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SEFTON RESOURCES INC - UNDERRATED OIL PRODUCER (SER)
ptholden
- 04 Aug 2006 19:53
Sefton Resources is an independent AIM quoted Oil and Gas company operating in the US. The companys principal current assets are two producing oilfields in California (Tapia Canyon Field and Eureka Canyon Field); it is also in the process of buying up prospective coal bed methane acreage (CBM) in Kansas.
Update from July 2007 AGM
Finance
I revealed in my annual statement that discussions were well advanced with
Banking institutions. The final phase of the agreement with a suitable bank
without complex and restrictive terms is now very near. This is weeks away
rather than months.
Oil
Oil production at Tapia has averaged 4,100 BO during the last five months. Which
is in line with last years levels. Once this finance is in place we will be able
to move ahead with drilling.
Drilling
We have stayed close to drilling contractors and we are ready to move forward
quickly when this finance is available.
Steam generation
The equipment is now in place at Tapia. Preparation time is needed to connect
the equipment and carry out the necessary trials required to get the main work
started. We anticipate this steaming will start in the next couple of months. If
successful a significant amount of oil resources will move into the Proven
Producing Reserves category.
Joint Ventures
Discussions continue with a number of interested parties to develop our Anderson
counties gas assets.
New finance team
A new CFO has been appointed with good knowledge and experience of the oil
industry. A new assistant to undertake all the daily needs has also been
appointed.
SWOT ANALYSIS
STRENGTHS:
Sefton has two oil fields, both producing. One is already profitable, and the other is breaking even. This should generate good cashflow for the company over the medium term.
Sefton owns 100% of both its major oil interests and is now demerging its non-controlled oil interests in order to concentrate on those where it has full control (Sefton has recently disposed of its Canadian assets for CDN450k cash).
Sefton is establishing a track record of using modern extraction technologies to improve the efficiency of its fields.
WEAKNESSES:
Sefton has suffered from a number of one-off factors. While these were out of the companys control the problems it has faced since 2002 have held back development and taken up management time. Investor disenchantment may account for the current low rating.
OPPORTUNITIES:
Sefton has acquired acreage for CBM (coal bed methane) in Kansas. CBM gas production is a thriving market and Sefton believes it has acquired the acreage at advantageous prices. While this is a longer term prospect it is an exciting one and could eventually eclipse the oil interests.
There are a number of other fields in the Ventura Basin and more generally in California as a whole that Sefton may look to target now its cash flows are stronger.
Eureka is a semi-exploration play which may contain further upside. This cannot yet be evaluated.
At this valuation the company may prove an attractive target for a larger player.
THREATS
Owing to its geographical location the company continues to be exposed to the threat of bush fires, canyon floods and geological interruption (earthquake risk). Sefton is taking steps to mitigate this risk by investing in Kansas and although Forest Basin area is susceptible to tornados - gas facilities have a minimal surface footprint.
LINKS:
Sefton Resources Web Site
Quarterly Update (Mar 08)
Operations Update Dated 14 January 2008
Hardman Report
Final Results - Year Ended 31 Dec 2006
2007 AGM & Update
In The News - Oil Barrel Dated 31 January 2007
Daily California Crude Oil Prices (MIDWAY SUNSET 13)
moonshine - 11 Aug 2006 15:18 - 82 of 2350
pt There are two cases, and the announcement you refer to was for the first case. That case was the Currington Litigation vs CAZA (the drilling operator) and Sefton. Currington was the name of the employee that was killed, and his family were suing CAZA & Sefton for damages. Sefton were indemnified by CAZA's insurance company against loss, and there were no damages awarded against Sefton for that case.
The second case is Sefton vs Caza, which could be brought by Sefton once the original case was settled, and is for compensation for damages, production loss, etc. I understand questions were tabled around the middle of May, but I haven't heard that this case has been judged, or any out of court settlement decided. But if found in Sefton's favour, then it could mean substantial compensation to Sefton, or CAZA drilling wells for nothing, or a combination thereof. At a cost of US$400k per well, drilling wells for nothing would be good.
I don't think it is a foregone conclusion that the case will be found in Sefton's favour. I didn't go to the AGM, but this is a comment from someone who did go:
The claim is awaiting a ruling but this should all be soterd within the next couple of months. Costs(if they arise) are already provided for. Upside could be large but ultimately will be negotiated. Mgt are keen to move on from the episode.
