So, where to go post Dana?

In reply to oilretire, post #34

Re Antrim - after getting my fingers burned with this one in 2008/9 I recently got back in after the Blakeney find by Wintershall (75% with SLG 25% .)

http://www.energy-pedia.com/article.aspx?articleid=141397

As the map indicates Fyne & Dandy is fairly adjacent (as Peter West might have said) to Blakeney and one wonders post Blakeney whether Wintershall might be interested in partnering Antrim on it and in the greater Fyne area.

There was a Q/A on Antrim recently here .

http://www.grayshares.co.uk/graysinvestmentbloguk/

SB: Antrim has been in discussions with potential industry partners to develop Fyne. These discussions have progressed in a positive manner and it is our intention to identify (ideally) an industry partner prior to year end 2010.

GW: You also state in your Q2 report that drilling will not begin on the Greater Fyne area until an industry partner has been brought in for the main Fyne block, but if you do not gain a partner by the year end, what effect will this have on your plans for the development of Fyne, and the drilling of the Greater Fyne area?

SB: It is Antrim’s intention to drill on Greater Fyne in 2011. Ideally we will have announced a deal around the development of the initial Fyne discoveries. The prospects on Greater Fyne are attractive potentially adding more than 100 million barrels of resources net to our interest. We may elect to drill some very low risk wells offsetting existing oil discoveries acquired at the 25th Round.

Not much new there really but maybe the Blakeney find might be some kind of catalyst.

Blakeney details..
http://www.upstreamonline.com/live/article227479.ece

Over the past 10 years I have often wondered whether a more focused approach of the sort advocated by ee would have been better than a mixture of losses and gains.

Judging by the list ee has given it seems as if there have been a fair number of losers promoted on TMF and I'd count myself as having t-shirts from a number of them.

Though I'd rank myself firmly as one of the people at the back of the class - I would say that the quality of posts on various BBs has meant that my losses on the Falcons of the world have been more than mitigated by gains in stocks such as Heritage (which started off life on the TSE).

And the recent experience with Encore has meant that I am now firmly of the opinion that losing money on the FRRs of the world is just an entrance fee to having a sizeable position on the EOs of this world.

In reply to Mid Herts, post #35

Hello MH,

I would like the debate to continue on how best to position portfolios to achieve the best risk/reward balance.

That is a very good question indeed, especially with people queuing* up to offer a range of explo situations as "the next big thing"

*repo is a bit like the funny lad in the school photo panorama....he keeps running round to the back of the queue to have another go ;-)

I'm  interested to see your list - partly because they fall neatly into two groups for me: SOCO, Dana(RIP),Faroes, BP, Tullow are in one group - I have no trouble seeing the case for them. The others I struggle with.

Someone said, I think, that it would be nice to avoid political risk. Where might that be?? I guess there is political, geological and specific risk everywhere.

That is actually quite an interesting question. If you go back to 1998/9, Vietnam was widely considered to be unacceptable "bongoland" by large chunks of the market - but the reality is that the political and operating environment there has been enormously stable!

Contrast that with the UK - where taxes were twice raised on North Sea oil operations. Or with the US, where the President and his acolytes dumped all over "British Petroleum" in an attempt to deflect blame from lax regulation and have flip-flopped over environmentally-sensitive drilling.

My general view is that there are some places where the political risks continue to be less than perhaps the market believes them to be....including Vietnam, Tanzania, Cuba and, bizarrely, North Korea (because the market expectations in that case are effectively zero). And there are a few where the market correctly sees stability - Norway, Greenland (probably), Canada, New Zealand and perhaps Brazil. [nb...these are just the first few to come to mind in each case). There are another group that may well be over-rated by the market.

I continue to favour those countries that may be more stable than the market thinks, and avoid those where the premium for perceived stability may be too high. And I think that, in general, international strategic asset buyers will try to do the same thing....so that, longer term, there is some political underpinning that may compensate for other risks.

