CRUMBS from the table never sound particularly appetising, unless you’re starving but in the resources world, it is a different matter.
Out there the crumbs of companies such as Rio Tinto, WMC, Pasminco and Santos can be very tasty indeed as is being proven at the nickel mines of Kambalda, and even further afield around Moomba in central Australia.
It is in the region known as the Cooper Basin that a flotilla of small stocks are feasting on the cast-offs of Santos and doing what many small resource companies just dream about, getting a fast start on production and watching the cash flow in, rather than out.
Beach Petroleum is one of the best known.
Over the past six months it has risen by a third from 30 cents to 40 cents. Stuart Petroleum is doing a bit better, up from 27 cents to 42 cents.
However, way behind these two, for no reason other than blissful ignorance in the market, is Cooper Energy which has moved all the way from 13 cents to 13.5 cents.
What makes this situation so interesting is that Cooper is a participant in some of the same discoveries that have propelled Beach and Stuart.
The first of these was the Sellicks oil strike about 50km west of Moomba which is producing 850 barrels of oil a day, with 75 per cent going to Beach and 25 per cent to Cooper.
Increased production is expected when a second oil horizon is tapped but the number to remember here is $100,000 because that is Cooper’s monthly share of the revenue from Sellicks alone.
More cash is expected when a second discovery well called Christies comes on line and then there are a series of drilling targets, none of them monsters, but all of them in highly prospective tenements which live up to that old snooker saying of "little fish being sweetest".
On the market, the success of Cooper (in the Cooper) goes unrewarded.
The stock is trading at a price which values the entire business at just $7.4 million, a number that sits oddly alongside existing revenue of at least $1.2 million a year and almost certainly more as new fields come on stream and which totally discounts the potential of a number of so-called high impact wells that will be drilled over the next 12-months.
Perhaps the biggest problem for Cooper and a reason for its ultra-low profile, is that its chairman, and former Perth stockbroker, Greg Hancock, has opted for the lifestyle of an office in a converted house in Fremantle, complete with a labrador pup at his feet, rather the regulation resource stock address of West Perth.
Briefcase suspects that Greg might soon return from his portside snooze and give Cooper a much needed dose of elephant juice to get its share price moving.
ON the question of overlooked opportunities in the oil patch, there is a stock that appears to have been discovered after a few years in the wilderness.
Amadeus Energy, which is doing in Texas what Cooper Energy is doing at Moomba, has been a sterling performer since March, doubling in price from 8.5 cents to 19.5 cents and briefly popping its head over the 20 cent barrier.
Heavy buying has been directed at Amadeus by Sydney dealer Shaw Stockbroking.
Over the past 10 days more than seven million Amadeus shares have exchanged hands with the price moving from 15.5 cents to its current level, a gain of 25 per cent and very good news for co-founder, Geoff Towner – and not-so-good news for recently departed co-founder, Anthony Short.
Briefcase would never dare draw a link between the exit of Short and the rise (and rise) of the Amadeus share price but the time lines appear to be eerily in parallel.
Whatever the cause, Shaw is very bullish on Amadeus with its oil analyst John Colnan estimating, in a recent note to clients, that the company should post a profit of $2.7 million for the year that ended on June 30 and (shock, horror) may even pay a maiden dividend of 0.5 cents a share.
TWO more thoughts on investment.
First, Briefcase is delighted to report that the price of a 1930 penny, arguably the most valuable coin minted in this country, has reached a new high of $25,000.
The antique money dealer, Monetarium, also reports that a 1923 halfpenny will fetch $3,000 – and there are probably a few readers out there who remember spending both at the corner shop in their youth.
Secondly, it is worth reporting that Mineral Commodities, last week’s top story in Briefcase, has jumped again, from the 25.5 cents mentioned and gotten up to 33 cents, up more than a handy 18 per cent over the week or, to be quite silly about it, 920 per cent on an annualised basis.
Briefcase takes no responsibility for the rise because, in future, it would have to take responsibility for stocks that tank.
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