Wednesday, August 11, 2004
Dana: coups in Mauritania and Indonesia
Results of Dana's Indonesian exploration are finally public. The company delivered a double thumbs-up to followers with news from Ujung Pangkah:
..The northern well encountered an oil column with a thickness of 77 feet underlying a gas column spanning 78 feet. Production testing of the oil zone resulted in a stabilised flow rate of 2,300 barrels per day. A separate test of the gas zone achieved a flow rate of 14.4 million cubic feet per day.
The western well encountered a similar section of oil bearing limestone underlying a larger 117 feet gas column. Production testing of the oil zone in this well resulted in stabilised flow rates of 2,100 barrels per day and a separate test of the gas zone achieved a flow rate of 31.4 million cubic feet per day...
This report raises the likelihood of more oil being found in the region. Dana and their partners are planning another well to the north. Dana shares were inspired to a 3% rise today as buyers await an upgrade of commercial assets.
Yesterday however, Dana suffered from the other sort of coup, news reports of an attempted overthrow of the authority in posession of Dana's most exciting oil prospect, the Mauritanian government, lopped 5% off the company's share price. Investors had an unpleasant reminder of the real risks of partnerships with the world's less stable regimes. The political climate in west Africa means Dana shares are simply too hot for some investors, who demand a lower price if they are to consider buying.
An investor must employ a similar savvy to a used car shopper before purchasing. What are the risks most relevant to this type of company? What are the warning signs and symptoms of fatigue? Should signs of rust be more or less concerning than a furry steering wheel and beaded seat covers?
Dana carries more risk than a one owner, retired driver's weekly carriage to the supermarket but the risks at the current price are driven down by the robust North Sea production assets which act as an MOT, promising a level of performance into the future.
With the oil sector still surging ahead thanks to crude prices recently reaching an all-time high, I'm happy to hold Dana shares and shoulder these risks. Dana is at possibly greater risk from Britain's Chancellor than it is from a change of government in Mauritania. The current tenant of 11 Downing Street could impose a windfall tax on North Sea producers to snatch additional revenue from the current boom period.
Ben Bailey shares have made progress to compensate for Dana's dip. As the housebuilder is by far my largest holding, only small advances form this point will be required if I am to meet the challenge set in the previous blog of a return more than 10% in the remaining four months of the year.
The Artful Dodger
..The northern well encountered an oil column with a thickness of 77 feet underlying a gas column spanning 78 feet. Production testing of the oil zone resulted in a stabilised flow rate of 2,300 barrels per day. A separate test of the gas zone achieved a flow rate of 14.4 million cubic feet per day.
The western well encountered a similar section of oil bearing limestone underlying a larger 117 feet gas column. Production testing of the oil zone in this well resulted in stabilised flow rates of 2,100 barrels per day and a separate test of the gas zone achieved a flow rate of 31.4 million cubic feet per day...
This report raises the likelihood of more oil being found in the region. Dana and their partners are planning another well to the north. Dana shares were inspired to a 3% rise today as buyers await an upgrade of commercial assets.
Yesterday however, Dana suffered from the other sort of coup, news reports of an attempted overthrow of the authority in posession of Dana's most exciting oil prospect, the Mauritanian government, lopped 5% off the company's share price. Investors had an unpleasant reminder of the real risks of partnerships with the world's less stable regimes. The political climate in west Africa means Dana shares are simply too hot for some investors, who demand a lower price if they are to consider buying.
An investor must employ a similar savvy to a used car shopper before purchasing. What are the risks most relevant to this type of company? What are the warning signs and symptoms of fatigue? Should signs of rust be more or less concerning than a furry steering wheel and beaded seat covers?
Dana carries more risk than a one owner, retired driver's weekly carriage to the supermarket but the risks at the current price are driven down by the robust North Sea production assets which act as an MOT, promising a level of performance into the future.
With the oil sector still surging ahead thanks to crude prices recently reaching an all-time high, I'm happy to hold Dana shares and shoulder these risks. Dana is at possibly greater risk from Britain's Chancellor than it is from a change of government in Mauritania. The current tenant of 11 Downing Street could impose a windfall tax on North Sea producers to snatch additional revenue from the current boom period.
Ben Bailey shares have made progress to compensate for Dana's dip. As the housebuilder is by far my largest holding, only small advances form this point will be required if I am to meet the challenge set in the previous blog of a return more than 10% in the remaining four months of the year.
The Artful Dodger
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