The second case is Sefton vs Caza, which could be brought by Sefton once the original case was settled, and is for compensation for damages, production loss, etc. I understand questions were tabled around the middle of May, but I haven't heard that this case has been judged, or any out of court settlement decided. But if found in Sefton's favour, then it could mean substantial compensation to Sefton, or CAZA drilling wells for nothing, or a combination thereof. At a cost of US$400k per well, drilling wells for nothing would be good.
I don't think it is a foregone conclusion that the case will be found in Sefton's favour. I didn't go to the AGM, but this is a comment from someone who did go:
The claim is awaiting a ruling but this should all be soterd within the next couple of months. Costs(if they arise) are already provided for. Upside could be large but ultimately will be negotiated. Mgt are keen to move on from the episode.
Laila25 - 11 Aug 2006 21:42 - 83 of 2350
Blue day maybe...but the price still couldn't break the strong resistance at 8 pence....5 pence soon.
ptholden
- 11 Aug 2006 23:03
- 84 of 2350
Moonshine,
Thank you for the update, much appreciated. I believe the worst that SER could suffer is approx $150k, which has already being set aside?
pth
Thank you for the update, much appreciated. I believe the worst that SER could suffer is approx $150k, which has already being set aside?
pth
Laila25 - 11 Aug 2006 23:31 - 85 of 2350
5 pence soon then.
moonshine - 12 Aug 2006 05:12 - 86 of 2350
pth, that is what I understand.
One benefit of consolidation has been the spread of the individual MMs. Pre-consolidation the normal spread was .2p (eg WINS would normally be on the bid with a spread of .45p/.65p and HOOD would be on the offer with a spread of .30p/.50p, giving a price of .45p/.50p). SCAP were the only MM with a different spread and that was .25p. A .2p spread is equivalent to a 3p spread after consolidation. However, after consolidation, SEYP have narrowed their individual spread to 1p, SCAP to 1.5p and the rest are on a 2p spread. The effect of this is that SEYP are now dictating the prices, not HOOD. If the spread is 1p, SEYP are both on the bid and the offer at the same time. Finally, at current prices the most the spread can be is less than 13%. Which, IMHO, is a lot better than it was pre-consolidation. (The MMs can widen/lessen their spread at any time, and they will widen the spread when/if the price rises. For instance on DES, with a price in the 30/40p region, the individual MM spread is 3p.)
At consolidation the mid-price was .51p. Two weeks in the price hasn't dropped as many predicted it would. SEYP are more supportive, too. Patience with this stock will, I believe (and hope), be rewarded.
One benefit of consolidation has been the spread of the individual MMs. Pre-consolidation the normal spread was .2p (eg WINS would normally be on the bid with a spread of .45p/.65p and HOOD would be on the offer with a spread of .30p/.50p, giving a price of .45p/.50p). SCAP were the only MM with a different spread and that was .25p. A .2p spread is equivalent to a 3p spread after consolidation. However, after consolidation, SEYP have narrowed their individual spread to 1p, SCAP to 1.5p and the rest are on a 2p spread. The effect of this is that SEYP are now dictating the prices, not HOOD. If the spread is 1p, SEYP are both on the bid and the offer at the same time. Finally, at current prices the most the spread can be is less than 13%. Which, IMHO, is a lot better than it was pre-consolidation. (The MMs can widen/lessen their spread at any time, and they will widen the spread when/if the price rises. For instance on DES, with a price in the 30/40p region, the individual MM spread is 3p.)
At consolidation the mid-price was .51p. Two weeks in the price hasn't dropped as many predicted it would. SEYP are more supportive, too. Patience with this stock will, I believe (and hope), be rewarded.
moonshine - 12 Aug 2006 09:49 - 87 of 2350
I don't know if anyone has posted the Hardman Monthly Update for July/August. Apologies if you have all read it:
http://www.oil-barrel.com/advisers/hardman/julymonthly.pdf
Might be a good link for the header. Hardman publish monthly updates, and each company that they cover is included in the update, so we should get the monthly updates about Sefton from Hardman. Not the impact of an RNS, I know, but at least at update.
http://www.oil-barrel.com/advisers/hardman/julymonthly.pdf
Might be a good link for the header. Hardman publish monthly updates, and each company that they cover is included in the update, so we should get the monthly updates about Sefton from Hardman. Not the impact of an RNS, I know, but at least at update.
austing2253
- 12 Aug 2006 15:58
- 88 of 2350
I think the best thing we can all do is totally ignore the '5p' poster and she will eventually go away. Unfortunately our replies assist with her attention deficit disorder.
