OEL - (Otto) Multi based, Gambling Stock.

[boysy]

good question jdg oel sure is powering ahead against the market thats for sure. Big volumes continually going through i wonder who is accumulating. Plenty of people willing to off load as some sh clearly bought above the present level.All in all a very decent few weeks as a sh and still plenty of news expected before the next quarterly one would think. Hopefully other farm out talks are progressing behind closed doors im sure bhp hoping into the frey cant of hurt oel position in talks with potential farm in partners

[Rabbi]

OEL is a bit of a comeback stock along with BCC. Both juniors had to massively dilute to clear their debt
I'm wondering what is the main factor behind the re-rating of OEL
Is it the improved performance of Galoc?
Phase 2 of Galoc getting factored in?
BHP taking an interest in the Phillipines permits?

All of these?

[shasta]

OEL is a bit of a comeback stock along with BCC. Both juniors had to massively dilute to clear their debt
I'm wondering what is the main factor behind the re-rating of OEL
Is it the improved performance of Galoc?
Phase 2 of Galoc getting factored in?
BHP taking an interest in the Phillipines permits?

All of these?

Rabbi

Just to add to your post re factors...

1. Two additional production wells for Galoc (as part of Galoc phase 2)
2. Edirne gas due this quarter, will add to cashflows + further exploration
3. SC50 - the mention in the quarterly they are looking into the rig market, re availablity

The market likes certainty, & with no debt, oil flowing & cash in the coffers, i'm picking the market is looking ahead with some optimism...

The Brent oil price has snuck up a bit.

Any further farm out arrangements (especially if with BHP) will spark more interest into Otto.

I'd like to see OEL move away from exploring in Italy, & focus on adding to the gas production in Turkey, where there AVO style analysis gave them an 8/8 100% strike rate.

The Phillipines ultimately has to be there focus area, Galoc, Calauit & then the deep water permits

[Rabbi]

Thanks Shasta, I had forgotten about Turkey.

Your post sums it all up nicely.

[jdg]

kumluk came in with nine metres of gas, meaning the remarkable 100% success rate in turkey continues. the next target, kartal, will be spudded next week (weather permitting).

-j

[boysy]

took a turn at the end of the week as could be expected by market sentiment and dropping poo. I to also saw the sneaky little comment about SC50 and the company keeping an eye on the rig market. Could be quite interesting on the Edirne front with 100% so far you have to wonder why they do not step up with a bit of activity here all new finds can be easily tied back to the existing infrastructure im having trouble finding the max capacity of the plant for handling the gas any one got an answer ?

[shasta]

took a turn at the end of the week as could be expected by market sentiment and dropping poo. I to also saw the sneaky little comment about SC50 and the company keeping an eye on the rig market. Could be quite interesting on the Edirne front with 100% so far you have to wonder why they do not step up with a bit of activity here all new finds can be easily tied back to the existing infrastructure im having trouble finding the max capacity of the plant for handling the gas any one got an answer ?

With OEL's Edirne guidance at 10-14mmscf/d (based on 8 production wells), now with a 9th production well, they must be getting close to 14mmscf/d.

Using the gas price mid-point @ $US7.50 & the AUD/USD @ 0.88

Gross Gas Revenue = ~$A120k x 35% (OEL interest) = $A42k per day

Assuming full production in Q2 (1/4/10 - 30/6/10)

91 days @ $A42k = $A3.82m Gross Gas Revenue (net OEL)

Not exactly huge but meaningful enough to add to cashflows, & the funds could & probably should be earmarked for more gas exploration drills.

You can see the upside if they keep drilling & finding more discoveries

[boysy]

yes i think the turkey gas could end up being a meaningful contributor to the bottem line. Another 5 wells to be drilled this quarter alone i remember reading an old presentation where they mentioned drilling 49 wells in this licence alone. Shasta do you have any idea of the max capacity of the plant currently being built ? Why not keep drilling if you have 100% hit rate i say

[boysy]

Have i missed something out i was reading an old quarterly and they had the flow rates for the first 3 wells drilled. Would be nice to know how the other wells have come in

Kirmizihoyuk-1 3.2 mmscf/d
Ikihoyuk - 2 mmscf/d
Oktakci-1 2.5 mmscf/d

[shasta]

yes i think the turkey gas could end up being a meaningful contributor to the bottem line. Another 5 wells to be drilled this quarter alone i remember reading an old presentation where they mentioned drilling 49 wells in this licence alone. Shasta do you have any idea of the max capacity of the plant currently being built ? Why not keep drilling if you have 100% hit rate i say

No i don't know what it's capacity is, but i doubt it would be much cost or effort to expand existing production facilities.

Biggest issue is probably choking the flow rates back to a safe level.

With such a great success rate, the JV partners must surely realise they are drilling in a gassy fairway, & my thoughts are that they should keep extending the exploration drills whilst they keep hitting gas.

With Galoc ticking along now, OEL can focus on Turkey & expanding the current exploration program, depending on what there JV partners want.

The drills aren't expensive, nor would the opex be on each new production well.

It's still not a strategic asset, so they really either have to buyout there JV partners & keep drilling, or sell there 35% interest to there JV partners & focus purely on oil in the Phillipines, & getting Calauit up & running.

OEL now needs to look at operating there own projects, or taking on bigger interests in JV's.