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  • St Andrew Goldfields Is Quietly Developing Its Taylor Project To Increase Annual Production Rates With 45% Before Year End [View article]
    St. Andrew's is my favorite gold miner: good balance sheet, low cost production and visible growth drivers in the future. This stock is way under the radar and needs a little market exposure. However, patience will pay off...fundamentals eventually win out.
    Jun 24, 2015. 09:14 PM | Likes Like |Link to Comment
  • Oil And Gas Reserves - The Governance And Oversight Structure [View article]
    Thanks for the thoughtful article. I agree that the reserves of a producer are an important part of the evaluation of the value, and these evaluations can trigger changes to the borrowing capacity and cost, dividends, etc. as well as stock price. A great deal of manipulation is included in these reports.

    The article references reports by Chesapeake and Contango that were prepared in January 2015. This conveniently allows in the calculation of last 12-month price of oil the over-$100 oil for much of 2014. As a result, the average selling price for oil considered for the reserve reports was close to $95. While that may be a good average over the life of the well, the present value calculations overweight the near term production, so the use of a $95 oil average for at least 2015 and 2016 seems overly optimistic, despite the controls you mention. This greatly over-values the reserves.

    I have noticed very few oil producers are updating their reserves right now, because eliminating those reports based on $110 oil and updating to $75 oil would devastate the NAV of the company and throw them into a debt crisis with lenders. The best report I have seen was by little Surge Energy (ZPTAF) which applied a price to each future year of production, beginning with sub-$60 oil in 2015 and gradually increasing to above $100 in ten years. Of course, to bring their reserve report into reality with the current oil market they had to take a non-cash $.45 per share impairment charge, but their low debt prevented a lender crisis. The good news is that now they can prepare financial reports based on reality, including reduced depletion charges in the future. All oil producers sooner or later will have to update those reports and there could be some devastating surprises for investors in companies that have not prepared a recent update...JMHO
    Jun 10, 2015. 08:42 PM | Likes Like |Link to Comment
  • Vertex Energy's 2014 Earnings And Nuggets Of Hope In 2015 [View article]
    I was surprised by the report initially, but became more comfortable as the conference call Q & A fleshed out several one time situations in the quarter. Since they were trying to reset the spreads, it was a good time to slow capacity at some facilities and tend to maintenance. Management expects profitability in the current quarter, for a number of reasons. Maybe the most basic is that they inherited contracts to buy feedstock at $.89 per gallon and those expired on December 31. The current cost is NEGATIVE...that is, they are being paid to haul the used oil away. That is a huge swing in costs. Add in lower operating and G&A, elimination of one-time costs for plant repairs at the acquired facility, higher spot oil prices, reversal of a $4MM accounting adjustment and the feedstock reset, and it looks like the next quarter could be a surprisingly profitable one. Management also mentioned that several small competitors are getting weeded out, strengthening their hold on the territories they serve as well as strengthening their negotiating position. Vertex is not out of the woods, but if you wait for everything to be rosy, you will be chasing this stock.
    May 20, 2015. 10:39 PM | Likes Like |Link to Comment
  • ClearOne, Inc. Is Still Cheap [View article]
    Agree that CLRO is still cheap. Double-digit growth, market leadership, R&D investment, no debt...low PE, low Price to Book, etc. Management is smart and focused. Pays a little dividend, too.
    May 19, 2015. 12:56 PM | 1 Like Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Energex,

    I agree that the production will be less in the next quarter, but selling price should be better than the $42 oil from the last quarter. But trying to compare that and hedges, etc. gets complicated. This analysis is like when I worked in construction, and the estimator said his bid was a wild guess to the second decimal point. Nonetheless, I also agree that Surge has stated that it will define the development plan in July. My point was that the sale of less profitable assets to take advantage of more productive ones should eventually lead to greater production. I am not sure if they will borrow from cash or credit to enhance production, but I think they are comfortable with 4 to 6 wells per quarter for now.
    May 18, 2015. 12:36 PM | 1 Like Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Energex,

    Thanks for the comment and good information. I am not sure what the market is looking for nowadays in oil stocks. I suspect it should be looking for companies that can manage their high debt load and provide cash flow at low oil prices. increasing production by borrowing in this low price environment is not all that attractive to me. Anyway, it looks like Surge is expecting to spend about half of quarterly cash flow on drilling. If we do the math, they could add 1500 - 2000 boe/day of production with that conservative strategy each quarter. For instance, apparently wells in Valhalla cost $4MM and produce more than 300boe/day. With $24M to spend each quarter, they can drill 6 wells, adding 1800 boe/day of production. At that rate, this can go on for years. In a year they will have spent less than $100MM and more than replaced all the production that they lost in the $430MM sale to reduce debt. I like the way they are thinking.
    May 17, 2015. 10:32 AM | 1 Like Like |Link to Comment
  • Watch Out Below In Cytosorbents Corporation: A Reverse Merger Uplisting Running Low On Liquidity [View article]
    I have owned CTSO from before the CE Mark approval...bought at 6 cents (pre-split). It has a determined and patient CEO and approval came with very little funding for manufacturing, sales and administrative initiatives. The first two years were to introduce the filter to the medical community in Germany as a sepsis treatment...a very small slice, but a manageable start. Evidently the filters caught on and reorders began. Only in the past year or so did CTSO actually really focus on sales, and Fresnius has only begun to market the product...an inspired selection for a partner. The registry project indicates that the filter eventually will likely be useful in many medical conditions, possibly even ebola. CTSO has a slow moving strategy, because management is reluctant to dilute the stock ownership. I think the product could be a standard option for many treatments in the future, and I for one like the idea of being on the ground floor. Personally, I think this article will probably get the last weak hands out and create a great entry point.
    May 13, 2015. 11:20 PM | 7 Likes Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    hivoltage,

