GSE Systems: A Unique Speculation on Uranium and Nuclear Power?

Jan 18

GSE Systems: A Unique Speculation on Uranium and Nuclear Power?

GSE Systems (GVP, NYSE) – Market Cap = $62M GSE is a pioneer and one of the world’s leaders in providing high-fidelity nuclear plant simulators and performance improvement solutions. Since building the first commercial full-scope nuclear power plant simulator in 1977, GSE has installed more than 1,100 simulation and training programs in 50 countries. My 154 word…

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Did TAG Oil’s New Engineering Team and Henrik Lundin Crack Kapuni’s Code Already?

Jan 05

Did TAG Oil’s New Engineering Team and Henrik Lundin Crack Kapuni’s Code Already?

What?… Back in 2014, a more prosperous time for petroleum companies, TAG Oil (TAO, TSX) invested more than $10 million drilling 3 deep wells targeting the Eocene-aged Kapuni formation which lies below its producing Cheal field in New Zealand. One of those wells, Cardiff-3, reached a total depth of 4,863 meters, intersecting all 3 zones (the upper McKee, the K1A,…

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Here’s How You Control Oil For Just 39-Cents Per Barrel

Dec 05

Here’s How You Control Oil For Just 39-Cents Per Barrel

Thank you, Mr. Market… For offering us one more opportunity to buy Africa Oil (AOI, TSX) at or near long-term support levels. We are thankful for this gift (filling the gap at $1.80), and will not let it go to waste. Admittedly, I haven’t been to the optometrist lately, but AOI appears to be stair-stepping higher. This consolidation pattern is laying the groundwork for a powerful move to the upside – the only question is when. Putting the prior 12 months of trading into perspective, by backing out to a long-term chart (all data), we can see a clear picture of where AOI stands (or sits?). The stock appears to have an upward bias. When it runs, AOI likes to stretch its legs by 700% or more. I don’t see why another move of this magnitude is out of the question. What’s the downside?  The last stair-step up was during the month of August.  That move, beginning with a gap, lifted AOI by roughly 33% (from $1.75). Yesterday, AOI traded about 6 x its daily volume. Scotiabank, Dundee, and TD Securities have price targets for Africa Oil between $3 and $3.50. Risk/reward is very attractive for a trade because we have relatively well-defined support zones. While possible, it’s hard to imagine AOI dropping back below $1.75 – implying a downside of 8.3% from yesterday’s $1.91 close. Optionality struck twice! Will it strike again?… I’m not sure about you, but after seeing Ivanhoe Mines (IVN, TSX) and Alderon Iron Ore (ADV, TSX) double and triple in price this year, I’m convinced “optionality” is a profitable strategy. Pending strategic selection(s). Africa Oil offers exceptional leverage to Oil prices and exposure to one of the world’s best onshore discoveries (approximately the size of the North Sea!), which is nice. But the great thing is that the price is right and AOI has two near-term catalysts. Allow me to explain… The pipeline joint development agreement is expected to be signed before year-end. Africa Oil, along with partners Maersk and Tullow, are drilling 4 exploratory wells now. There’s potential to drill 4 in addition to those. 39 cents per barrel?… Looking at slide 8 from Africa Oil’s presentation, we see 3C Oil resources have increased dramatically over...

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SOLD! Harvest Natural Resources Pays 64% In 26 Days

Oct 07

SOLD! Harvest Natural Resources Pays 64% In 26 Days

As expected, thankfully, Harvest Natural Resources (HNR, NYSE) announced this morning that it has sold all of its Venezuelan Oil interests. Time to lock in profits!     As I outlined September 3, the buyer, billionaire Oswaldo Cisneros, made all the difference in this deal. Here’s an excerpt from the news release: “At the closing, Harvest received $80 million in cash, a $12 million 6-month 11% note payable to Harvest by the purchaser, and cancellation of $30 million in debt owed by Harvest to CT Energy.  Harvest used part of this cash consideration to pay the remaining debt it owed to CT Energy and for other expenses and adjustments associated with the transaction.  Net cash proceeds received after paying the above closing adjustments and other expenses was $69.4 million.  Also at the closing, CT Energy relinquished its 8,667,597 shares of Harvest common stock, which will be held as treasury shares, and agreed to terminate the warrant, issued in June 2015, to purchase up to an additional 34,070,820 shares of Harvest common stock.  With the return of the shares held by CT Energy, Harvest now has 44,318,567 outstanding shares. “After receiving payment of the purchaser’s note payable of $12.0 million less taxes, funding a reserve for potential change of control payments and working capital, the estimated cash remaining is expected to be $62 million.  Upon the potential exercise of vested options held by employees, the estimated outstanding shares of Harvest common stock is expected to be 48,693,768 shares. “Going forward, Harvest’s primary tangible asset is its Oil and gas interests in Gabon.  Harvest has received two proposals for the purchase of its Gabon interests and is in discussions with both potential buyers; however, there can be no assurances that these discussions or either proposal may lead to a definitive transaction.” HNR has traded as high as $1.04 this morning. Its cash position represents $1.27 per share.   Get your FREE Subscription to our Research Reports and Alerts >>> RIGHT SIDE OF PAGE >>>     DISCLAIMER: The information in this publication is not intended to be, nor shall constitute, an offer to sell or solicit any offer to buy any security. The information presented on this website is subject to...

