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Norse Energy - Anbefaling fra Argo


35902 Hegu 12/11 2010 12:36
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Bemærk afsnittet om "Regulatory issues"


Argo | NEC (Buy, TP NOK 2.7)- 3Q presentation:

· Norse Energy Corp (NEC) released its 3Q report this morning reporting a weak bottom line of negative NOK 19,5 mill, which is mainly due to an impairment write off stemming from falling NYMEX prices used for valuation purposes.

Key takeaways:
· NEC is refocusing operational strategy: Shale gas drilling in the Utica formation is put on hold pending a final SGEIS resolution that regulate hydraulic fracturing. The USD 2.2 million that were previously appropriated for 2 Utica wells before the end of the year have now been allocated to Herkimer drilling instead.
1. Approximately 5 Herkimer wells can be drilled for this amount under the new JV with Stryker Energy.
2. Herkimer Break Even Costs are around USD 3/mcf while break even costs drilling in shale formations (Utica and Marcellus) is closer to USD 5.5-6.0 / Mcf, hence the motivation for the shift given today's gas prices of around USD 3,5/mcf.

· Regulatory issues: An update is expected before the end of the year.
1. After the mid term election in USA, the Republicans have regained control of the NY senate. Republicans are generally regarded as being pro business and the energy industry in particular.
2. The sponsor of the shale moratorium bill have apparently lost his position in the Senate, which could lead to a retraction of the proposal, which currently are awaiting approval from the NY Assembly and the Governor.
· Non Core Assets are up for sale: While the Panoro shares have already been monetized for USD 8.5 million, other assets such as gathering systems/pipelines could be divested under the right circumstances.
· Herkimer drilling plan: 30 wells is still the target for next 8-12 months. Another rig will be brought into action shortly to facilitate dual drilling.
1. The first Herkimer well is on budget but little over time due to minor hydraulic problems (4 days time delay).
2. Notwithstanding the slight delay the well is almost completed and is situated in immediate proximity to existing infrastructure for easy hook-up and cash quick generation.
3. We expect to see a turnaround in total NEC production as from the 4Q due to the new drilling activity, which now is based on new 3D seismic.

Cash balance USD 13,1 mill: down from USD 26.7 mill in the 2nd quarter due to extraordinary high bond payments of (USD 22,8 mill), capital spending of USD 3,5 million, partly offset by USD 17 mill from the equity offering.
Conclusion:
We reiterate our buy recommendation for now with a target price NOK 2.7, but will keep a close eye on cash consumption going forward.



12/11 2010 13:33 kroesus 035905



Så er det nok derfor, Argo sælger ud i dag



12/11 2010 14:21 MadsK 035906



De er i år den 8. største køber med ca. 4.5 mil stks.

Dog har de på det seneste solgt flere end de har købt
Den sidste måned (uden at have dagens handler med) har de netto volumen på -183555



13/11 2010 01:51 collersteen 135921



Apropos "regulatory issues" så ser det ud til at Gastem har fået en fracking tilladelse mere i Otsego county.

http://thedailystar.com/localnews/x1110251870/Gastem-..

Som man kan se af kortene fra NEC ligger Gastems land stort set opad det område hvor NEC huserer. Jeg kan huske at vi tidligere havde en Gastem-tilladelse oppe og vende, men jeg tror det var den Ross well der også omtales i artiklen.

gastem, nec.ol




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