I suspect that my approach will be to have core positions in relatively stable companies generally operating in relatively stable locations....and I will probably try to continue with a mix of having 80% of so of E&P assets in larger companies and relatively small proportions in the minnows. I don't think the current environment is likely to reward those who take big risk positions and so I'm pretty sure I'll be gradually diversifying my portfolio, including outside the E&P sector.

FWIW

Ithaca could have been a fantastic company until the credit crunch, directors squandered money, paid themselves very well and nearly went Oilexco

22,000 million bopd targeted for Athena next year, but since the credit crunch and the sell off to Dyas Ithaca only have a 22% interest and therefore just 4950 bopd net and proved/probable reserves just 5.49 mmbbls net to Ithaca for Athena

The company are doing their best to keep production up from Jacky/Beatrice/Bravo, but are loosing the battle as production is down 2800bopd net since start up. Beatrice needs $75 oil to be commercial, hence the importance of Jacky which brought the threshold down to $10/15 per barrel. As Jacky tails off the running costs go up

In terms of reserves Xcite Energy (XEL) is the one for me, once reserves are proven XEL could be the third largest independent operator in the N/sea

In reply to repobear, post #37

Hi,

For those of you who are more comfortable to DYOR a few links to let you know that Cladhan is far from finished as an explo project.

Encore views

http://www.investegate.co.uk/Article.aspx?id=201009130700075385S

http://www.investegate.co.uk/Article.aspx?id=201008310700548281R

Sterlings are here

http://www.sterling-resources.com/

But there again unlike many E&P bosses AB prefers to walk the walk, but can I'm sure talk the talk. Us guys who 'have followed him for three years know this and profited as a result.. None better than this one though quoted on this thread here

http://boards.fool.co.uk/sterling-revisted-12026491.aspx?sort=whole


''There are going to be two pieces of crucial news flow to come. Firstly, we await testing results at Cladhan and the down-dip sidetrack if the testing goes as planned. The down-dip sidetrack won't have to be a success to get to commerciality so it's not as crucial - it will just tell us where we are between a large find and a stonking one. Secondly, a major worry will be lifted when Melrose Resources finally get their farm-in to Romania ratified. There is good reason to be hopeful with both events.

Re:Cladhan, I think Encore's comments are very important since Alan Booth has established himself as a man to be taken very seriously when he is optimistic over a discovery. Cladhan will hopefully prove to be his third major find in the North Sea and this is what he says:

"This is a superb result from Cladhan and is at the upper end of our expectations regarding the quality and quantity of reservoir sands. This result supports the idea that Cladhan is a significant stratigraphic trap which has still not encountered an oil water contact.
...
"Aside from this exceptional result at Cladhan, we are hopeful of returning to Catcher this autumn, dependent on the signing of a suitable rig contract which is nearing agreement, but not yet confirmed.

Whilst I may be a cynical git normally, trusting Alan Booth has made me a fortune over the last few years so I'm going to trust him when he uses word like "superb" and "exceptional" to describe Cladhan results to date.
''
That was written before the superb 15k BOPD equivalent result from the DST and the downdip has just started to try to determine the size of the field;-)

From my reading of the RNSs above, SLG,the opertor, have overtaken him in the bullishness stakes re Cladhan.

The plans for a further stepout well have been brought forward to Q1 2011 for those of you who thought Cladhan was now done.

100mn bbl gross on Cladhan is worth about C$1.17 to SLG and about 16p to Encore according to my calculations.. It could be 4 times volume OIP that according to some. Who knows? Current prices C$2.73  and 92p respectively

I know where I think the starting line for each company is now, but that's another story.

Further drilling plans and details of the 'ragbag' of assets, ROtFLMAO,  that one was nearly so wide of the mark as the ''Cladhan now finished' one liner.are contaiined here

http://www.sterling-resources.com/docs/2010_Ops_Up.pdf

and here

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=307054

Ik ben nu klaar met mijn 'dog with a bone' ding;-)

repobear

In all honesty enjoying this thread tremendously at present - long may it continue.