TheFrenchConnection
- 12 Aug 2006 17:09
- 89 of 2350
Amities mes potes - Still no response as to if L actually holds a position in this stock . Obviously not from his repetitive derogatory posts. So why the "sudden intense interest L. " ? . l am the first to support anyone with a contrarian view to the general consensus of opinion on any individual board { as i did myself with NML , SEO , & TMC } . But at least i tried to give rational reasoning behind my decision. .......lncidentally most consolidations do not act as a prerequisite to a falling s/p ....that is pure nonsense and research into this very matter by JP Morgan illustrates otherwise.. lf yours was the case certain ftse 100 companie would have dissappeared let alone mere minions .........Let the results at interims and drilling statements do the talking and i think we shall all be in for a nice surprise come next interims ............................and it wont be 5p !.@+ J .
aldwickk
- 12 Aug 2006 18:40
- 90 of 2350
' J '
Long time no see , was getting concerned about you hope you have been keeping well. Roly.
Long time no see , was getting concerned about you hope you have been keeping well. Roly.
kkeith2000
- 12 Aug 2006 18:53
- 91 of 2350
Hello aldwickk and j
I was just thinking that myself aldwickk, nice to hear from you j also any comment's on afr am still in there
thanks Keith
I was just thinking that myself aldwickk, nice to hear from you j also any comment's on afr am still in there
thanks Keith
Laila25 - 13 Aug 2006 14:36 - 92 of 2350
Should drift down next week IMHO.
Laila25 - 13 Aug 2006 15:48 - 93 of 2350
Even ptholden agrees....wot a load of balls and 5 pence soon.
ptholden
- 13 Aug 2006 15:53
- 94 of 2350
?
Laila25 - 13 Aug 2006 16:15 - 95 of 2350
Blackhole in the accounts to be discovered.........can that happen........can never rule it out.
ptholden
- 13 Aug 2006 17:24
- 96 of 2350
The only 'black hole' SER have to worry about are the new wells to be drilled in the Tapia Field, additional production, increased revenues.
From the Hardman July monthly update:
Sefton Resources is new to our coverage. An independent AIM quoted Oil and Gas Company, it operates in the US with exclusive rights over two producing oilfields in California. Sefton is operating profitability and with continued development drilling in California it should see significant new revenues generated this year. Since our initial note, Sefton has disposed of its Canadian operations for CDN450k in cash as management continues to focus on upping its core assets in the USA. As the Californian operations are operating profitably, the proceeds from the Canadian sale are being re-invested into Sefton's new coal bed methane (CBM) program and will be used to acquire new CMB mineral leases in what we anticipate will prove to be a highly prospective asset packet in Kansas. We look forward to Sefton progressing its plans to begin feasibility testing in Kansas in due course. Operationally, since our
initiation of coverage note, Sefton has completed renovation work on the wells at Tapia. We understand oil production is at full capacity from the current wells with
operations running smoothly.
pth
From the Hardman July monthly update:
Sefton Resources is new to our coverage. An independent AIM quoted Oil and Gas Company, it operates in the US with exclusive rights over two producing oilfields in California. Sefton is operating profitability and with continued development drilling in California it should see significant new revenues generated this year. Since our initial note, Sefton has disposed of its Canadian operations for CDN450k in cash as management continues to focus on upping its core assets in the USA. As the Californian operations are operating profitably, the proceeds from the Canadian sale are being re-invested into Sefton's new coal bed methane (CBM) program and will be used to acquire new CMB mineral leases in what we anticipate will prove to be a highly prospective asset packet in Kansas. We look forward to Sefton progressing its plans to begin feasibility testing in Kansas in due course. Operationally, since our
initiation of coverage note, Sefton has completed renovation work on the wells at Tapia. We understand oil production is at full capacity from the current wells with
operations running smoothly.
pth
Laila25 - 13 Aug 2006 17:28 - 97 of 2350
Loving it....Sefton is just dog of dogs...only downhill from here.
