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

Decided to sign up here as well last week....overvalued : I still think this is but the sp keeps on rising and spudding can't be far away....

Ah, the lure of filthy money eh RF???? Duster or gusher, should be worth trading in & out a bit as the RNS are issued.

Not filthy money ...good, honest stuff....just bought a smallish amount to have a foothold in the stock.....

After one year of talking SEY down, I think you will not be sorry now you have a few.- Good luck with them. I have a shed full.

The trouble is that a big strike is already priced in to my thinking....and half a penny here we go if the well is uncommercial...

I know a few people who have a shed full.

Read the latest article at Proactive Investors.

mitzy

Exactly what are you getting at ? "I know a few people who have a shed full".

What is written at Proactive Investors ? Can you not give us a clue ?

You seem to talk in riddles

the clue is r..p!

What? R I P?

Wednesday, October 14, 2009

The Next Great Oil Stock in Kurdistan?

Theres no doubt about it. Kurdistan contains oceans of oil.

If you were among the readers of my newsletter, Red Hot Penny Shares, you might have made many hundreds of percent returns on Gulf Keystone Petroleum (ticker: GKP) when it struck oil there recently.

Well now the hunt is on for the next get-rich-with-oil Kurdistan strike. With few foreign companies willing to risk the wrath of the Baghdad government, the number of candidates is small. But penny share aficionados have alighted upon Sterling Energy (ticker: SEY).

Long-time readers of my free email Penny Sleuth (you can sign up for free by clicking here) may remember that I wrote on Sterling Energy in May. Back then, I wrote of my surprise that this once respected oil junior had managed to get into so much of a mess.

Well, four months on and things have now reached a predictable conclusion. Shareholders have been obliged to stump up fresh capital to keep the business alive. The former directors have been shown the door.

Could this be another Kurdistan success story?

Replacing them in charge of the operation is Alastair Beardsall, whose credits include the successful turnaround of Emerald Energy (ticker: EEN). Here he oversaw a rescue rights issue at 25p per share in 2003 and today Emerald is in receipt of a 750p cash offer from Sinochem. Sterling Energys shareholders would certainly settle for a similar return.

Beardsall likes the fact that Sterling has interesting assets but has been strangled by a lack of finance. He has a reputation for running a tight ship, and for issuing a minimal number of new shares. In a new research note, these are all arguments put forward in favour of Sterlings shares by broker Evolution. But the overriding matter, at least in the short term, is Sterlings drilling program in Kurdistan. What could success be worth?

Ill come to that in a moment. But first, let me tidy up Sterlings other interests and the tricky matter of its relationship with the bankers. For the last year and a half Sterling has been living from one banking review to the next. But it has now raised the hefty sum of 62.5m through an issue of shares at 1.3p.

A further 20.6m may follow, depending upon how many shareholders elect to take up the open offer to buy shares, also at 1.3p, which closed on Tuesday. Given the discount to the prevailing stock market price of 3.6p, one would expect the majority to do so, so Sterlings coffers should be about 80m better off.

With this out of the way, Sterling can now proceed with the sale of its producing assets in the Gulf of Mexico and this could raise another 50m or so. Set against these cash sums Sterling has debt of some 70m and it may have to pay its share of drilling programs off-shore West Africa and Madagascar. Unless Sterling farms out its interests here, these projects could require an investment of 60m, but this will not be until late next year. By that time we should know how Sterling has fared in Kurdistan.

The gamble that investors in Sterling Energy (ticker: SEY) take

Here it has an interest in the Sangaw North Block and drilling is expected to start before the end of this year. It should hit the first potential oil bearing rock in 60 days and complete drilling in 150 days. Sterlings interest is likely to fall as partner Addax farms into the project and the Kurdistan Regional Government takes its share. Even so, Sterling will still be left with 40% and Addax will pay all of the initial dry hole drilling costs, leaving Sterling to chip in only at the point where any oil flows are tested.

So basically Sterling now has a clear run at this prospect, without having to worry about appeasing its bankers or progressing its other exploration projects.

Of course, there is no knowing whether Sterling will strike oil at Sangaw, although the success rate in Kurdistan seems to be pretty high. But as a guide we have an independent report. That gives a best estimate of Sangaws oil reserves at 1.335 bn barrels of oil (Gulf Keystone has estimated 1.5-3bn bbl at its Shaikan strike), with the chance of success given as 27% at the shallower levels and 10% at greater depth. On this basis the prospect at present is valued at 2.2p per Sterling share, assuming a $70 oil price and a /$ exchange rate of 1.65.

But Sterling will not 27%-find-oil. Either it will or it wont. And if it does, then these estimated reserves become worth 10p per share. It is also possible that while Sangaw could contain much less oil than the best estimate it could contain much more perhaps worth close to 20p per Sterling share.

On the other hand it might find nothing at all. If that turns out to be the case, the shares will have, in the opinion of Evolution, a value of just 0.5p. And thats the gamble that Sterling investors take!

Whenever you go looking for big rewards, just be aware of the risks...

Good investing,

Tom Bulford
A Penny Sleuth article for Proactive Investors

http://proactiveinvestors.co.uk/columns/investment_insights/508/the-next-great-oil-stock-in-kurdistan-0508.html

Thanks for that...what did I say about the half penny if the well is dry ...somebody agrees with me !.

Business Financial Newswire
"AIM-listed Sterling Energy plc, has signed a binding sale agreement in respect of it's USA business to a non-USA buyer.

The intial gross consideration is $90m payable on completion and further amounts may become payable depending on future oil and gas prices over the next three years.

The sale consideration is fully funded.The disposal will lead to a book loss of around $80m, which will be recognised in Sterling's accounts for the period to 31 December, 2009.

The net $79m will be used to repay all of Sterling's bank debt "

sounds very much like a forced sale

cynic

re - sounds very much like a forced sale

The company has been trying to sell the US assets for a very long time now


re - and further amounts may become payable depending on future oil and gas prices over the next three years.

that is a good deal, if considering the prices are expected to be on the rise, so further money should be recoup from that.

personally, i shall stay away from this company .... though there may be good profits to make on 0.25p moves, provided you remember to bank them! ..... there are so many tasty fish in the sea at the moment that i see no need to try and pick at the plankton, especially as some will assuredly turn out to be poisonous

Cynic - Please list the tasty fish for us, and let us see your recommendations, rather than passing empty comments.
I'm not trying to put you down but I am looking for ideas.

in such a booming market it's hard to know which still have the most legs, but any of the following are worth a look ....

TLW, AFR, AMEC, CEY, CSR, POG, KAH, PMO, MCRO, WMH, FTSE, DOW

how many do you want?

Thanks Cynic for some ideas - I will trawl through them. I know AMEC was tipped in the Sunday Telegraph. Tullow's oil in East Africa is said to be waxy and may require a heated pipeline, but I shall have another look at it, together with the others. I have not traded indexes before such as FTSE or DOW.
I usually do day trading with CFD,s and Direct Market Access, following the free charts I get when logging into my IG Index account ( although I do not now do spread betting ). I seem to remember that you trade CFD,s.? Thanks again.

i'm certainly not nearly brave enough to day-trade ...... seems to me, that unless you have very sophisticated methods and discipline and a very deep wallet, it is the certain road to perdition