SB

In reply to repobear, post #44

I recall being in the AGM in November 2008 just a few days after the Cladhan drill had given me some hope for the serious loss of funds I'd had over the GS project a fortnight earlier.
AB was questioned so many times about the significance/size of Cladhan but he steadily resisted being drawn in .What I do recall is him saying is that the phone hadn't stopped ringing.
The single fact that there had been no OWC kept me in for my original largish stake through 2009/10.
If AB gets a bit extravagant sometimes ,on past form I'd agree he's being pretty informative.

In reply to ohisay, post #46

Hi ohisay,

Well done on holding through the dark days on Encore and indeed we should have a better idea of the size of Cladhan within a week or two.

There have been two cracking posts on Sterling over on TMF and anyone interested in Sterling as a possible outlet for some Dana funds is recommended to take a look.

From WShak

http://boards.fool.co.uk/hi-repobear-the-track-record-of-canadian-listed-12039990.aspx

"I think that anyone ignoring Sterling will regret it over the coming weeks. There are always reasons NOT to buy a stock but each investor must decide for themselves whether they are material enough to dissuade them from a purchase. The failures of some other companies operating a similar business model, or the nationality of the shareholder base strike me as being particularly immaterial reasons to dismiss it as an investment.

The central bull case for Sterling is that it has four major assets in Breagh, Cladhan, Blakeney and Romania which have a (growing) market value which should be much greater than the existing share price indicates. More importantly, we don't have to trust management when trying to establish what the value is since we have verification from independent partners who have already demonstrated that they have impeccable credentials. "

and IronPyrites who makes this point amongst several others

http://boards.fool.co.uk/misconceptions-about-sterling-12040133.aspx

''10. IronPyrites, repobear and WShak are pump and dump merchants of the worst kind ;-)

Damn I think they might be on to us :-)''

repobear

In reply to emptyend, post #42

Hello ee

Thanks for your response. I am not much into this italics thing so will just continue in conversational mode since I am sure you are well aware of what you said.

I just want to emphasise that in giving a list of my current holdings I was merely trying to say that the decision implicit in the title of this thread was portfolio based for me. I certainly wasn't trying to encourage you or anyone else to buy any of these shares at todays levels. Some might be worth proper research but that is very much a topic for individuals in relation to their own circumstances. As it happens, I was very happy to see that about half were not favoured by you since this provokes me to think about my own rationale in continuing to hold shares which in every case were purchased at lower levels.

What I try to do is purchase shares in companies which offer me an an asymetric balance between reward and risk (taken within the context of my portfolio). I dont always succeed and my fingers still tingle at a couple of thankfully small positions at the lower end of the scale which went wrong and were dropped. As a result I am now much more aware of the need to go for companies of some substance rather than those which have to succeed with a small (perhaps only one) number of projects.

Briefly ( as a memo to myself rather than any encouragement to you to change your mind)

Heritage has already returned more than 30% of my original stake as a dividend but still stands at a small profit. At its present scale in my portfolio I see it as a case where potential rewards are very hard to pin down with any certainty but risk is mitigated by its cash holding. Sooner or later I will have to take a view because it isnt really a big enough holding post the return

Salamander hasn't set the world on fire with its exploration but encouragingly hasn't suffered too much from this. I think this suggests some patient shareholders and if it does succeed with one of its projects it might do well. I do not see any more political risk here than in some of the areas you favour

Hunting is a special case which has served me very well from its original purchase at levels much lower than now ruling. I have been pleasantly surprised by its resilience this year

JKX is an interesting case. I think I have read that you do not much like Russian/Ukrainian risk. Still one has to consider where the resources are and I am comforted by managements long experience in the area and some chunky local shareholdings. Happy with where I am and one of my better candidates for more if it does not run away from me before I am ready.

