Another one of Ron Coll’s colleagues at Jennings Capital is Gregory Chornoboy. Chornoboy covers the oil and gas sector. His two picks are Tethys Petroleum (TPL: TSX) and Calvalley Petroleum (CVI.A: TSX).
Tethys Petroleum (TPL: TSX)
Tethys drilled 9 successful gas wells in Kazakhstan in 2008, discovered the new Tasaran zone and signed the Tajik PSA for an area nearly four times larger than anticipated. Chornoboy writes “Kokbulak prospect is testing now, with results expected before year end, and the Phase 2 compressors are being installed, which will bring production up to 40+ MMcf/d in the new year.” The company has also announced a strategic relationship with a Russian electrical company that could be both a gas purchaser and a joint venture partner in project development.
Catalysts for 2009
- "Start-up of the Phase 2 compressors in January, lifting production to 40+ MMcf/d.
- First results from workover programs in Tajik fields (Q1).
- Drilling the Akkulka deep test into the Jurassic and Triassic zones (results in April).
- Production increase to 60 MMcf/d (and possibly 72 MMcf/d) in Phase 3 (early - mid Q3).
- Continuous drilling of the leads and prospects already identified in Kazakhstan."
Chornoboy has a $3.00/sh target price on Tethys Petroleum.
Calvalley Petroleum (CVI.A: TSX)
Chornoboy expects Calvalley’s Central Processing Facility to start up “imminently” and that should allow production to double. The company’s main draw and risk for that matter is its pipeline project from Block 9 in the Republic of Yemen that would allow it to connect to a third party pipeline system for the export of crude oil production. While the company has encountered some setbacks with the commerical arrangements in shipping oil to Block 18, it is currently in discussions regarding alternatives for marketing and the pipeline. Chornoboy expects some kind of resolution in this matter in early Q1/09 and “procurement and construction to commence shortly thereafter.”
Catalysts for 2009
- "Central Processing Facility start-up allows increase in production to 5,000 Bbl/d (CVI WI) (Q1).
- Calvalley has received the final version of a reservoir simulation, which has been given to its reserve evaluators. This could result in substantial reserve increases in the Company’s 2008 year end reserves.
- Extended production test results from Qarn Qaymah oil discovery (Q2).
- Exploration wells at South Qarn Qaymah and Rashidah (Q1/Q2).
- Progress on pipeline (initial announcement in Q1, and continuous progress throughout 2009).”
Chornoboy has a $3.35/sh for Calvalley Petroleum
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