The AIM-listed Sefton Resources (SER.L) was flying sky-high since last November as it finished the first quarter 2008 four-well drilling programme at its Tapia oil field in California.The group, which also has assets in Kansas, said its wholly owned subsidiary TEG Oil and Gas USA, Inc will initiate a pilot steam programme on 20 March on two wells at its Yule lease.
It said today's results are particularly exciting since these wells extend TEG USA's productive area of the Tapia field.
Sefton admitted that that recent drilling since November 2007 significantly stepped-up cash flow and the four additional wells should add to this progress.
Up to the top?
"We are extremely pleased that, with successful drilling results at Tapia and improved cash flow, Sefton and its subsidiaries are now in the position of being able to be flexible in deciding how to complete the full development of Tapia field, further develop Eureka Canyon field, and initiate a pilot drilling programme within its Kansas CBM acreage," said boss Jim Ellerton.
Oil and gas sales were down some 15% at $1.276m ($1.508m) but with general and administrative charges down 18% and oil and production costs reduced by 23%, net income was slightly up on last year at $179,134 ($175,647). Last year's figures included TEG Oil & Gas Canada, which was sold during the period and provided a small trading income of $6,897.The group admits though that the most most significant event, however, for Sefton last year was the signing of an agreement with the Bank of the West for a $10m line of credit. Sefton has started to drawn down an initial $1.5m, which will be invested in the development program at Tapia. The Tapia oil field is the major source of production and revenue for our wholly owned subsidiary, TEG USA.
It looks as if the company's stock took-off for another record. Isn't too late to get on board? To some degree, it is, but the company has proved to be a serious player in this field and I believe there some more sunny days coming for Sefton Resources.
At the time of editing this article, the stock was up 6.67% since previous closing and was trading at a price of 8.00p.
Reference
www.seftonresources.com
User comments
* CBM drilling in Kansas to begin in the near future
* Infill wells to be drilled on the Tapia field scheduled for November
* Low risk, low cost route to significant increases in production (and booked reserves) with cyclic steaming
* Resource at Eureka to be further defined with a view to drilling in due course
* Enhanced finance facility upto $15m on very competitive terms.
* Low running costs
* Many years of reserves
* Profitable, forecast pe of 4.5 for this year (at current sp and $/£)
* New broker/nomad to start 1st October
* Good level of director share ownership
* Company can now buy back shares if/when appropriate
* Shareprice near 3-year lows
And even ignoring all these fundamental plus points, from a chartist point of view it is once again sitting at the bottom of its historical price range.
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