Dragon is interesting especially in the light of what has happened to Dana. This is the exact opposite. Independent directors recommended the bid from the majority shareholder but a couple of determined institutions meant that it did not succeed. Probably I should have sold more when it spiked early in the year but it was not convenient. I am not a buyer at current levels but unless good alternatives appear I am happy to wait a while because I think that some sort of corporate action will take place. Meanwhile the majority shareholder is a good one to have in relation to where its field is and there is a very comforting cash pile.

However, the real problem is that I am finding it difficult to discern opportunities of the kind which I like. Of course with the benefit of hindsight it would have been nice to have been in Encore and I am pleased for those who were. I very much think that there was a time when the reward was asymetric to the risk. It did after all trade around net cash for a time and although Catcher was a bit of an outlier in terms of probability it was an opportunity missed by me. I cant see that I would have taken a major position though.

I was interested to have your list of areas where you thought political risk was acceptable (or perhaps overstated) It looks as if I shall have to do more research because nothing is leaping into my mind or unless I am missing it evident on this thread

Regards

MH

Mid Herts

Dragon is interesting especially in the light of what has happened to Dana. This is the exact opposite. Independent directors recommended the bid from the majority shareholder but a couple of determined institutions meant that it did not succeed. Probably I should have sold more when it spiked early in the year but it was not convenient. I am not a buyer at current levels but unless good alternatives appear I am happy to wait a while because I think that some sort of corporate action will take place. Meanwhile the majority shareholder is a good one to have in relation to where its field is and there is a very comforting cash pile.

I wouldn't agree that the ENOC bid for Dragon was "an exact opposite" of Dana-KNOC.

First, it wasn't just 'determined institutions' who were responsible for the bid failing, but the fact that what appears to have been an overwhelming majority of PIs simply felt that the bid was way too low.

Secondly, ENOC already had over 50 per cent - what was remarkable about this failed attack is that, given that, ENOC still failed, though they clearly were very keen indeed to get their hands on the remainder, whether for the cash pile or to turn DGO wholly into the Dubai government's overseas E & P company. There could NOT have been any potential competition for ENOC - unlike the Dana case (even if, ultimately, it seems as though one isn't going to appear).

I would agree that  I think that some sort of corporate action will take place, although I'm far from convinced that this will necessarily be wholly in the interest of the non-ENOC shareholders, and, in that sense, I wouldn't agree that the majority shareholder is a good one to have.

Once the Dubai Government has decided what it wants to do with regards to setting up its own E & P arm, whether through a bid, much higher, for the rest of DGO or by starting again, then the shares will no doubt get re-rated. But the Dubai Government doesn't seem, at the moment, to have much in the way of spare cash to make a move.

Worth watching, definitely, and there may, of course, be a surprise new offer from ENOC or some kind of deal between ENOC and another party (a state oil company, perhaps), but I have no rgrets at having sold out a year or so ago, just beneath the level of the ENOC offer.

Not that I have any real (new) suggestions to make as to where Dana proceeds could be put, for those that have/will have them.

Man Siarad

In reply to Mid Herts, post #48

Hello MH,

What I try to do is purchase shares in companies which offer me an an asymetric balance between reward and risk (taken within the context of my portfolio). I dont always succeed and my fingers still tingle at a couple of thankfully small positions at the lower end of the scale which went wrong and were dropped.

Well I think we all try to do that really....but it is my feeling that it is very much more difficult to do that in todays market than it has been over the last 10 years. I think returns are generally going to be (much) lower and they are also going to be riskier and more unpredictable. Therefore I suspect I will be weighting more heavily the relatively solid liquid stocks and restricting the size of my exposures to more speculative situations.

Sadly the demise of Dana is another nail in the coffin for a more FTSE250 approach, IMO.

