My longshot is

Discussion in 'Stocks' started by CaptainObvious, Mar 8, 2007.

  1. I'm looking for 100% > I don't know butkiss I've decided on two " Energyish " plays the first is Pacific Asia China Energy/PACE. Not a great name granted. Symb. PCEEF.
    Asia China Energy Drilling Subsidiary Signs Multi-Million Dollar Contract
    Thursday February 22, 7:43 am ET. This dropped as the markets did in the Far East so perhaps overlooked.

    Often overlooked in finding the lower risk coalbed methane [CBM] company is the fact it can take years before a company can generate cash flow from gas sales. While the CBM blocks awarded by Chinese United Coalbed Methane [CUCBM] to its foreign partners are quite generous, and should become increasingly valuable later this decade, investors remain less well-informed as to the realistic time frame these CBM projects might take. The upfront development costs could burden many companies during the first two to five years. The elusive jackpot, which could be enormous, might not materialize until circa 2009 or 2010, or take longer.

    Not so for Pacific Asia China Energy (Other OTC: PCEEF.PK - News). This tiny and very speculative CBM play was the joint venture relationship PACE had begun with Mitchell Drilling Corp, Australia’s largest private drilling company. In an interview this past May with PCEEF's management, it became evident PACE’s CBM extraction story would play second fiddle to the coal degasification in China until the company achieves commercial production.

    At the time, stonedinvesting was concerned about what Sprott Asset Management’s CBM analyst Eric Nuttall had said, “CBM exploration and development can get pricey.” This sounded like CBM explorations were best left to the oil giants, such as BP Plc, which recently announced it was spending $2.4 billion in the San Juan Basin over the next decade to expand its CBM development in Colorado and New Mexico.

    By contrast, the latest drilling technology PCEEF & Mitchell Drilling has used for the past six years was regularly getting gas out of the ground for under $1.50/mcf. This drilling company had proven it with more than 250 wells in Australia using the Dymaxion® horizontal/vertical drilling technology. The company had drilled about 50 wells in India with another 70 wells coming. Corporately, the company had taken acreage in southern Kansas in the United States where it had just finished its first CBM well. His company's website boasts of ‘Finding the Needle in the Haystack’ and having had a 100-percent success rate intersecting the surface-to-inseam wells with the main vertical wells.

    What married Mitchell Drilling to PACE was the inroads the CBM company’s president Tunaye Sai has made, as well as his personal connections, within CUCBM in China. Mitchell wanted to expand into China’s explosive CBM sector, hence the partnership with PACE. They first discussed the potential of this relationship after Mitchell and Sai unveiled the Dymaxion drilling technology at a Chinese coal symposium in spring 2006. Both were unabashedly excited about being swamped by Chinese coal executives asking when they could start using this innovative drilling technique to degasify their coal mines. Shortly thereafter, PACE paid the upfront costs to build two drill rigs. That's BIG!

    The PACE Mitchell joint venture inked its first drilling contract to degasify a Chinese coal mine, valued at about US$7.5 million in Feb, with a unit of the Shenhua Group.

    “This is a turnkey operation, which includes 44,000 meters of drilling – both SIS and UIS. For surface-to-inseam [SIS], it includes the supply of well head CBM production equipment, test production for three months and the training of local operators.”

    Buried at the bottom of the company’s news release was a paragraph describing a signed Memorandum of Understanding for a second degasification – in Yunnan Province – with a different coal mining company, noting that contract terms are now being negotiated. THIS IS HUGE!

    Mr. Sai, who is also a mining engineer living in China, was asked how many coal mining companies were in the pipeline. In his curt response, Sai said, “We can get another ten companies to sign up soon, but we have three which are very close now.”

    Lets just dream for a moment- Hypothetically, if all ten coal mining companies materialized, this could represent upwards of US$75 million in revenues for an obscure TSX Venture-listed company whose main assets, until now, were exploration-stage production-sharing CBM contracts in China.

    “The cost of building the drill rig was US$1.5 million,” Sai wrote. “But we have to add in other accessories.”

    Of the US$4.125 million the PACE subsidiary would gross from the 55-45 split with its marketing partner, this would leave about $US2.6 million. In an audio interview with PACE executive vice president Steve Khan on December 14th, he explained the cost of building the drill rig, borne by PACE, would be paid down first and then the profits split by the joint venture.

    Other foreign CBM operators have expressed interested in using the subsidiary’s Dymaxion® drill rigs. At least one competing CBM company has been evaluating the drill rig.

