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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)
SECRUOSER
- 08 Jan 2008 13:06
- 1441 of 2350
Depending on what details SER give in their next update I may attempt a projection, but it will still be a very rough estimate as there are so many variables.
driver
- 08 Jan 2008 16:31
- 1442 of 2350
Nice bit of buying today, the sp should have moved.
SECRUOSER
- 08 Jan 2008 16:43
- 1443 of 2350
But bear in mind 2x150k 'buys' were actually a rollover. Otherwise, as you say, the sp would have moved. The online quotes did move up a bit today.
Online limits just before close : 50k@4.8p/50k@5.4p
Online limits just before close : 50k@4.8p/50k@5.4p
driver
- 08 Jan 2008 16:46
- 1444 of 2350
Not a bad rollover when you can buy cheaper that what you sold.
SECRUOSER
- 10 Jan 2008 10:20
- 1445 of 2350
Nice buying volume so far for 10 in the morning!
driver
- 10 Jan 2008 10:32
- 1446 of 2350
SECRUOSER
I agree a nice little bit of buying now lets have some news.
I agree a nice little bit of buying now lets have some news.
SECRUOSER
- 11 Jan 2008 11:24
- 1447 of 2350
November production figures have been published and i'm glad to see they are nicely above the estimate in my spreadsheet.
capetown
- 14 Jan 2008 08:40
- 1448 of 2350
SECRUOSER,
You should do the rns for sefton,you do a much better job!,
Good update,sp not up to much but its in the right direction.
You should do the rns for sefton,you do a much better job!,
Good update,sp not up to much but its in the right direction.
SECRUOSER
- 14 Jan 2008 08:56
- 1449 of 2350
Thanks Capetown :)
Good news on the flowrates and the drilling programme, and even signs of progress to come on CBM this year at last.
Very good to see that the settled rates were above the initial figures (78bpd), and now December figures are also well above my estimate.
I'm still not 100% clear whether steaming pilot has actually begun or not though, although they have taken the decision to use propane. JDM did say this
"The pilot steaming programme continues with the use of propane gas. " however.
But at this time I am more interested in the drilling programme. I do disagree somewhat with some posters view that only steaming will provide significant operational progress. Because the company has historically been around break-even, all increases in production pretty much go straight to the bottom line and significantly increase profitability. Do the sums and with another 3-4 wells even at 17bpd each suggests 250bpd and around $5m per annum free cash flow / profit after fixed and variable costs at current prices!
Good news on the flowrates and the drilling programme, and even signs of progress to come on CBM this year at last.
Very good to see that the settled rates were above the initial figures (78bpd), and now December figures are also well above my estimate.
I'm still not 100% clear whether steaming pilot has actually begun or not though, although they have taken the decision to use propane. JDM did say this
"The pilot steaming programme continues with the use of propane gas. " however.
But at this time I am more interested in the drilling programme. I do disagree somewhat with some posters view that only steaming will provide significant operational progress. Because the company has historically been around break-even, all increases in production pretty much go straight to the bottom line and significantly increase profitability. Do the sums and with another 3-4 wells even at 17bpd each suggests 250bpd and around $5m per annum free cash flow / profit after fixed and variable costs at current prices!
SECRUOSER
- 16 Jan 2008 09:58
- 1450 of 2350
Good article on Sefton out today on front page of Oilbarrel.
http://www.oilbarrel.com/home.html
http://www.oilbarrel.com/home.html
capetown
- 16 Jan 2008 10:05
- 1451 of 2350
SEC,
Can you paste it on here or give us a link.
Can you paste it on here or give us a link.
SECRUOSER
- 16 Jan 2008 10:06
- 1452 of 2350
Link to the article:
http://www.oilbarrel.com/email_index.html?page=/news/article.html?body=1&key=oilbarrel_en:1200448803&feed=oilbarrel_en
http://www.oilbarrel.com/email_index.html?page=/news/article.html?body=1&key=oilbarrel_en:1200448803&feed=oilbarrel_en
capetown
- 16 Jan 2008 10:15
- 1453 of 2350
Its a good read and goes a long way to explain why the SP is where it is,SER have much to prove and as we all hope as holders 2008 is the year for them to increase production,and lets hope that using propane gas as a quicker route to power the steamer; works.
driver
- 16 Jan 2008 10:18
- 1454 of 2350
SECRUOSER
A good article also like to see talk of the CBM at last.
The AIM firm has diversified into the gas business, having established a 43,000 acre footprint in the Forest City Basin in Kansas, thought to be highly prospective for unconventional gas resources. According to the analysts at Hardman, it looks like Sefton has acreage over the thickest sections of the Bevier and Riverton coal deposits. Progress in 2007 was described as cautious in response to the varied results achieved by other operators in the area. The wealth of geological knowledge gleaned by other operators will serve to smooth Seftons path towards optimising future production, said the analysts.