It looks as if I shall have to do more research because nothing is leaping into my mind or unless I am missing it evident on this thread

I have a few thoughts, but I'm not prepared to share them here as yet.  They won't be anything "new" though - and price will be an important factor if I decide to enter any of them. I think there is a fair chance of some severe market volatility ahead and so I am mostly focused on situations which have the potential to crystallise in months rather than years (eg SOCO)....though I don't doubt that other opportunities will emerge from time to time and perhaps it will be a good idea to sit on some cash for a while and pick them off from time to time

FWIW

ee

There is a slight hint of something confessional about this thread, so I'll get on my knees now and own up to my own sins both venial and mortal.

Over the past 10-12 years I've made a lot from Dana. I originally bought in at about 120p and my core long term holding averaged out at 150p.  In the 10-12 years since there have been 3 ocasions when I've sold all/most of my holding before re-entering at much lower prices. The effect of LTBH combined with this occasional topslicing and re-entry has been to deliver a compound annual return of approximately 28% pa over a 10-12 year period. My holding in Dana has sometimes been as high as 60% of my total portfolio. In recent years it has been closer to 30%.

I went 100% into cash a few months ago to protect against the risk of another major financial tremor. (Thanks to that decision I have been spared the terrible fate of making an absolute fortune from my previously large holding in EO.) When I sold up I sold everything including my ultra long term holding in Dana. I was in the early stages of rebuilding that holding when KNOC came along.

In the past few months I have been dripping money back into stocks as and when the price/risk/reward has looked attractive.

My portfolio currently comprises holdings as follows:-

Aminex - 1.5% (thank you EE)
BP - 5.5% (thank you Barrack)
Caledon - 1.5% (thank you Marben)
Dana - 8% (thank you TC)
Europa (EOG) - 1.5% (from an original idea of Marben I seem to recall)
Nautical - 2% (Thank you carmensfella for organising mello x2)
Petroceltic - 1%
Soco - 19% (thank you EE)
Sterling - 3% (Thank you Wshak)
Xcite - 4% (Thank you Oilbarrel)
Cash - 53% (Thank you LR and BB and AP - private joke)

Of the above everything except EOG is showing a very healthy profit.

I would be happy to add to any of the above holdings if the conditions look right - price vs newsflow vs valuation vs risk.....

my watch list is rather long but the most likely candidates include :

BEZ
COP
ENQ
KAH
KYS
MML
PMG
PMO

In reply to tournesol, post #51

Is anyone else going to confess to selling up and moving on?

Or selling up with a view to either to either, sitting on the cash, because of macro economic fears, or whilst they consider alternatives?

It's Dday for most. Or are you content for your Dana cash to be locked away for several weeks, so that you´re guaranteed to keep your powder dry.

repobear

In reply to repobear, post #52

Is anyone else going to confess to selling up and moving on?

Well if you like I’ll join in the fun.

I sold at 1713p on 19th August thinking that the upside to 1800p from here was only about 5% and that there were better opportunities elsewhere. Of course I knew that if a bidding war were to break out I might have a few regrets but I didn’t think that was very likely.

On the same day I recycled all the funds into Xcite, which is up about 30% since then! But more importantly I think Xcite still has a long way to go yet…..and I might have made the move anyway sooner or later.


MT

Just looking through all these posts I can't see any mention of the Falkland oilers.

Of course its all high risk and some of these companies other than RKH seem to me to be quite fully valued already (DES in particular IMV) but if the Sea Lion flow test for RKH comes up trumps in a few weeks time I'd expect to see all the NFB companies rerated and on the back of that the plays in the southern basin getting some sympathetic backwash.

Mention of a barbel approach has been mentioned.
For myself I topped on BG this morning - a real long term hold for me for its many prospects and coupled it with a small purchase of ARG - Argos resources.
The latter seems to me to me to be heavily leveraged to a decent Sea Lion test given its rel. low mkt cap - I expect it to run away if the flow test is as hoped for.

Strange, I sold 19 August also, for the same reason as mangotree. Had been in for many years.
Bought BNK (thanks for the earlier heads up djp!) & (more) CTP, & also kept some cash.
Both looking good in comparison so far, particularly CTP.

