Canuck Investor

The SEC Surrenders to the Oil Industry

SEC proved reserves of P90 is not a helpful metric. Firms want to have the best estimate of the actual reserves and P90 is not the best estimate. SEC P90 reserves can be interpreted as "there's a 90% chance that our estimate is too conservative and the reserves are higher." The key metric is P50 or 2P reserves and this means there's an equal 50% chance that the actual reserves will be higher or lower. Canadian firms use this metric. The key factor is that the reserves estimate has to be done by an independent and respected 3rd party engineering/geologist consultant.

S&P 500's PE Ratio of 139 Isn't Sustainable

I imagine the S&P 500 P/E ratio was lower when the banks were reporting great earnings a few years ago but we all know that those earnings weren't real. At least now we have a ratio that might be more meaningful.

Royal Dutch Shell Gets More Efficient in Exploration and Production

I prefer oil & gas firms that are able to grow production year-over-year. Shell's production is in decline just like the other majors.

Colonial Bank Failure Highlights the Problem

I'm not sure bankers are quite as evil as the article makes them out to be but the author has a point regarding the perverse incentive system. It's kind of like the CEO will always have a seat at the compensation committee without the board necessarily realizing it. The financial results are really based on judgement calls by management.

On Norway's Petroleum Sector

The top 10 gas producers in 2008 according to the BP Statistical Review of World Energy 2009 are as follows:

Russian Federation
US
Canada
Iran
Norway
Algeria
Saudi Arabia
Qatar
China
Indonesia

So, Norway is a long way to go to become the number 2 natural gas producer and the North Sea is in terminal decline to boot.

Niko Resources: Opportunity Beckons

Big oil hasn't really overlooked India. I would say that India has discouraged big oil firms with a lame fiscal regime for oil and gas. Niko has done great exploratory and production work but the fiscal terms have really limited it's financial success.

Some Important Notes on Potash (And Ways to Profit)

Despite what Potash Corp says about demand for higher quality food driving higher fertilizer prices the real cause is the increase in biofuels production. The World Bank published a paper entitled: "A Note on Rising Food Prices." To quote: "It concludes that the most important factor was the large increase in biofuels production in the U.S. and the EU. Without these increases, global wheat and maize stocks would not have declined appreciably, oilseed prices would not have tripled, and price increases due
to other factors, such as droughts, would have been more moderate.

So, fertilizer prices are tied to oil prices and corn prices. At lower oil prices ethanol is not an attractive substitute.

I'm long Potash Corp myself.

Isis Generating Impressive Oncology, Diabetes Data

Well, Isis is working with many big drug companies in partnership so they already have access to some of the drug candidates. The big pharmaceutical firms tend to look for blockbuster drug candidates when contemplating takeovers. Isis's lead candidate Mipomersen has the potential to eventually get access to a large market if I recall. I think its currently being trialed for a small market niche. This company is on my radar but I don't own shares. Milestone payments for candidates that progress through trials are nice but remember that real success comes from selling products. Pre-trial and phase one results are not particularly meaningful despite the torrent of press releases ISIS issues on them. Show me a phase II trial with extremely robust results or obviously phase III that targets a large market and I get interested.


On Jun 25 12:07 AM Buckeye Jim wrote:

> Why isn't Isis a target of a big pharma takeover? I've owned Isis
> for years and can't figure this out. Antisense technology and the
> products that are being developed for cancer, diabetes, and lipids
> are very promising. What's missing from the picture?

'Fracing' Technique Creates Great Opportunity in Exploration of Oil and Gas

The Baken is an oil formation, so, yes it has an effect on oil recovery but most fracs are done on natural gas wells. Gas flows far more easily than oil so a frac has a bigger effect on a gas well.


On May 20 09:24 AM Bruce Vanderveen wrote:

> Thanks for the great article explaining the fracing technology. Suddenly
> we now have lots of gas and the price shows the overabundance of
> supply. I'm wondering, however, how successful is fracing increasing
> oil recovery. At this point we need oil more than gas.
>
> Long term you can see gas more and more replacing oil as an energy
> source (vehicles when?).

Petrobank Energy Can Deliver, Even with Low Oil Prices

I'm a Petrobank shareholder. All the value of the Colombian subisidiary is in the Corcel field and other exploration properties. The Orita and Nieva fields have negative net cash flows and I believe they're operated by Ecopetrol so Petrobank doesn't even have control over the expenditures. Fortunately the Corcel field is very productive.

Medivation's Attitude Warrants a Pullback

I've read the Lancet article and I can't see how you can conclude it was only a lukewarm endorsement: "The results...were highly statistically significant at 6 months.... Improvements were seen across all domains...."

Investing in Biotech: The 3 Phases of Clinical Trials

The time to invest is after phase 3 but before approval or, if the clinical results are very robust after phase 2.

1,238 Billion Barrels of Oil Reserves: Is This an Oil Price Bubble?

A lot of those reserves only exist on paper. The OPEC producers in the Persian Gulf have vastly overstated their reserves to increase their production quotas.

Oilsands Quest: Looking to Breakout

I'm long too but there' no guarantee that the geology will be suitable for SAGD production and even if it is there's no infrastructure in the area so it will take years for production to come. But when you start looking at 5 or 10 years out the future could be pretty bright.

BMB Munai: Cheapest Oil Producer in Kazakhstan

The acreage appears to be mature and I'm also concerned about deteriorating fiscal terms.