    The big boost for this deal was the client, which was subtly noted in the PACE news release. The Shenhua Group is not only China’s largest coal producer, BIG!but it is also the world’s third largest coal mining company behind Peabody Energy and Rio Tinto. In June 2005, Shenhua’s initial public offering in Hong Kong – at $3.3 billion – was one of the year’s largest IPOs. Major investors such as Hong Kong billionaires Lee Shau Kee and Cheng Yu-Tung invested, and so did Fidelity. Not bad company for a penny stock!

    Shenhua has been on a tear for the past six years. Recently, the company’s deputy general manager announced the company planned to become the world’s largest coal company by 2010, producing 200 million tons per year. In July, Bloomberg reported Royal Dutch Shell Plc and Shenhua Ningxia Coal agreed to study investing up to $6 billion in building a 70,000 barrel/day plant in the Ningxia province for turning coal into fuels and chemicals. British construction giant Amec has been appointed to provide the initial engineering design for this plant.

    The Ningxia Hui Autonomous region in northwest China has proven coal reserves of about 31 billion tons; potential reserves could run more than 200 billion tons. The Shenhua Ningxia Coal Group, which awarded the PACE-Mitchell contract, has at least 13 coal mines in the province. This first contract may be viewed as an audition for the Dymaxion® drill rig. For a tiny company, this would be on similar footing for a tech company announcing a new technology contract with Microsoft. Shenhua is the 11th largest company, by market capitalization, trading on the Hong Kong stock exchange, and the world’s second largest publicly traded coal company.

    The timing is perfect. As we’ve reported previously, the State Administration of Coal Mine Safety has been beating the drums to improve mine safety. The horrendous publicity of China’s unparalleled level of coal miner deaths is an image the Chinese would like to change. WE ARE HELPING THE CHINESE MINERS HERE FOLKS not just doubling our money! In an article written last March, Chinese Premier Wen Jiabao’s concerns about methane gas explosions in his country’s coal mines. A mining engineer by profession, he said, “The development of coal bed methane exploration and production can not only prevent gas explosions in the collieries, but also help diversity the energy consumption mix, and we should intensify efforts to research, explore and utilize coal bed methane resources.” Atta boy Wen!

    The Chinese Premier has been tough on coal miners. Coal-rich Shanxi province, for example, plans to shut down many of its smaller and more dangerous mines this year. By June, the province will have closed nearly 6,000 coal mines, cutting the total number of producing coal mines to 3,200.With China’s quantity of coal mines, and the substantial number of coal miner deaths, mine safety is one of the country’s greatest concerns. And Stoney's! Degasifying coal mines is at the top of the mine safety list, and bodes well for drilling technologies, such as the Dymaxion®, for many years into the future.

    What does PCEEF feel about all of this?

    “Revenues from our drill rig subsidiary offer investors some ‘risk protection’ as the company moves forward toward commercial gas production,. Meanwhile the company soon plans a vertical drilling program on its Guizhou CBM block. According to Sproule International Resource estimates, which have not been independently reviewed, there might be up to 11.2 trillion cubic feet on the 970 kilometer square concession.

    True, the initial drilling contract doesn’t hold the sexy appeal of a major natural gas discovery, but this may also be on the horizon, judging by the world-class gas content found at shallow depths during the early-stage drilling of 2006. Results were comparable to at least two other foreign-owned CBM companies hoping to commercially develop their concessions. Results were similar to gas content found in New Mexico’s San Juan Basin and in Alabama’s Black Warrior Basin – both major CBM producers in the United States.
    Those are both BIG finds.

    In the interim, PACE appears to be on a roll of lining up, and hopefully signing more, contracts. If the Dymaxion® drilling technology catches on in China, this could very well result in a steady and increasing stream of revenues to buttress PACE against any possible volatility in natural gas prices. After all, there are more than 800 Chinese coal mining companies with several thousand mines which may need degasification.

    Me go " All In " with this one and close my eyes and
    pray which seems like the best way with these
    " longshots ". My second Energy Longshot will be revealed when the ethanol thing heats up again.
    #41     Mar 17, 2007
  2. blast19


    Take another look at TBLC.ob. I think you'll find it an incredible buy and messing with charts. It's ridiculously stable. There are almost never agressive sellers but sometimes agressive buyers.

    What moves these "special" penny stocks that are actually worth investing in is the float and a growing business. Simple business at that. If the business is complicated it's often too complicated for the guys running it too...this mostly pertains to OTC companies in my opinion.

    Whne you have a wildly high float and "traders" trading the stock you'll never get anywhere...but with investors looking to get in, as I believe TBLC has, you'll be sure to get into a stock that may sit steady for a period of time, and then one quarter they impress and their business is growing and the stock rises nicely.

    It's not impossible to make money in penny stocks on trades...but it's really frustrating. I suggest you find one that has a simple business with simple filings, from the USA(very important for OTC stocks I'd say), get in and sit on it if you believe in the business.