cellby - 13 Aug 2006 19:53 - 98 of 2350
seems to me someone has a short on, what a lot of energy spent, hope the rewards if they come will be worth it.theres room for eVery kind of share punt here,but lets try to keep it informatiVe with a few facts thrown in.Im long on ser and am in profit,beleaVe there will be growth from here and if they do go down to bargin basement, without bad news i will haVe some more, good luck to all.
markusantonius
- 15 Aug 2006 01:51
- 99 of 2350
Pete, I have now DMOR and am interested in having a punt - just a few however (skint atm, as you know!). Gonna try for 6p entry point - what do you reckon?
markusantonius
- 15 Aug 2006 12:35
- 100 of 2350
Up this morning, I notice - Laila, you have mislead us all here!
ptholden
- 15 Aug 2006 15:11
- 101 of 2350
markus
LaLa's comments had nothing to do with the prospects of SER, shorting or otherwise. His posts were in direct retribution to comments I posted on an attempted 'pump n dump' stock.
In answer to your question of entry points I would offer the following:
1. Following consolidation, stocks often whipsaw until a new SP level is attained. The fact that SER's SP is up 10% one day and down a similar amount the next (or vice versa) is of no surprise to me.
2. There is an unfounded perception that following a consolidation, stocks fall in value, possibly, in the short term this may prove to be the case. However it is important to understand the skewed logic behind this perception.
When a company announces that they wish to consolidate, it is essential that the reasons for the consolidation are considered. In many cases the company perofrmance has been so poor that SP has been devalued to such a degree that to recover credibility and escape sub penny status, consolidation is the only option. At this point look at the fundamentals of the company. If they are crap, then further devaluation is likely. followed by administration, (PTG are a classic example).
In SER's case there is nothing fundamentally wrong with the company. They should report results in September that demonstrate profitability and their plans for the immediate and longer term (if they come to fruition) will enhance shareholder value. SER were unfortunate in terms of the well blow out / floods and fires that plagued oil production over the last two years and inevitably management need to recover city confidence before the full potential of the company is to be believed.
3. I actually think that thus far the SP has reacted extremely well to the consolidation and although the SP is still quite volatile, I don't think that 6p is necessarily on the cards. It is not long till the Results are announced and then there will be a steady flow of news, annoucing new wells in the Tapia and Eureka Fields, CBM porgress, CAZA settlement and so forth. Each of these events will stimulate the SP further. Personally, my view on SER is medium to long term and whether I buy at 6,7 or 8p is immaterial to me. When and if the SP is way beyond these levels the saving of 1p or 2p per share will be unimportant.
If I could predict 6p on this stock or any other with a certain degree of accuracy I would be a very rich man by now!!
LaLa's comments had nothing to do with the prospects of SER, shorting or otherwise. His posts were in direct retribution to comments I posted on an attempted 'pump n dump' stock.
In answer to your question of entry points I would offer the following:
1. Following consolidation, stocks often whipsaw until a new SP level is attained. The fact that SER's SP is up 10% one day and down a similar amount the next (or vice versa) is of no surprise to me.
2. There is an unfounded perception that following a consolidation, stocks fall in value, possibly, in the short term this may prove to be the case. However it is important to understand the skewed logic behind this perception.
When a company announces that they wish to consolidate, it is essential that the reasons for the consolidation are considered. In many cases the company perofrmance has been so poor that SP has been devalued to such a degree that to recover credibility and escape sub penny status, consolidation is the only option. At this point look at the fundamentals of the company. If they are crap, then further devaluation is likely. followed by administration, (PTG are a classic example).
In SER's case there is nothing fundamentally wrong with the company. They should report results in September that demonstrate profitability and their plans for the immediate and longer term (if they come to fruition) will enhance shareholder value. SER were unfortunate in terms of the well blow out / floods and fires that plagued oil production over the last two years and inevitably management need to recover city confidence before the full potential of the company is to be believed.
3. I actually think that thus far the SP has reacted extremely well to the consolidation and although the SP is still quite volatile, I don't think that 6p is necessarily on the cards. It is not long till the Results are announced and then there will be a steady flow of news, annoucing new wells in the Tapia and Eureka Fields, CBM porgress, CAZA settlement and so forth. Each of these events will stimulate the SP further. Personally, my view on SER is medium to long term and whether I buy at 6,7 or 8p is immaterial to me. When and if the SP is way beyond these levels the saving of 1p or 2p per share will be unimportant.
If I could predict 6p on this stock or any other with a certain degree of accuracy I would be a very rich man by now!!
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