Thursday, April 30, 2009

Questerre news and link to webcast

Good news for all of the Utica Players.

Questerre's St. David No. 1 well tests at 450 mcf/d

2009-04-30 06:07 ET - News Release

Mr. Anela Dido reports


Questerre Energy Corp. has released preliminary test results from its program in the St. Lawrence lowlands of Quebec.

Two prospective shale zones in St. David No. 1 were fracture stimulated in a single operation. On a 17-day test, the well flowed at a stabilized rate of 450 thousand cubic feet per day based on an analysis of the production logs, this flow rate is interpreted to be primarily from a single zone. The well is currently shut-in for buildup to gather additional pressure data.

Michael Binnion, president and chief executive officer of Questerre, commented: "Four hundred and fifty thousand cubic feet per day from a single frac in a vertical well is excellent for an emerging shale play. This result correlates with the over 800,000-cubic-feet-per-day test last August from the same zone in Gentilly No. 1. We look forward to drilling our first horizontal well with multistage fracs targeting this zone, which we are confident will significantly increase the rates."

Questerre also updated the status of recent testing on Gentilly No. 1 and La Visitation No. 1:

The Lorraine formation was successfully frac'd in Gentilly No. 1. Sustained gas flows were achieved encouraging further work to assess this potential.

Three prospective shale zones in La Visitation No. 1 were stage-fracture stimulated early this winter. Two zones in the Utica formation flowed at a preliminary rate of approximately 300,000 cubic feet per day over a five-day test period. Production logging indicates the majority of the flow is from the same zone as the successes at St. David No. 1 and Gentilly No. 1. Testing was affected by flow back of proppant and frac fluids, and further analysis is necessary to fully evaluate the results.

Mr. Binnion added: "Over all, we think this program is delivering tremendous results. We have one zone with three vertical successes over a broad geographic area. While early, this zone exhibits the characteristics required to carry a commercial development. Two other zones show good promise and we expect further engineering work will unlock their potential."

Questerre also reported that the operator has begun work on a seismic acquisition program in the lowlands. The 2-D data will target several areas for prospective pilot pads that could include multiple horizontal wells.

Thursday, April 23, 2009

Oro Gold and Real Time Measurement

The Oro Gold play is progressing as planned. Recommended a few weeks ago at $.185, the stock closed today at $.33. I would feel comfortable buying up to the $.50 level as I fully expect a $1 share price on the day of their press release in May (just added more today). My sleeper which I just highlighted as my April Energy Alert is Real Time Measurement (RTY). The share price actually fell on their blockbuster announcement and it sits at a paltry $.03 but I look for a $.15 share price over the next month. See my report at the top left of the website.


Sunday, April 19, 2009

One of the few to see this coming - from 2005

No one else on Wall Street dared talk like this in 2005. No one on Wall Street will tell the truth now.


The entire IMF sale of gold would be incredibly bullish

The rumour of an impending sale of some or all of the IMF gold has lead to a $100 sell-off. If it occurs, it will be incredibly bullish contrary to the conventional trade. The following below explains why:

Monday, April 13, 2009

A Primer on Junior Resource Investing

I posted this on the Investor Village board in response to a poster on Oro Gold (OGR.V) so I thought I would repost it here as well:

Good points. I made the assumption that since this is a precious metals board that most board members have at least a portion of their speculative money in the Canadian Juniors. Since that''s not the case, I'm more bullish than ever that this gold bull run has years to go. If we were at the heights of the gold bull, every widow and orphan would have some of their money in the Canadian PM juniors. Personally I only buy precious metal stocks that are traded on the Canadian exchanges even though I live stateside.

On Oro Gold (OGR.V), if you don't follow the Canadian Juniors then DO NOT SPECULATE on this stock. Take some time (several months) to read the Northern Miner publication and get familiar with how these stocks should be played. Follow a few of them daily to see how they react to news as these stocks are mostly news driven. After a while, dabble in a few of them to build your confidence in the sector.

