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Words of Wisdom
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Message Icon Topic: BLACK GOLD--SELAN EXPLORATION Post Reply Post New Topic
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Ajith
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Quote Ajith Replybullet Posted: 04/Aug/2009 at 8:04am
 Subu76,
              I am tracking Selan( but do not currently have significant holding at present) closely because management has indicated that though production will stagnate in the current year there may be significant ramp up after that because of new technology available.At current oil prices of 71 dollars Selan is undervalued even with current production levels.
         As an aside,did you hear about ONGC  drilling aggressively off Kochi? Its more or or less certain that there is oil as I understand very reliably but not 100 percent certain of course.
 Over a longer period I am bearish on oil.The reason being US is coming up with strict fuel efficiency norms.Also alternatives are gaining ground.
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subu76
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Quote subu76 Replybullet Posted: 04/Aug/2009 at 9:39am
Yup...this is a purely oil price story....actually they call it out in all their statements...
 
What attracts me to this cyclical company is that:
- it has guaranteed business
- low capex
- management does buybacks.
- management abhors financial engineering and debts
 
Ajith, How will ONGC's drilling impact the prospects Selan?
This one sure seems interesting.
 
 
Do you also track Dolphin Offshore? The story  there has improved last year...but the stock has also run up.
 


Edited by subu76 - 04/Aug/2009 at 9:47am
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Quote subu76 Replybullet Posted: 04/Aug/2009 at 9:58am
Ajith, i have another question for you? Do you know how long their contracts run? Also, they won a new mining license on OGNAJ field in Aug 08...any idea if the numbers from this field is already showing up?

Edited by subu76 - 04/Aug/2009 at 9:59am
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kumardiwesh
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Quote kumardiwesh Replybullet Posted: 04/Aug/2009 at 11:49am
Originally posted by subu76

Yup...this is a purely oil price story....actually they call it out in all their statements...

 

What attracts me to this cyclical company is that:

- it has guaranteed business

- low capex

- management does buybacks.

- management abhors financial engineering and debts

 

Ajith, How will ONGC's drilling impact the prospects Selan?

This one sure seems interesting.

 

 

Do you also track Dolphin Offshore? The story  there has improved last year...but the stock has also run up.

 


The company is also free cash flow positive.
Its fixed assets turnover ratio has been going up over the last 5 years.
Promoter holding has also gone up from Dec-08 to Jun-09.
Makes a compelling case for investment except that this is a cyclical.
"History does not tell you the probability of future financial things happening" - Warren Buffett
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subu76
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Quote subu76 Replybullet Posted: 05/Aug/2009 at 1:20pm
Indeed this is my dilemma too.........
 
If it's a cyclical then i'd loved much more beaten down valuations....though it is not overvalued now for sure....
 
One point which i have is....shouldn't we also be looking at these as growth stories? These guys are winning new contracts all the time....so though revenues get impacted by oil prices...will they be able to do better overall?
 
Overall buy backs and management buys is a story across the entire oil sector..atleast in the smaller companies...seems like good times are ahead
 


Edited by subu76 - 05/Aug/2009 at 1:23pm
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kumardiwesh
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Quote kumardiwesh Replybullet Posted: 05/Aug/2009 at 3:24pm
Any idea how much production is planned for the current year and the coming year(s)?
What are the proven reserves of the company?
"History does not tell you the probability of future financial things happening" - Warren Buffett
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subu76
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Quote subu76 Replybullet Posted: 05/Aug/2009 at 3:47pm
I have there 2008 AR only...that's the only one uploaded on their site:
Here is the data points i see in the AR
 
1. Bakrol Oilfield has 73.3 mmbbls reserve
2. Crude oil production during the financial year 2007-08 was 120,226 barrels cumulatively.
 
Ajith, do you have the data for the other oilfields with this company?
 
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Ajith
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Quote Ajith Replybullet Posted: 06/Aug/2009 at 8:48am
 SUBU76,
              I have no idea about extact reserves(but it seems large enough) . I feel its more important to focus on how much oil will be extracted.
              This year production is expected to stagnate but management indicated possibility of substantial increase after that.
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