3SOF

Hi everybody, I am new to this board.

Has anybody an idea on what the direct added value will be if the Zhambai option is
successfully exercised.
The value of these new (at let's say 7US$ a barrel) reserves will lift the market cap into the billiions. Can I then conclude the markt cap will increase  by the value of the new proven reserves - the cost of the option and other related costs

or is that all to simple, some companies such IVH do not even make money and are only valued on what is in the ground

25% participatory interest in Zhambai LLP (a wholly owned subsidiary of Kazakhoil, the predecessor of KazMunaiGas), which holds a licence for the exploration and production of Zhambai South and South Zaburunye blocks

Hi Nelsoninvest,

Welcome to 3SOF and the Nelson team!

I wish it were so simple but unfortunately the market is not so rational (otherwise NLG would already be trading at much higher prices!) But the exercise of the Zhambai option will certainly add value to NLG so I would expect a nice pop in the price when the announcement is made.

I mentioned previously about NLG's purchase of the CAIH 60% stake in CHAR.OB but couldn't remember the price:

Quote from: Michael on July 12, 2005, 02:51:46 PM
.....But too many oil assests makes life difficult so the management of CAIH thought that it would be a good idea to merge their stake in Chaparral into NLG. Normally that would happen at huge multiples but not in this case (after all it was part of the family!)

Chaparral Resources is engaged in international oil and gas development with a single operating asset: development of the 16,900-acre ``Karakuduk Oil Field'' and NLG now holds 60% of the company acquired veeery cheap (Let me be honest I can't remember the price so you just have to believe me!)

Well I found the price: NLG paid in May 2004 $23.9 million for 26 million shares or $0.91 per share. Chaparral is to day valued at $3.16 per share. 242% profit on that investment over 1 year. Not bad but then remember NLG.TO is not like other companies we are something special 

Here is what ATON Capital had to say:

Hi Michael

Thanks for the great info!!!

Nelsoninvest

A very interesting article about the supply/demand of oil. This is another good reason to own Nelson.

Cut and Paste:


http://321energy.com/editorials/sprott/sprott070505.html

VIDEO

Good Day All
I can't find any news, so I'm guessing that there's some profit taking today. You don't tend to see NLG fall with oil price declines. Any thoughts!

Monthly article of Eric Sprott at sprott.com is a good read. One of top Canadian investors, bullish on oil, coal and uranium.

Best of Luck

Hi Usedcasting,

I also can't find any company specific news so I guess we are seeing some profit taking due to the drop in oil. After all NLG has had a nice run while oil prices has gone down as you mention.

There might be bumps on the road but as long as NLG post results like this:



I am not concerned about the long term direction of this company. 

Nelson resources paid US$2.60 per barrel for Chaparral

The transaction will be accounted for as a purchase of Chaparral by Nelson under purchase accounting rules and Nelson will continue to use the full cost method of accounting for its interests in oil and gas properties.

Based on a transaction value of approximately US$23.9 million, the transaction implies a proved reserve purchase price of US$2.60 per barrel.

If NLG pays US$ 2 (just a guess as might even pay less as the oil is still in the ground) for the Zhambai option (according to a PR the two off shore blocks have 1.7 Billion of recoreveble oil) they will need to pay 3.4 Billion.
Total reserves will go up from 220 Million now to 1900 Billion suggesting a market cap of (7 $US per barrel *1900 M barrels) = 13.3 Billion, taking debt/share increase of lets say 1.8 Billion shares to finance the purchase into consideration would give NLG a 13.3 Billion $US market cap / 1.8 Billion new shares plus 900 M already outstanding would give us a price per share of 4.75 $US or 5.7 CAD$

comments please

Nelsoninvest

just out : 28 July 2005

                      NELSON RESOURCES LIMITED ANNOUNCES                       
             15% INCREASE IN RESERVES AND APPOINTMENT OF DIRECTOR             

Nelson Resources Limited (TSX / AIM: NLG), a leading independent exploration
and production company operating in Kazakhstan, today announces an increase of
15% in proved and probable (2P) oil reserves net to Nelson's equity interest in
its fields, according to a mid-year update of the December 31, 2004 reserves
figures carried out by independent reserves evaluators McDaniel & Associates
Consultants Ltd., Calgary ("McDaniel").

The increase to 270 million barrels (MMbbls) of 2P reserves net to Nelson, from
235 MMbbls as of the previous review, is mostly attributable to a re-evaluation
of the Kozhasai field in north-western Kazakhstan, following the completion of
a test well carried out as part of the field's pilot production programme. The
reserves review was limited to the field's West Block where the test well is
located. As a result, the field's total 2P reserves at December 31, 2004 have
been re-evaluated at 75 MMbbls (38 MMbbls net to Nelson's 50% interest), a
seven-fold increase over the previous evaluation of 11 MMbbls.

Hi Orvis,

Thanks for the news clip, which I believe has still not hit the main media (you always read it first here on 3SOF!). Allow me to quote our chairman:

QuoteI am very pleased that the success of our drilling program is allowing McDaniel to
attribute more reserves to Kozhasai. I have always believed that this field
would prove to be a major asset for Nelson. We have a second new well being
completed now and expect to have the third of the six pilot development wells
completed by the end of the year.

Also did you notice that Chaparral moved up 13.4% yesterday. We own 60% of that baby so we might see some follow up on NLG today.

• Increased production
• Increased reserves
• Increased profit
• Increased value of subsidiary
• Increased share price

Well the last one is still lacking. We are only up with 10% in July. We are now fighting with the resistance at 2.2 but volume is increasing so we will break through. It is only a matter of time.

Michael, posted that NR because I'm in London and it was released here at 07:00 (01:00 am your time).
Interesting to hear about Chaparral. Any idea what the holding is now worth per NLG share?

Hi Orvis,

The increase in Chaparral was only 13% yesterday but 30% over the last 4 trading days. Sorry for the mistake.

The value of NLG's stake in Chaparrel is $91 million.

Hi Michael,

Hopefully, we will have some gains on NLG shortly.

Do you think char.ob will have faster gain than NLG?


Thanks.

Hi Valueseeker

I am not good at making short term predictions. I think I have demonstrated that clearly lately (AOB and VPHM). 

I am real valueseeker 

What I do know is that NLG have more potential value inform of reserves, production, options on fields etc. than CHAR.OB. Will that be reflected in the share price this week, month or year? I have no clue but sooner or later it will be reflected.

Both charts looks bullish to me so it is your pick.

Prompted by Orvis post i did a quick calculation. The 30% increase in Chaparral's share price adds 3 cent to NLG's share price.

Thanks. Michael.

I have been in VPHM since $6 range and sold 1/2 of the seed in $11 range and keeping 1/2 for long term.

I am also in in AOB, NLG, RITA and DESC. Looks like RITA is going to rise today with the news.


-Louis

Good day all. I was just wondering if a 15% increase in reserves should translate into a 15% increase in share price.

Wishful thinking I presume!