    They are out there. I've made a lot of money with OTC stocks...they're just boring sometimes and there aren't many of them worth investing in so I look at bigger boards.

    Good luck stoned :D
    #42     Mar 17, 2007
  3. TA is very relavent on otcs/pinkys
    #43     Mar 17, 2007
  4. ZROS is very nice, arca came in huge bidding 112k shares but he wasn't aggressive enough and got taken out leading it back down end of day
    #44     Mar 17, 2007
  5. topdown


    Good Job Stoney - That's what I call longshot investing! But forget 100% return - you gotta shoot for the stars, think 500% - or better!

    The below is somewhat dated (December), but this analyst says the shares could go to US$10 under a best case scenario. Tell ya what, I am not going to be foolish and ignore this find. I will be taking a position next week (after I see how the markets react to the Chinese rate hikes).

    A recent report published by the Cohen Independent Research Group, called Wall Street’s #1 Independent Research Firm, rated Pacific Asia China Energy (TSX: PCE: Other OTC: PCEEF) a Buy.
    PCE shares, which closed at C$1.16/share on nearly 131,000 shares trading hands on June 19th, were given long-term fair market pricing of C$1.96/share by Cohen Research. This pricing was under the most pessimistic scenario. The low-case scenario included a natural gas price as low as $275 per 1000 cubic meters, and included a discount rate of 25 percent on the stock price. Cohen also reported, in the report, that at the current market price, PCE is “grossly undervalued.”

    Cohen Research wrote, “As per our Base Case scenario estimates, the NAV of PACE’s resources falls in the range of C$5.31 – 7.83 per share (with a discounting factor of 20 percent).” Under the most optimistic pricing, assuming natural gas at $375 per 1000 cubic meters, Cohen targeted PCE shares at C$11.56/share. Cohen Research used the Net Asset Value (NAV) based method, which is one of the most accepted methods to value mining companies.

    PACE, the acronym for Pacific Asia China Energy and not the stock’s ticker symbol (which is PCE, trading on the Toronto Venture Exchange, or TSX), is fortunate that one of its concessions is in the Guizhou province of China. Estimates describe this Chinese province as hosting more than 20 percent of China’s coalbed methane (CBM) reserves. The country’s total CBM reserves have been independently estimated to exceed 31 trillion cubic feet.

    This valuation does not include PACE’s other CBM concession in China, the Huangshi project, where the company began drilling test wells in mid May. Nor does this include the company’s joint venture partnership with Mitchell Drilling Services of Australia for the exclusive use of the drilling company’s Dymaxion® system in China. We interviewed Nathan Mitchell, president of the drilling company, who was both optimistic and excited about his company’s joint venture with PACE, and looked forward to expanding his drilling operations into China.

    Mitchell told us, during that interview, his drilling company’s technology made it possible to extract gas for around US$1.25 per mcf. This would help make potentially “uneconomic” gas more economic under a very pessimistic scenario. Revenues from others using the Dymaxion system in China would flow into the coffers of both PACE and Mitchell.

    The company appears on the right track and has been issuing regular progress reports, which are encouraging. As PACE progresses to its final drilling in Guizhou province, and as the price of natural gas recovers, we suspect Cohen Research will be pleased with their price targets, as might shareholders in Pacific Asia China Energy.
    #45     Mar 17, 2007
  6. topdown


    O.K. - I've got another one for you. WWAT.OB. They've got everything to love about a longshot. No cash, lots of debt, never made a profit. But..... Could this be the time for this company to finally shine? Solar powered water systems - Originally formed to provide water to 3rd world countries, but now they have a growing domestic market. If they ever expand to China, they really could explode. 2/20/07 press release:

    WorldWater & Power Announces Outlook for 2007

    Tuesday February 20, 7:30 am ET
    Anticipates Revenue of $30-$35 Million to Drive Company to Profitability

    PENNINGTON, N.J.--(BUSINESS WIRE)--WorldWater & Power Corp. (OTC BB:WWAT.OB - News), developer and marketer of proprietary high-power solar systems, today provided guidance for 2007. The company, which estimates 2006 revenue of $17 million, expects to see sales nearly double this year - to $30-$35 million, representing 5 megaWatts of electricity. The company has a steady backlog of solar projects and is bidding on an active pipeline of opportunities. Seasonality will be similar to 2006, with higher revenue expected to be realized in the latter half of the year. However, each quarter is expected to show strong comparisons over 2006. The seasonality reflects both normal demand trends and a shift in the company's focus to larger, multi-megaWatt projects. In addition, WorldWater anticipates showing a profit for the full year - a major accomplishment - as it leverages increasing opportunities and takes a growing share of the solar market.