For those who speculate in the sector, the following below is nothing new but it may help those who eventually get into one of these stocks:

Managment is key. Only speculate on a junior exploration stock where managment has worked for one of the larger precious metal companies and have been involved in prior discoveries. This can be determined by reading the bios on the website. In Oro Gold's case, the three executives are from Placer Dome and were involved in multi-million ounce discoveries.

Property is key/. The best place to look for gold is next to a gold deposit (duh). The property should also be close to road access and power. In Oro Gold's case, Eldorado Gold mined an open pit for 2 years in the 90's andf shut it down after 2 years due to low gold prices. They never drilled down further than 100 meters during their exploration phase. Oro Gold drilled 150 meters underneath the open pit and may have found a major new discovery with much higher grades than were mined by Eldorado.

Share structure is key. Avoid companies with a large number of shares outstanding (over 100 million) and preferably they should be under 50 million (as is the case with Oro Gold). The lower the number of shares, the greater the potential near-term return on a discovery.

News flow is critical. Juniors live and die by news flow and in certain parts of the world, no drilling can take place for months due to rain/cold/etc which leaves the junior void of news. In Oro Gold's case, the can drill year round and just started a new drill program with the first assays due back in 30 days.

Timing is critical. Even if a company releases good news, the overall sector performance has a drastic effect on the likelihood of a rapid rise in price on any news. Since mid-2008, most juniors (including Oro Gold) are down 80% or more from their highs. Very few large gains have been realized. When Oro Gold released their initial drill results in October 08 hinting of a major discovery (to be determined), it was the same day the TSX had their biggest point decline in history. After an initial spike, the share price got hit with all the other juniors. Also, the juniors trade smaller volumes in the Summer so it is tough to make large gains past the end of May through August.

Cash is critical. In this environment, many juniors can't raise funds to explore. Oro Gold has over $3 million in cash to drill throughout 2009 without needing to go to market for funds.

Technicals matter. Avoid any stock that rises suddenly on no news as it is sure to come back to earth. The key is to find a stock near it's 52 week low and one that has based for a while and is starting to move slowly higher (as is the case with Oro Gold).

Promotion matters. Juniors are a lighted match. They only have so much time to make a discovery before investors get impatient and the stock slowly dies. Since the major institutions don't cover the junior explorers, it is up to newsletter writers and company management to get the word out as financings are a necessary evil (similar to bio-techs in the states). Before relying on any newsletter writer, make sure they disclose their holdings of any stock they recommend (see my disclosure). Some of the better ones are Lawrence Roulston, Doug Casey, Peter Grandich and John Kaiser. Sprott Investments is the best resource institution who covers the juniors and also listen to Rick Rule if you get the chance.

Country matters. Mexico (Oro Gold), Canada and Chile are the best in my book. Fraser puts out a list of the most friendly mining countries.

High grade matters. In this tough financing environment, high grade gold offers a lower cost, higher payback proposition. Drill results over 5 g/t over significant widths are preferable (Oro Gold fits this criteria).

There are many other things to look for in a junior investment but you will find these out as you explore potential investments and make and lose money in the process. That being said, the juniors are so under-covered that you can find a diamond in the rough every now and then before the rest of the speculators realize the potential and those are the ones where significant profits can be achieved. You must be prepared, however, to lose your entire investment as the risks are high as well as the rewards.

Saturday, April 11, 2009

The best near-term investment opportunity of the last 4 years

Since following the Canadian junior exploration sector since 2005, the opportunity I highlight in my April investor alert on the website is the best near-term (less than 1 month) precious metal gain potential I have encountered. It's almost like knowing that Aurelian was going to announce their Fruta Del Norte discovery 3 weeks before the announcement. The clues are there but no one is connecting the dots. I have purchased 100,000 shares of Oro Gold over the last week and expect the shares to trade over $1 at some point in May. They currently trade under $.20. The opportunity is summarized here (right click to open in a new2 window):

Please do your own due diligence before considering purchasing shares and if you happen to get a double, sell 1/2 to recover your original cost and let the rest ride.


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