It great fun for shorters to take down a stock as they tried with IVAN today, but these are hiccups on the road to recovery. Why are shares trading at 50 cents? Since the market for traders is full of ill informed people, who are jittery at cash balance (without knowing 60 million was just retired in the fall) or think a share split is possible when even the idea is 8 months away, alas for traders, as for investors, they haven't moved--why? Why didn't the shorts break RSI today? Why does it rise now to .52? What is so good about this stock?
Did you know the CEO of PetrosAmazonas is in China this week? Correa is in roundtable negotiations with 31 oil companies, including half a dozen from China. China is now in charge of 80% of all Ecuadorean exports. China is buying properties in Angola, Mozambique, South Africa, but why here? They can by dollar denominated assets. Why does this matter? China has 1.3 Trillion in US notes, it is forced to buy notes to keep its currency down, but it would much rather have producing assets. Yet while any asset is good to own, it is those denominated in US that they can most benefit by substituting asset purchases for more note purchases. Today China's PMI is down from last year, less build up locally, which means prices will be stable for export, rising exports means pressure on the currency--so the real price of Ecuador is cheap by comparison to notes at 3% on dollars that might inflate. The sovereign risk is negligible given the tightness of the relationship and the means of payment being secure, sovereign risk is non-existent as far as non-payment given the cancellation of 3.2 billion in 2008 owed to the Fed cartel.
Block 20 is not a minor part of the reserves, it is a big even huge part, being a megafield (above 5 billion), the capex is 550 million (not billions as some would like to misinform you), and it is a quarter as much as the alternative, and in terms of production cost, it is not significant.
April 23, 2013
Ivanhoe Zeroes In On Potential Foreign Partners
By Lynda Harrison
Ivanhoe Energy Inc. says the two potential partners it has found to help develop its oilsands project and its upgrading technology have shown great interest in investing in Canada.
After divesting of its Zitong and Dagang assets at the end of 2012, Ivanhoe had approximately $83 million in cash and two remaining projects: the Tamarack SAGD project in the Athabasca oilsands and Block 20 in Ecuador, but it needed a partner to help finance them.
The company needs about $1.3 billion to develop both the SAGD and the proprietary Heavy-to-Light (HTL) upgrading technology elements of its Tamarack oilsands project, Carlos Cabrera, executive chairman, told the company's annual general meeting yesterday. It also needs a partner to share those costs and will be ready to connect with one as soon as it receives regulatory clarity, Cabrera said.
Alberta's Ministry of Environment and Sustainable Resource Development has deemed Tamarack's environmental impact assessment complete (DOB, Jan. 28, 2013) and Ivanhoe anticipates approval from the other regulator, the Energy Resources Conservation Board, during the second quarter of 2013.
"We have held back to going to market [with Tamarack] to bring a potential partner in until we have certainty that the governmental process has occurred, to give us the confidence that we can market the property at the highest value, to bring in a potential partner," said Cabrera.
As with its Canadian projects, its greatest challenge is to secure sufficient capital to develop its Ecuador property, which holds four to 12 billion bbls of oil in place, the meeting heard.
Last year, Ivanhoe launched a search for a partner in Ecuador to provide the necessary capital to bring the project forward and was successful in finding one. Ivanhoe is now in the process of negotiating with the government of Ecuador the incorporation of the partner to be part of the consortium. Ivanhoe expects
Don't believe everything you hear including what IVAN management says.
1) what ever happened to the GTL jobs IVAN said they had in Qatar?
2) where is the HTL plant in Iraq? IVAN sure pumped this one for all its worth
3) HTL in Coban? What happened there? Haven't heard one word since.
4) Where is all the oil they were to be swimming in from Mongolia?
5) Why did IVAN sell their entire US operations for pennies on the dollar?
6) Why hasn't IVAN been able to move forward after 8 years pumping HTL process to the max?
need I list more?
Sentiment: Strong Sell
Ivanhoe expects negotiations with the partner and Ecuadorian government will be completed this summer.
Discussions are "very advanced," but Ivanhoe cannot yet disclose the name of the partner, said Cabrera.
In the interim, the company has a small drilling program in the South American country to further validate reserves. An existing pipeline has space for Ivanhoe's production so it does not need to build one, he noted.
Also during 2012, Ivanhoe allied with SBM Offshore, a Netherlands-based company with a fleet of 16 floating, production, storage, and offloading vessels, to create floating, production, upgrading, storage and offloading vessels (DOB, March 20, 2013).
The two companies are to produce a first-of-its-kind design for offshore facilities to produce and upgrade heavy oil from offshore fields with crude oil quality of 10-degree API gravity or lower using Ivanhoe's partial upgrading technology.
Ivanhoe may be able to build an HTL unit offshore before it has success onshore but is pursuing both propositions in parallel to gain industry acceptance, said Cabrera.
Any idea if Ivanhoe has any negotiations with Russia on HTL?
In the Jan 13-14 presentation it notes that Russia has 50B, that according to Ivanhoe fits into; "Countries whose significant unutilized resource base can now be accessed using HTL".
This is the first time I have seen Ivanhoe present this, so is Ivanhoe hinting they are in final negotiations in Russia for HTL?
The takeaway from London included a few more nuggets, firstly TM is on track, AER 'shared with us the interim requirements and promised to publish within a month'--Shared, it puts a very different spin on delay, they know what to do already, they have the funds, they are using the issue to put pressure on? Ecuador? On consortium partner? On AER? They either meet the pressure requirements or not, so they are dead in the water or they are moving forward, if they are dead, than IVAN is dead since it will be sued if they didn't warn of pressure risks, they will go out of business, and this is far too extreme, Cabrera is not a fool, he is a ph d in oil specifically.
The other takeaway is EC timing, this quarter the presentation says--this is our first news after the December presentation, so it is surprising everyone seems to have missed it. If the refinery is to be built on the Pacific coast as Correa tell us, then how will block 20 oil get to the refinery? Isn't Block twenty too far away? Stranded oil? So a refinery, which costs perhaps 4-6 billion, and HTL costs 500 million (given the amount of local work that can be done, the purchasing power parity number is probably closer to $400 million) So does EC's plans for a refinery require HTL?
Russia, well Correa has stated publicly his belief that Russia should be brought closer, the Russians may very well join a consortium to gain learning curve traction on heavy oil--will HTL show up in Russia? It seems unlikely, given the lack of lead announcements. My bet is they will join the consortium and syndicate sovereign risk, just as the Fed does with its own loans.
Thank you... for an informative essay in all this #$%$ on the boards, we are here because of Ivans potential to be a leader in the heavy oil recovery business. Good reading indeed!
Sentiment: Strong Buy
Guys I don't have a crystal ball, just common sense, we are an oil company that sold our producing assets for 1.60 a share, sure we can go out of business before TM or EC, but think CLEARLY, what are the chances? Did we sell those assets to make even more money? PPS doesn't reflect any of this true reality.