    The company continues negotiations with ENTECH, Inc. and will keep investors and customers informed as developments warrant.

    "I am very pleased with the progress made in 2006 and look forward to continued strong growth this coming year," commented Quentin T. Kelly, Chairman and CEO of WorldWater. "Profitability is clearly within our reach, and we believe that our focus on larger systems will pave the way for even greater performance in 2008."
    The company expects to report fourth quarter and full year 2006 results on or about March 30, 2007.

    About WorldWater & Power Corp.:
    WorldWater & Power Corporation is a full-service, international solar electric engineering and water management company with unique, high-powered and patented solar technology that provides solutions to a broad spectrum of the world's electricity and water supply problems. For more information about WorldWater & Power Corp., visit the website at
    #46     Mar 18, 2007
  7. DRL....good action on Friday...and sub prime lenders are washed out for a while. I am in it to win it...and looking for a 10 bagger here. (The fact that the NYSE has delisted them has to mean something, if there business was a complete flop, they'd end up like NEWC.....I did exit that one on FRI.

    BTW....STOP is a new low close...that's where I'm out for this trade.
    #47     Mar 18, 2007
  8. WWWAT taps into everything I like about solar small applications making a big difference. But geez they have like three farms in jersey. They also have over $3 million they owed for parts and materials and $73K in the bank as of last year. Topdown I wonder if these guys can financial survive. I was wondering though who made that water system in Dar es Salaam--WorldWater & Power designed and constructed the first fresh water system for the main slaughterhouse in Dar es Salaam, Tanzania!
    #48     Mar 18, 2007
  9. topdown


    Exactly - But that is what make "longshots" so potentially attractive. WWAT does appear to have some financial backing from another company, Emcore (EMKR). They recently sold a part of their business to GE for $100M and have agreed to invest $18M in WWAT.

    Check this out (edited from 1/8/07 quarterly results press release):

    SOMERSET, N.J., Jan. 8 /PRNewswire-FirstCall/ -- EMCORE Corporation (Nasdaq: EMKR - News), a leading provider of compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and solar power markets, today announced preliminary unaudited financial results for the fiscal 2006 fourth quarter and fiscal year ended September 30, 2006.

    The sale of our interest in GELcore and the sale of the Electronics Materials and Device division have provided us with the capital to invest in our terrestrial photovoltaic strategy and expand our fiber optics business. Our strategic investment in WorldWater and Power and expansion into China are just two examples of these initiatives.

    EMCORE sold its 49% membership interest in GELcore, LLC to the Lighting operations of GE Consumer & Industrial, a division of General Electric (GE) for $100 million in cash. GE owned a 51% membership interest in GELcore prior to acquiring the remaining 49% from EMCORE.

    EMCORE and Sandia National Laboratories announced the agreement for the development of next generation concentrator photovoltaic power systems. Sandia will provide technical support for EMCORE's terrestrial solar systems products. Sandia has over 25 years in the development of photovoltaics for grid-tied utility scale power generation and is a pioneer in photovoltaic research. EMCORE is the leading supplier of gallium arsenide multi-junction solar cell technology for power generation on satellites. EMCORE is adapting its state-of-the-art solar cell technology as a base for the development of large scale, concentrator photovoltaic power systems with the goal of becoming the leader in solar energy power systems.

    EMCORE has agreed to invest $18.0 million in WorldWater and Power (OTC Bulletin Board: WWAT - News) in return for an amount of convertible preferred stock and warrants of WorldWater and Power, equivalent to an approximately 31% equity ownership in WorldWater and Power, or approximately 26.5% on a fully diluted basis. The two companies also announced the formation of a strategic alliance and supply agreement under which EMCORE is the exclusive supplier of high-efficiency multi-junction solar cells, assemblies and concentrator subsystems to WorldWater and Power with a contract valued at $100 million over the next 3 years. On November 29, 2006, EMCORE invested $13.5 million in WorldWater and Power, representing the first tranche of its $18.0 million investment. In connection with the investment, EMCORE will also gain two seats on WorldWater and Power's Board of Directors.

    I've got a feeling that just maybe old man Kelly (72 yo founder and chairman) was ahead of his time and was more concerned with saving the world than making $. New management, financial backing and most importantly, a huge growth market make this a "longshot" that deserves watching.
    #49     Mar 18, 2007
  10. cscott


    Why are the mods allowing talk about penny stocks? Did they change their policy since I recommended MEMY and STG a few months ago. BTW, MEMY went from $1.20 to over $4 after I recommended it. It's back down now tho'.
    #50     Mar 18, 2007