Monday, February 13, 2006

11 Trading Days Til PSCmas

Only 11 trading days now remain before Production Sharing Contracts ceding control of choice oil-bearing blocks in the Nigeria-Sao Tome and Principe Joint Development Zone are signed, and the next two weeks of trading is sure to reflect that fact.

With the caveat that selling may quickly appear just on or after the day PSCs are signed - as it always has in the past on great occasions - it's going to look a lot like Christmas to many investors who have held on through some grim, dark days since the badly flawed Sao Tome probe report, an effective scarecrow that sent investors fleeing until they learned the facts and heard it officially disowned many weeks later.

Now, on several days since the 13.5-million blast-off that took us from $0.321 on "bad" news and up to $0.48 on "good" last Tuesday, Feb. 7, our share price has resisted some serious selling and has closed within a half-cent of Tuesday's close every day since. That is a strong indication that we are bound for a strong price improvement and that the market wants to let us run as the PSCs approach.

No run lasts forever, though, unless it is accompanied by validation that speaks directly to the bottom line. A strike on its OBL-1 well by ChevronTexaco in Block 1
would accomplish that.

The synergy of the two events would not be lost on any investor, and those who sell massive amounts of stock every time our price improves would be tempted - if they are not trying to buy the company on the cheap, that is - to hold until the price stops rising. And the good thing is that such a strike is almost a 50-50 chance, if we understand the statistical claims about the Gulf of Guinea properly.

I expect substantial action today, with volume topping a million and our share price probably topping $0.54. As many will argue, I may be wrong, but that's how it looks and feels to me.

I have yet another diversion this morning, one that will prove most enjoyable, I think, but will keep me away from my computer until at least noon. With my wife, Mireya, I will be going to Tampa to watch her get sworn in as a U.S. citizen. It is one of the proudest days of my life, and it has only just begun.

No comments: