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Trading BKP: wise or not wise to hold it?

Discussion in 'Shares' started by wdongli, 9th Apr, 2011.

  1. wdongli

    wdongli Well-Known Member

    Joined:
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    Perth
    Oil passes by $110, which stir the market very much while gold goes to $1,475 surprisingly to a lot of market players and XAO refused to drop down less 5,000. What is being changed? Is it the time genius and bum would make money together for these who would like use the impacts of Japan disasters, European deficit, china ghost cities, and inflation expectation? Do you known in 1970s and 1980s, our Aussie dollars were priced much more than US dollars? Do you know our Aussie dollars were price more than double of US dollars? Do you think if China slow down we would lose most of demand to our resources around the world?

    All of the above questions could not get certain answers! As BKP shareholders you don't need to get all of the answers but get a wise feeling or intuition if you got BKP at the price with great discount. What we should not forget

    1. BKP holds a piece of potential shale oil cake, which would be in check very soon. This claim doesn't fit to the day traders. They just don't understand anything more than one day or one week. So this very soon claim is about months at least and could be years for 10 baggers collectors.

    2. Three scenarios of the checking: a. it hits enough unconventional oil, which would make the market mad since all of people in oil sectors know SSN now. The expected cake, true or not, would drive its price up significantly since oil price seems force the whole market to think not wisely but emotionally; b. it fails to get any oil out. That is sad but if you pay in great discount you should not lose all; c. it gets some oil but not excited, which would cause great disappointment.

    3. What would you do? Get the pennies from dollars as you play the blue chips? Would you like 10 baggers and do you know a 10 baggers means you could lose all of 10 betting at the same amount of capital? What's the worst and best in your case? In my case I prefer 10baggers.

    4. The reason is simple I prefer 10bagger from $0.015 around, which is not unlikely if and only if oil price keeps to be $100 or more, bkp has the oil which is likely based on the geological structure, mom and dad come back to the oil sectors which would start a self-reinforcing process and force the day traders buy the high and sell higher until a mania happen!

    If I have 70% chance for 10 baggers should I get the pennies and see the train leave the station forever? Is it speculation or wise market decision based on the history, the fundamental forces, the explosive probabilities, and market sentiment?

    Do you know when to hold'em or unfold'em? Are you reasoning for holding or unfolding or never think but trade without brains but so called system? Personally I believe what Buffett said being greedy when most of market players are fearful and being fearful when they are greedy since it tells the logic inferred from the herd psychologies.

    How many of the market players around BKP are greedy without worrying about what if no oil at all from the ground for BKP? Nearly all including me! The correction since Oct 2009 could not shed any light for the herd even the players of BKP are mainly day traders, momentum traders, or penny profit players, who have more hope and guess than know what BKP is and don't have the senses of the probabilities and black swans!

    10 baggers is about unprecedented surprises positively! It is and only is the result of excellent position at right time, the extremely worst cases and ruins, the explosive events in process, and then some triggers for actualizing something... It must be the excellent mixing of dreams and future realities. It is art not system. It is the result of the deep understanding the complicated market process with some help of lucks! It is about to get the improbable lowest price when the market swings to danger all into the hell, the swings to the historical means quite probably, the swings to the positive extreme with the help of good black swans, the gut, the art, the belief, the insight, and intuition... Once it happens you could give all of logic explanation but before that you could not declare it!

    Some would wonder why some could get $billions but he could not get. Get the chances to bet on the life turning points without the worry to lose the shirts, and have the capability to bet forever(of course you have to manage how to allocate your capital for this forever)! The history is being brewed some new bubbles. It sounds to be wise to hate the bubbles but wrong. You have to hold the cheap ticket to the future party somewhere before the people cheerfully come to the party. BKP has all of favorite matters from the existing market environment except it needs to prove it has the oil! If it has the oil, you would laugh loudly to your bank.
     
    Last edited by a moderator: 9th Apr, 2011
  2. wdongli

    wdongli Well-Known Member

    Joined:
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    BKP: the reckoning day is ticking in!

