wilbs