There are plans for a pilot drilling programme later this year but for now the real focus lies in California, where very real steps up in production, and thus cash flows, are on the books for 2008.
http://www.oilbarrel.com/email_index.html?page=/news/article.html?body=1&key=oilbarrel_en:1200448803&feed=oilbarrel_en
A good article also like to see talk of the CBM at last.
The AIM firm has diversified into the gas business, having established a 43,000 acre footprint in the Forest City Basin in Kansas, thought to be highly prospective for unconventional gas resources. According to the analysts at Hardman, it looks like Sefton has acreage over the thickest sections of the Bevier and Riverton coal deposits. Progress in 2007 was described as cautious in response to the varied results achieved by other operators in the area. The wealth of geological knowledge gleaned by other operators will serve to smooth Seftons path towards optimising future production, said the analysts.
There are plans for a pilot drilling programme later this year but for now the real focus lies in California, where very real steps up in production, and thus cash flows, are on the books for 2008.
http://www.oilbarrel.com/email_index.html?page=/news/article.html?body=1&key=oilbarrel_en:1200448803&feed=oilbarrel_en
ptholden
- 16 Jan 2008 10:22
- 1455 of 2350
Looks like 2008 is unlikely to produce any great increase in the SP. The reserves in California are well known and increasing production has had little effect thus far in nudging the SP on an upward path; seems it's all down to the Kansas CBM play and that is moving along at the pace of a very slow three legged snail.
SECRUOSER
- 16 Jan 2008 10:28
- 1456 of 2350
Sorry ptholden, but I strongly disagree, and think you will be proved very wrong on that score. Increasing production at the rate they are doing and are planning to do, will sooner or later be reflected in the shareprice. Thus far production has just about made the company break-even, but if you do the sums (I have), current production (after the new wells), and any further increases in production (3-4 wells planned from next month for a start) is throwing off a lot of cash and I would be very suprised indeed if they aren't now looking to make a substantial profit.
All this cashflow in conjunction with the credit line can be ploughed back into growing Tapia further (steaming, yet more wells), increasing the asset value of Eureka by some exploratory drilling and at last developing the Kansas CBM acreage.
So in summary for the first time in many many years they are now finally in a position to grow the company (and the shareprice) at a rapid rate.
All this cashflow in conjunction with the credit line can be ploughed back into growing Tapia further (steaming, yet more wells), increasing the asset value of Eureka by some exploratory drilling and at last developing the Kansas CBM acreage.
So in summary for the first time in many many years they are now finally in a position to grow the company (and the shareprice) at a rapid rate.
ptholden
- 16 Jan 2008 10:42
- 1457 of 2350
Sec
We'' have to diasagree on this one, although I do hope I am the one in the wrong. My point is that any production from Tapia etc (current or future) is already under-pinning the SP, they are not particularly big fields. Perhaps good results with increased profitability might do the trick, but I remain unconvinced. They need increased production of something from somewhere (CBM) to really get going.
We'' have to diasagree on this one, although I do hope I am the one in the wrong. My point is that any production from Tapia etc (current or future) is already under-pinning the SP, they are not particularly big fields. Perhaps good results with increased profitability might do the trick, but I remain unconvinced. They need increased production of something from somewhere (CBM) to really get going.
SECRUOSER
- 16 Jan 2008 10:50
- 1458 of 2350
I like to work with figures and spreadsheets in order to form a kind of mathematical model of the company's operations. This, when using real figures from company accounts and conservative assumptions has given me a high degree of confidence in the economics involved in the drilling programme and its ability, by itself, to significantly improve the company value.
Many people seem to play down the potential value of increasing production by the drilling programme, but I wonder whether they have worked through all the figures as I have.
So, current total production may indeed underpin the current shareprice (although imo still around 50% of the price it should be), but further production increases from here, which we know are coming as soon as next month, will start to significantly add to the value of the company (as derived via cash generation / profitability) and the shareprice.
In terms of asset/reserves value, the successful implementation of the pilot steaming, which is as far as we can tell still on for completion during H1 this year, should allow the reserve value at Tapia to be restated quite significantly upwards as oil is recovered from the field via enhanced recovery.
Many people seem to play down the potential value of increasing production by the drilling programme, but I wonder whether they have worked through all the figures as I have.
So, current total production may indeed underpin the current shareprice (although imo still around 50% of the price it should be), but further production increases from here, which we know are coming as soon as next month, will start to significantly add to the value of the company (as derived via cash generation / profitability) and the shareprice.
In terms of asset/reserves value, the successful implementation of the pilot steaming, which is as far as we can tell still on for completion during H1 this year, should allow the reserve value at Tapia to be restated quite significantly upwards as oil is recovered from the field via enhanced recovery.
driver
- 22 Jan 2008 13:58
- 1459 of 2350
Another dip??????????
kkeith2000
- 22 Jan 2008 14:18
- 1460 of 2350
Yes driver we held up well yesterday but today looks like our turn for some medicine, we can only hope that in the end SER deliver and the short term movements will not matter to the long term holders, looks like holding on for me not selling at these prices
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