    Thanks for the comment. I did see an interview with him and my impression was that he was conservative and thoughtful. I should mention that his salary is only $24K. He is working to grow the company.
    May 7, 2015. 10:38 AM | 1 Like Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Bea,

    Thanks for your smart comment. Valid insights all. ZPTAF carries risks, and I am glad you added your comment to make a more fair analysis.

    I try to keep a balance so that stock portfolios pay at least as much income as 10-year treasuries while keeping diversification and growth targets in tact. ZPTAF helps bring up the income component while allowing me to include a fairly solid stock in the energy sector, which is pretty risky right now...as you say. Even so, I think it is better than most because the divvy has already been adjusted to sustainable levels, and the monster discovery could mean a hare-type growth run for an otherwise tortoise-like company.
    May 6, 2015. 11:13 AM | 2 Likes Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Dag,

    Thanks for the comment. I have been enjoying your contributions also.

    Even though the market is treacherous right now, my clients have instructed me to invest portfolios 100% in the small-cap market, as a balance to their more conservative 401Ks and IRAs. It is living on the edge, but some of the companies like ZPTAF are exciting to be part of, if you do not pay too much attention to the daily ups and downs.

    I may get back to writing a little more because of loyal readers, but some of the comments get ugly and ridiculous, and that detracts from the fun of sharing solid investment ideas. The short attacks on good companies, based on innuendo and twisted facts are becoming so prevalent, and then there are the vulture attorneys piling on. It is nice and quiet in my cave.

    I'll be looking for your next article.

    Stan
    May 6, 2015. 10:54 AM | 2 Likes Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Thanks for the valuable information about the AGM. Given that management seems very cautious, I suspect that there are further positive surprises on the way. As a Texan, I am not so big on DivCos either...I have seen too many times that ultimately reserves play out and distributions peter out. Nonetheless, I think Surge has found itself in this growth situation and the management has the experience to navigate it. The big dividend is gravy. I would probably invest in this story with no dividend.
    May 5, 2015. 11:29 AM | 1 Like Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Divirgil,

    Thanks for your comment. However, the dividend is 6.5% today. You may be calculating based on a quarterly payout. ZPTAF pays monthly.

    According to the Annual Report, netback increased by 7% per boe (despite steep drop in oil price) and G&A reduced by 21% per boe. Funds from operations increased 83% and net asset value increased $.41 per share. Due to exploration, depletion and other accounting the net income and expenses can be lumpy. The best measures, in my opinion, are the cash flows and changes in NAV.
    May 5, 2015. 10:55 AM | 2 Likes Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Goalkick,

    Thanks for the compliment.

    I am holding SLP and collecting my 3% dividend. It has not been a good year for the stock, and I think that there is some churning due to the acquisition of Gognigen...people coming and going within the company and subsequent selling of stock. I also think the founder is taking a back seat now and some see that as a weakness. I think he is still very involved, and I am excited to see what the new guy will do. The basic business is steady and Cognigen contributed to the 20% income growth last quarter. He indicated that this quarter should be improved over that due to some timing issues. With the healthcare sector going through some rotational selling, I would be watching for now, but probably buying before the next earnings. I think I will do an update on SLP as there have been changes, but may wait for the earnings.

    Stan
    May 5, 2015. 10:44 AM | 1 Like Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    Cwalt,

    I think it is pretty clear that management intends to keep the dividend as is for awhile, but I agree that I expect an increase before year end. The debt reduction may allow a divvy bump, even if the oil price struggles. I like that the management very clearly states in their strategy that the dividend is a primary priority. Some like non-dividend stocks with the idea that those companies invest in growth. That is appropriate sometimes, but generally my view is like Surge management...stockholders should get something too. Dividends don't exclude growth.

    Thanks for reading.

    Stan
    May 5, 2015. 12:42 AM | 2 Likes Like |Link to Comment
  • A Scaredy Cat's Top Oil Pick - Surge Energy [View article]
    windyhill,

    Thanks for reading the article. As others have mentioned, this is a tricky sector, but I happen to think this is the best of the bunch if you have a conservative bent. Future looks promising. I tried to look at Surge from different perspectives and came to the same conclusion...good growth, value and income.

    Stan
    May 5, 2015. 12:30 AM | 1 Like Like |Link to Comment
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