    Someones believe trading systems and stop-losses. Someones believe value investing and margin of safety. Someones believe wise speculation in the winds. All could make money or lose money in short term but at last all what they do and expect would be reckoned by Mr Market:

    1. lose some capital or all for long term

    2. collect some profit or become very successful

    There are lucky elements to decide who would win at last but no one could win big enough just sleep on the lucks. Every way could lead to Rome but there are bums and ashes of the money in every way to Rome in the market.

    Who are you? I really are not be sure now since there are thousands of miles ahead. However I have given up to expect I am extremely lucky since I never was so.

    ***
    I bought BKP at $0.005 and then joined its SPP at $0.017 for a average cost about $0.011, since I have read all of the data I could get about its EP127 and EP128 in Georgina Basin, Northern Territory . I have been very encouraged by its shale oil prospective there.

    In a life you have to make your bet while you are confident based on the reasoning even you could be wrong; you have to bet for affordability, prepare to clean up the ruins and get another fighting again if you fail, and keep your pondering for lessons.

    Anyway its partner, PFC in Canada, updated on Drilling Operations in Georgina Basin. PFC trumped all it could give out to the market yesterday. The drilling would start in 2-3 weeks. It is what all of BKP shareholders wanted to know since the flood. The reckoning time for them is ticking in! http://imagesignal.comsec.com.au/asxdata/20110518/pdf/01181805.pdf.

    1. There are great shale oil: A company maker and you just need to sit tightly to ride the flying bird.

    2. There are some but not significant share oil: Shares of BKP would be dumped and few could run away quickly enough!

    3. No oil at all: Most of money should be gone in BKP.

    ***
    Everyone could speculate about the consequences but only God knows which card would be out there. When do you want to hold'em or unfold'em? A silly but tough question to all around BKP.

    I would not allow my capital death squad in BKP to show any sign of coward to face risks. It is worth to have a fight since if they could pass through the valley of death ahead, they would be my heroes!

    BKP goes and my death squad goes. They should win since they hit out at a point which could change the course of themselves!

    Never and ever trade in the chances for the turning points of life and market!
     
  3. wdongli

    wdongli Well-Known Member

    Joined:
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    Perth
    Cheer when you know the worst and get a good position!

    Life needs the happiness and market players have to get pleasant cheers even short time to make their market life feel worthwhile. The problem is most of market players cheer at the wrong time for wrong reasons!

    I do feel it is worst time for Australia stock market for more than 18 months sentimentally. So how to cheer yourselves up when the whole market is dreadful without signs of lives!

    BKP shareholders now could be very cheerful: the drilling would start very soon! So if everything goes on as PDF planned to do, July would be a very bright month for all around BKP.

    ***
    From a post in HC:

    Mr. Bennett was confidently talking about what to do with the OIL and GAS...

    "Production is possible"

    "spending 32 million on drilling and siesmec this year"

    "drill water wells and found oil and gas"

    "Pacific Oil drilled on a hill"

    "identified 13 wells never fully interpreted"

    "400 kms by 300 kms "

    Initial oil production via Alice Spring refinery" with infrastructure road and rail.

    "Put pipeline in 100k Barrels per day up to Darwin"

    "Athuur Shale ubiquitious oil shows ...is everywhere in area"

    "Biggest prize the unconventional shale"

    "in Bakken water above and below...in Georgina no water and higher permeability"

    "anticipate better production rates higher than Bakken based on logs interpretation"

    "Huge potential convential play = 1 billion barrels"
    "Can do larger fracs than in Bakken"

    Using "packers plus system" ...First in Australia

    They have been quitely planning this play since 2007 and are now working on that plan to a positive outcome.

    ***
    If you could afford and ready to see your death squad gone, you should cheer for BKP!
     
  4. wdongli

    wdongli Well-Known Member

    Joined:
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    Perth
    BKP: You should be happy if you hold it now!

    A very detailed and excited article about Baraka Energy & Resource: "Bakken Style Oil Shale play goes Down Under in Southern Georgina Basin" can be found in Baraka Energy & Resources: Bakken Style Oil Shale play goes Down Under in Southern Georgina Basin - Proactiveinvestors (AU).

