Coastal Energy – never let a good crisis go to waste.
I think that was said by someone in the democratic leadership when 2008 hit. In 2008 it took me a while to get over the fear of a plummeting market but I did eventually take advantage of the crisis and pick up some bargains that really helped my portfolio recover and exceed its highs in the following 2 years
Well this isn’t 2008 (yet), but there have already been some bargains. This crisis and volatility has been good for one thing only so far and that has been to increase my position in Coastal Energy. I’ve bought more of the stock in the $8’s over the last few days and its now my largest position.
Coastal Energy released more good results last night. First, more extremely positive results out of Bua Ban North.
The Bua Ban North B-05 well was completed using an electric submersible pump (“ESP”) and is currently producing 2,500 bopd from the Miocene interval. The Bua Ban North B-01 well was completed using an ESP and is currently producing 600 bopd from the Oligocene interval. Total production from the Bua Ban North field is averaging approximately 7,100 bopd.
Putting together some rough production numbers, in Q1 Coastal was producing 6,384bopd from Songhkla and another 1,916boed of gas onshore. Add to that the 7,100bopd from Bua Ban North and another 1,000bopd from the recent success at Songhkla and you get about 16,500boed current production. The company has 112M shares outstanding and 78M of debt. At a $10 share price that means they are trading at 78,000/flowing boe. That does not appear overvalued to me given that Bua Ban North production will still grow quite a bit more in the next couple quarters.
Songkhla production should also grow with the new discovery of the H-01 well. The company said the following
The results of the Songkhla H-01 appraisal indicate an oil column of approximately 200 feet. We are pleased with the Songkhla H discovery as there are numerous other prospects which can be drilled nearby and, if successful, developed from a central Songkhla H production facility.
Now if we could only get the french banks to stay afloat.