Brief Update – Caza, Encore & the markets generally.

Caza Oil & Gas

The ASX partners in the current Arran drill released an RNS today (here) stating that drilling is now progressing and they expect to hit targets in 7-10 days (targets are below 14,000ft). This means that the issues outlined in this week’s Sonris report (here) have been resolved and drilling is continuing, which is great news. But as with the last 60 days, it’s given investors an idea of timescales, so the ‘hot’ money can know exactly when to move in.

Pretty much every share on my watch-list was in the red for the last couple of days, thanks to the impact of the on-going conflict in Libya. Not helped today by the saddening disaster in Japan.

So Caza’s SP has drifted a bit, and ended the week at 52.75-53.00p. Technically, the share has a lot of support at this level thanks to consolidation over previous weeks. It has bounced off the 52p mark a number of times.

As previously highlighted (here), the Arran drill offers significant potential additional NAV to Caza, and at this price, none of it is priced in, In my opinion, based on the calcs in the aforementioned post.

Essentially, the bottom line is that the drill has had some quite standard complications and we should be within the pay zones late next week. ‘Exciting Times’ still applies, it’s just been held back by external international issues and drill delays.

Encore Oil

Encore released their Interim results for 6 months to Dec 2010 (here) on Wednesday.

As mentioned in my previous post, Nautical Petroleum had stated intent to drill Spaniards and Tudor Rose (which Encore are operator for), but Encore hadn’t at the time. In these interim results, Encore state their plans to do so, which is re-assuring. They have been granted license extensions. The question on everyone’s mind has been how Encore will fund these drills. Encore have plenty of funding for the Cladhan and Catcher appraisals, but not enough to see these prospects through. They have always stated that they want to offer great value for their shareholders, and that they were researching innovative funding models. (They had £31 million cash at end of 2010, and no debt!)

In these results, they stated that they are considering floating a second company, which they will retain a significant shareholding in and transfer the exploration assets to, so they can raise funding that way, without diluting Encore shareholders’ holdings. I think this is a great idea, as Encore will retain Catcher and Cladhan, which they can finish appraising and sell on, and the new company with fresh funding can continue to explore and add value, which will transfer to Encore as a significant shareholder.

I will be wanting some shares in the new company as well as in Encore!

There have been a number of articles related to Encore’s RNS, and they’ve been generally very positive.

Again, the SP has been depressed, and in my opinion, this is down to the external market influences. The whole stock market is down generally.

The Markets Generally

Clearly the on-going conflict in Libya is having an adverse impact on the global economy in general. I’ve seen a lot of people wondering why Oil companys’ SPs aren’t going up, as the price of oil is going up. But it’s not as simple as that. These global events have a big impact on investor confidence and generally cause them to seek safe haven for their cash, and clearly increased sales = downward pressure on prices.

I hope, more for those in Libya than for my own investments, that these issues get resolved. Likewise I hope Japan’s disaster doesn’t reek too much havoc and misery.

I think these factors will continue to have an impact on the markets, which is bound to have a negative impact on the SP of most companies across the globe. It’s important to remember the fundamentals of the companies you’re invested in during these times. Unless, of course, you’re talking about companies directly exposed to these issues.

Blog Updates

I’ve made a number of updates to the blog layout, the menus at the top, a contact page etc. I hope it’s becoming increasing useful and user-friendly. Thank you to those of you who have provided feedback and comments, I appreciate it.

What next?

I’m still deciding what company to do a full assessment of next.. I’ve had a number of suggestions, so thank you for those, and feel free to fire some more in… Otherwise, watch this space, I hope to have something in the very near future.

 

The Small Print

Please note that I am not a financial adviser or even employed in the financial sector and am not providing financial advice. The contents of this blog are from my own research of publicly available data, and any opinions expressed are my own. I trust that you enjoy reading them but you must do your own research or obtain financial advice before making any investment. Naturally, I do everything I can to ensure that the information posted by me is entirely accurate, however, any information provided is subject to the possibility of error, both in fact and interpretation, on my part and for that I can not be held accountable.