    If you are shareholders and have got its shares when the whole of market deserted it in the last 1.5 years, you would be happy its potential since it sits on two bakken type of oil Shale plays in Southern Georgina Basin. Seriously saying if its reserve could be confirmed half you would get a life turning points! I am lucky to be one of BKP shareholders and hold its 1,820,000 shares at $0.01 average price. To get a life turning point, you must be right and hold decisive position. I just could say I took the right risk at the right time even I could not sure Nature would favor us, the BKP shareholders.

    ***
    I fully agree what the article said:

    1. The Southern Georgina Basin in the Northern Territory represents one of the few remaining virtually unexplored onshore oil and gas basins in the world. Yet the rewards are potentially vast to the company that threads the needle in the Basin.

    2. Very few wells have been drilled within the Basin by North American standards – relative to successful Bakken oil shale discoveries in North America.

    3. BKP's two Exploration Permits over 31,750 square kilometres (7.4 million acres) are situated over a potentially highly prospective part of the Southern Georgina Basin.

    3.1> Ryder Scott Petroleum Consultants has estimated Baraka’s unrisked, prospective Arthur Creek "Hot Shale" resource at 7.5 billion barrels (25% interest, P50 estimate).

    3.2> Potential Bakken style oil plays in the Northern Territory are understandably exciting North American explorers, fund managers and investors given the scale of Bakken oil discoveries to date.
    (wli: even in Australia market, it just caused some ripple so far, since Aussies traditionally are very cautious and usually just jump on the board too late)

    ***
    (Wdonli: BKP was a early bird, which let me like it very much too. My dirty-cheap fishing philosophy seems similar what its board holds. I like it very much.)

    1. Tellingly, Canadian oil companies have arrived in the Southern Georgina Basin and by consolidating ownership of it, have provided a risked opportunity for Baraka. Baraka’s fortunes are currently tied to well funded Toronto listed JV partner PetroFrontier Corp (TSX-V: PFC).

    2. Pound for pound, Baraka offers investors an enormous independent, unconventional oil and gas exploration play. Investors in Baraka are the beneficiaries of the Canadian rush to drill the Southern Georgina Basin.

    (wdongli: a lot of traders count on how many days the drilling would start but they forget the betting on BKP is about whether or not it has huge shale oil; if it has oil, you would miss the chances; if it has not oil you jump in just when the drilling start, you could no way to run away without shirt's losing. You have to send your death squad if you want to get the turning points and let the squad follow the drillers to explore the future)

    Baraka represents the earliest way investors can “play” an ASX-listed stock in the Southern Georgina Basin.

    ***
    Value on the opportunities with the corresponding risks:

    1. On a 5% risked valuation analysis guide, this would assign a risked valuation on Baraka of $0.068 a share.

    2. At a 10% chance of success the implied share price guide would be $0.12.

    3. At the higher risked valuation of 20% it would be valued at above $0.20 a share.

    Altogether, this underscores a high risk/high potential return scenario.

    (Wdongli: to me it is acceptable risks, such 5%, 10%, and 20%. Little casino needs to be built to let the winning probabilities of each betting you could have more than 75% winning chances if you use the diversification and time averaging techniques. I do so. It is a betting I have to take. Yes and no but...

    At $0.005, it is a low probable event since if you see its price chart it was highly abnormal and it is the product of highly unlucks as shown in its chart

    [​IMG]

    It was a stealth but very fair. At $0.017 of its SPP, I joined in to increased the holdings since if you read "the report from Ryder Scott Petroleum Consultants, you could not be attracted by its potential even I had to keep my allocated capital affordable

    What if BKP gets the oil and everyone would be cheerful for the new swan in the market for years? In the market nothing is risk free and the risk is about worthwhile or not.
    )

    There will likely be a “window” of opportunity on offer with the current valuation of Baraka – in the lead-up to spud date of first well by PetroFrontier Corp. As the drilling date nears for JV partner PetroFrontier’s well expected in the next month, the Baraka share price is likely to be a beneficiary.
     