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Channeling T. Boone of the 1980s, My 2 Takeover Targets

Sep 04

Channeling T. Boone of the 1980s, My 2 Takeover Targets

Serious contrarian investors are working at least 60 hours per week right now investigating opportunities in Oil and gas stocks. While recently rubbing elbows with sophisticated investors in the natural resources penny stock capital of the world (Vancouver), I didn’t hear anything but negativity and pessimism regarding Oil. A great contrary indicator. Human emotions are one constant among turbulent financial markets. Yet, like clockwork, the Oil industry is cyclical, and we’re nearing 4 on the Oil clock!  The time to position oneself is between 4 and 6, as we’d rather arrive at the next OIL BOOM fashionably early, instead of being late. The image above is courtesy of TAG Oil (TAO, TSX). Expect to hear more about TAG Oil in the months and years to come. Simply put, TAO is way too cheap at today’s 72-cent close.   After backing out its cash position, investors are paying roughly $30 million for pipeline and processing infrastructure with a +$100 million replacement cost. It looks like an even better deal after factoring in approximately 1,200 boe/d production and Oil/gas reserves (an estimated 3.6 million barrels of 2P reserves). What is a good price to pay for 1 barrel of flowing Oil?… Price per barrel of flowing Oil is a common metric used by M&A professionals for valuing Oil/gas companies. In most situations we want to value each stock as if we were going to acquire the whole business (100 shares or 100 million shares). Valuing stocks from this psychological perspective is critical for achieving out-sized riches in the market. Along with balance sheet strength, management ownership and exploration upside, when talking Oil/gas stocks “price per flowing barrel” is one of the most important metrics. In an article titled: “Oil and Gas M&A: What Price is the Right Price?”, Oil & Gas 360 addresses the question. Boiling the article (and others like it) down to what’s most important, at +$100 Oil investors will pay as much as $75,000 to $$150,000 per flowing barrel. Bargain hunters right now, with Oil under $50, are aiming to buy quality assets for below $50,000 per flowing barrel. Channeling T. Boone… Even though we aren’t T. Boone, there’s no reason we shouldn’t speculate as he did during cyclical...

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This 8K confirms Harvest’s (HNR) Oil Sale to Venezuela?

Sep 03

This 8K confirms Harvest’s (HNR) Oil Sale to Venezuela?

Harvest Natural Resources (HNR, NYSE) Will the 3rd attempt of selling its Venezuelan assets be a charm for Harvest Natural Resources? RISK vs REWARD Downside risk = –11.5% | HNR trading at 61 cents (U.S.); could stop-loss at 54 cents. Upside reward = +75% | Venezuelan asset sale expected to close by the end of September. Sell the news! THE HEADLINE… On June 30, Harvest, an Oil and Gas company, announced an agreement to sell its assets in Venezuela. CT Energy Holding SRL, the buyer, is a Venezuelan-Italian consortium that owns +10% of HNR equity and $30 million debt. Assuming the deal closes, net proceeds after payment of the remaining CT Energy debt, taxes and transaction-related costs from the transaction are estimated to be $63 million. Harvest’s market cap is currently $31 million. THE DEAL… The deal is expected to close by the end of September.  When it does, HNR should spike higher on the news because it will have approximately $63 million ($1.24 per share) to fund projects in Gabon (or distribute back to shareholders?). Here’s the catch…Harvest announced plans to sell its Venezuelan assets to an Indonesian company in 2012 and an Argentinean company in 2014 – both deals fell through. Understandably, shareholders and speculators don’t have much confidence this 3rd attempt will be any different (hence the discount). Additionally, Mr. Market is inherently skeptical about anything related to Venezuela. THE OPPORTUNITY… There’s some indication Harvest’s 3rd time could be a charm. Venezuelan billionaire Oswaldo Cisneros is the owner of CT Energy (the buyer) – if anyone can pull this deal off, it’s him. GOVERNMENT SUPPORT? I pulled the section below from an 8K Harvest filed August 18: Authorization by Government of Venezuela “As previously disclosed, the closing under the Share Purchase Agreement is conditioned on, among other things, the approval of the proposed sale by the Ministerio del Poder Popular de Petroleo y Mineria, representing the Government of Venezuela, which indirectly owns a 60% interest in Petrodelta. In a letter dated August 15, 2016 to Oswaldo Cisneros, the sole member of CT Energy, the Ministerio del Poder Popular de Petroleo y Mineria authorized a change of control in Harvest Holding, effective upon the acquisition by Oswaldo Cisneros in his...

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