John Stephenson
First Calgary Petroleums
FCP-T
SELL
Aug 22, 2008
Big hiccup was financing for the Algerian properties and it looks like they will get it by the end of this year. All their finagling has pushed production to the 2nd, maybe 3rd quarter of 2011. Doesn't look like they are going to have as much natural gas liquids as the market expected. No catalyst for a couple of years.
Natural gas discoveries in Algeria. He is not crazy about Algeria. He is also concerned about how long it is taking for these investments to come on. Recently had some good news so is moving on. A lot of risk here.
Oil/gas in Algeria. Gas, which is harder to ship, has to go into Italy or Spain and is a little more difficult to generate cash flow. Oil exploration has been somewhat disappointing. Other international plays have better risk/rewards.
Liquid rich gas and some oil in Algeria. Very good success with the drill bit. Problems are twofold. 1) How much money are you going to make at the end of the day with the Algerian government? 2) They need hundreds of millions of dollars to bring this project into existence. Too risky even for him.
Infrastructure in Algeria is a bit on the weak side. Their best bet on marketability is to liquefy it and send it out as LNG. Huge development. Some uncertainty around financing.
Have a large potential find that they need to develop and it’s a financing issue. Whether they can make a go of that is an open question and they probably will. It’s going to be a little bit of tough sledding.
His brother is the new CEO, but does not talk to him about it. Deal being contemplated with an Italian firm buying it. The asset is spectacular – gas fields in Algeria. It’s a complicated, tortured company with a horrendous past. He owns the bonds.
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