I think Lundin is worth adding to the list - but the timing is perhaps wrong - it has just announced a discovery

http://www.businessweek.com/news/2010-09-17/lundin-soars-on-significant-oil-discovery-near-luno-field.html

and the shares have soared by 15% this morning.

It is a mid cap, which expetcs to triple its production to 100,000 barrels a day within 4 years. Unlike Dana the shares are relatively tightly held - around 30% owned by Lundin family trusts.

After a recent portfolio clean up (including a 15% trimming of Tullow holding, spending my POL 3p dividend) I sold all DNX which was a significant % of portfolio and have recycled proceeds mainly into EO with some also into BP.

For those interested portfolio looks as follows.
Gulf Keystone (GKP)           22.8%
Tullow Oil (TLW)                  20.1%
Soco (SIA)                             15.6%
Encore Oil (EO.)                     9.2%
BG Group (BG)                       8.1%
BP (BP)                                    5.2%
Nautical Petroleum (NPE)   3.3%
Aminex (AEX)                          3.0%
Bankers Petroleum (BNK)    2.3%
Regal Petroleum (RPT)        1.5%
Polo Resources(POL)           0.9%
Circle Oil (COP)                      0.8%
Kryso Resources(KYS)         0.5%
Caledon Resources (CDN)  0.4%
Antrim Energy (AEY)                0.3%
Cove Energy (COV)                 0.2%
Allied Irish Bank (ALBK)         0.1%
Cash                                          2.9%
Managed Funds                      2.8%
Total                                        100.0%

Some more tidying up in next few weeks should see me increase holdings in BNK, POL, BP, COV and reduce/eliminate holdings AEX, AEY, RPT. Regal have been my “Falcon Oil” investment of 2010 (every year I usually pick a complete dud), when I rather rashly jumped in and am paying dearly for the lack of DYOR on this one.
Having missed the early easy gains in Falkland Islands stuff, XEL…etc I have stubbornly refused to buy in when in hindsight there were still easy gains to be made. Cest la vie....
My watchlist include various non O&G high yielders and PTR, ENQ. I am struggling though to find the enthusiasm to invest other or new LSE listed O&G compaes to invest in…which measits probably time to broaden my investment horizons by getting a foreign dealing  account or to move more out of O&G comfort zone.

JPGH

In reply to JPGH, post #57

Hi JPGH,

For those interested portfolio looks as follows

This might not be a comment that adds much value; I'd just say that for a portfolio that's quite so wide I find it quite striking how much you have concentrated in GKP.

Natuarally you don't have to answer the question, but I'm wondering what proportion you bought and how much has been 'earned' through growth? Have you ever top-sliced it?

SW10

SW10

its fair to say that my initial GKP investment was fairly small (got in at approx 10p using profits earned from a decent sized punt/lucky gamble on Sibir Energy earlier on that in 2009).....but took fright when GKP 50p so quickly in Aug 2009 and top sliced 50% but have been adding on dips (added quite a few at 75-85p range). I haven't sold any since Aug 2009. Its not everyone cup of tea (nor was Sibir for that matter, I recall being a small minority there also, I have an affinity for companies with lets say "a bit of previous").
I am hopeful that GKP will go under the hammer in 2011 and the upcoming news pipeline is very promising (Akri Bijeel sidetrack and drill test results, Shaikan-2 sidetrack flow test, Shaikan-3, Shaikan-1 extended well test, Sheikh Adi drill....etc). It costs next to nothing to get oil out of ground in Kurdistan, PSA terms are severe but still profitable. Politics in Iraq looks to be better/more stable than it was in early 2010 and with GKP now approaching the £1b mark I guess GKP board will have to tread carefully if they are to attract the big oil bidders to offer >£4/sh that will probably be required to prise these out of hands of holders. Hopefully no more dilutions.
There are possible downsides but I am confident that at least the oil (and lots of it) is there....which is a major plus these days.

JPGH