May 15, 2010

[dan_s]

It has been raining in Sugar Land (my home base) so I'm catching up on a few things. So much for the yard work I've been putting off all week. I may need a tractor to mow the lawn when the rain stops.

As I announced at yesterday's luncheon our first "real" Newsletter will go out to EPG members on June 1. It will be sent via e-mail to all registered members so if you have paid but haven't set up a profile yet you need to do so. If you don't know how, please contact Kim at > kim.m.tran@gmail.com

In addition to working her tail off for me, Kim is getting married this summer and she's buying a new house. To say Kim is a "high energy" person is an understatement.

The Sweet-16 has pulled back and is now only up 14.7% year-to-date (compared to the S&P 500 which is up just 3.5%).

As I just posted, PetroBank looks like a "Screaming Buy" up to $50 (compared to my Fair Value estimate of $72).

GeoResources (GEOI) gave an impressive presentation yesterday. They have more Bakken Shale potential than I realized, maybe more than Kodiak, and they have double the proven reserve based. This company has a high quality management team that has been together a long time and they know how to keep their costs down. A big chunk of their 2010 production is hedged at prices above the current oil & gas prices so earnings and cash flows are easy to forecast. See my model for details.

Several TransGlobe Energy (TGA) shareholders attended yesterday's luncheon and they cornered me for my thoughts. TGA still has a lot of upside from here.
1. OXY is going to drill two exploration wells with very high potential on Yemen Block S-1 where TGA holds 25%. These prospects were developed with modern high density 3D seismic so the chances of success are high. If either one finds a new oil pool it will open up a whole new development area.
2. In Egypt TGA's West Gharib water floods and horizontal drilling should result in significant reserve adds this year that will lower DD&A rates and increase EPS.
3. Two more exploration areas will be tested later this year in Egypt.

Dan