  5. wdongli

    wdongli Well-Known Member

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    Catalysts for re-rating of Baraka

    1. Other activity by international oil and gas firms in Northern Territory

    2. Further consolidation of ownership in the Southern Georgina Basin

    3. Increased investment from North American investors in ASX-listed Bakken “style plays” like Baraka.

    4. Significant profits have been made by North American investors on the Bakken producing shale oil discoveries in North Dakota /Saskatchewan

    5. Approaching spud date for EP 103 in May/June

    5.1> Drilling results of EP 103

    5.2> Approach of spud date for EP 127 or EP 128

    5.3> Drill results of EP 127 or EP 128

    6. Baraka is assessing other projects to diversify.

    6.1> An acquisition of a quality project could add additional valuation to Baraka shares

    6.2> Tax losses of $49m offset against an acquisition of a company or project earning profits
     
  6. wdongli

    wdongli Well-Known Member

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    Valuation Guide

    1. The exploration effort on Baraka’s permits is being funded by Toronto listed PetroFrontier. Baraka’s fortunes are currently tied to JV partner PetroFrontier and that company is well funded for its exploration program in the Basin - as is Baraka with its free-carry to completion of a well into EP 127 or EP 128.

    2. Upcoming drilling on EP 103 by PetroFrontier in May-June (depending on date of rig arrival) should see the spotlight widen to Baraka. Baraka’s EP 127 and EP 128 tenements “ring-fence” PetroFrontier’s EP 103.

    3. Baraka offers investors a near term high risk/high return exposure to the unconventional Lower Arthur Creek “Hot Shale” formation in the Southern Georgina Basin with technical similarities to the unconventional Saskatchewan and North Dakota Bakken oil shale play.

    ***
    1. If PetroFrontier and Baraka successfully discover oil and or gas reserves on its Exploration Permits, the ability to monetise oil discoveries and generate revenues, will depend on capacity to connect to existing pipelines or truck oil to market. In the case of a discovery of natural gas, a new pipeline from the Southern Georgina Basin would likely be required.

    2. However, there are a lot of contingencies in shale and unconventional exploration plays. Prospective resource estimates are large and promising, however there is a risk there could be significantly less than the estimate.

    Diversification would not discount...

    1. Given Baraka’s stated aim of diversifying its asset base, we would not discount that an acquisition could also change valuation dynamics of the company.

    2. Baraka has a significant number of issued ordinary outstanding shares at 1.95 billion which, at a recent closing price of A$0.018, gives the company an A$35.1 million market capitalisation. With approximately $5.0 million of cash on hand, Baraka’s enterprise value equates to A$30 million.

    3. Oil and gas explorers like Baraka carry high risk/high return scenarios (although we would expect a diversification by Baraka in 2011 would mitigate this risk somewhat).

    3.1> A dry hole in the Georgina Basin carries a probability.

    3.2> That Baraka is free carried through to undivided 25% working interest up to completion of a minimum of 500 meters of horizontal drilling into the Basel Arthur Creek Shale on either EP 127 or EP 128 - is a significant plus for a small explorer.

    4. Despite the fact there have been oil and gas shows in past drilling; we have still risked Baraka’s unconventional prospective resource at only 5%, until the play is proven commercial.

    4.1> Imputing value to an unconventional resource is more difficult. The conventional resource is risked at 15%, in consideration of the fact that the oil is discovered.

    4.2> Ryder Scott used a higher geological chance of success of 16-22%.

    5. On a 5% risked valuation analysis guide, this would assign a risked valuation on Baraka of $0.068 a share. At a 10% chance of success the implied share price guide would be $0.12. At the higher risked valuation of 20% it would be valued at above $0.20 a share.

    6. Altogether, this underscores a high risk/high potential return scenario. There will likely be a “window” of opportunity on offer with the current valuation of Baraka – in the lead-up to spud date of first well by PetroFrontier Corp. As the drilling date nears for JV partner PetroFrontier’s well expected in the next month, the Baraka share price is likely to be a beneficiary.