this is a gas play as you know I've followed for some time
posted on
Nov 19, 2010 11:23AM
Edit this title from the Fast Facts Section
and traded a couple times...still looking for a new entry but may start to phaze in a few here and there on any dips....Shachtner is a gas analyst fom Canada....
Schachter continues, “The evidence for a new cycle includes:
rising demand for natural gas, a slowdown in new
production, the La Nina impact this winter, lucrative hedge
programs having run down, and some gas producers are
beginning to shut in high cost production (i.e. Encana).”
But then we must get to the meat of the matter. If you
believe that gas prices have bottomed and there is a future
for the fuel (we still can’t get over why natural gas isn’t
used more in the States by every taxi, every bus, etc., the
environmentally preferred fuel, there’s tons of it in the
States that could create hundreds of thousands of jobs...I
don’t get it). So anyway, time to pick a stock.
Of the two stocks that Schachter features in his latest
Maison Monthly, Delphi Energy has long been one of his favorite
stories and being a gassy story, that’s obviously a
way to look at it. As his top domestic pick Schachter
writes, “In addition to its core conventional targets, Delphi
has been active in acquiring and targeting play type that if
proven to be successful, would increase the asset base and
production over the longer term. These play types include
the Duvernay oil and gas shale play north of Bigstone, the
Second White Specks and Cardium in Bigstone, and the
high impact Nikanassin across its Wapiti/Gold Creek acreage.”
Delphi Energy
Has natural gas finally
turned, or a false start.
Schachter also points out that “DEE has a strong balance
sheet, partly due to its excellent hedging program.
Currently 53% of the natural gas production is hedged at an
average AECO price of $6.08/mcf, much above current market
prices. In addition, the increasing oil and liquids-rich
component of the company’s production increased realized
netbacks as well as the premium for its heating content
quality. Delphi has been focusing on light oil and high NGLcontent
properties to aggressively increase production and
to capture higher netbacks for these commodities. DEE’s
goal is to increase the oil and liquids percentage from the
20% currently to 25-30% in 2011. At Q2 the company managed
to increase oil and NGL production year-over-year by
86% to 1,612 boe/d.”
It looks like the company is going to be busy as
Schachter writes, “For the remainder of the year Delphi
plans on drilling 17 wells and have 5 rigs active.”
Schachter has a $4.00 target on the company as does
Kim Page of Wellington West. On Tuesday, Delphi had
their quarterly conference call and Wellington West Kim
Page writes, “Batting 1000 in Q3 within Core Deep Basin
Project Area: Reiterate Strong Buy Rating.”
Page highlights the third quarter operational success
where DEE drilled 12 wells at 100% success rate boosting
Q3 production to 8114 boe/d equivalent. Page also writes
that he has a $4.00 target and a strong buy rating, suggesting
“Potential resource additions from inventory of 350
locations could add roughly 105 mmboe in reserves.”