Derek Pain: When the oil well dries up, turn to whiskey
No Pain, No Gain
Saturday 14 February 2009
Exploration shares have a well-deserved reputation for volatility. The hit or miss nature of this widely spread occupation can send prices surging into the stratosphere – or plunging down to the very depths of despair.
Pan Andean Resources, an oil and gas explorer and producer, has experienced the extremes of sentiment. It endured one of the most dramatic crashes ever recorded. One minute the shares were soaring majestically to around 140p; the next they had slumped to 12p and then struggled to hold above 30p. A botched drilling exercise in Bolivia caused the calamity. But I suspect chairman John Teeling would today settle for that 30p price tag. In these depressed times the shares bump along at 6.5p. Yet the company is one of AIM's few profitable oil groups and embraces an intriguing spread of promising but as yet untapped operations in South America.
As the resources veteran observes: "Industry insiders put a much higher value on Pan Andean's assets than the AIM market", where it is capitalised at a mere £7.75m.
Today Pan Andean gets most of its income from the United States although it makes a profit, albeit a declining one, from its Bolivian interests. In its last full year it achieved a £1.2m pre-tax profit, a 40 per cent advance. At the interim stage in the year, ending next month, profits were up 33 per cent to £619,000. The subsequent slump in the crude oil price will, of course, influence future figures.
The profits are being used largely to develop interests in South America, principally Columbia and Peru. Bolivia is not getting much attention these days as "political uncertainty and sub-economic commercial terms have made new investment unfeasible". Teeling says his strategy "is to sweat out these difficult times" but not jeopardise the "important position that we have built by continuously operating in Bolivia since 1988".
That was not the situation when Pan Andean had its memorable brush with stock market fame. The shares had climbed with remorseless pleasure as excitement intensified about the Bolivian drilling venture. The group, it was confidently assumed, was about to strike it rich.
But, following telephone calls to Bolivia, an inquisitive investor discovered there was in fact no oil – it had "migrated". In a deluge of selling the shares slumped. A red faced Pan Andean had to admit that the well was in fact dry and the investor had discovered that unpalatable fact before the company had received any such message from the oil face.
In Colombia and Peru, Pan Andean's role is increasing. There is talk that it is sitting on a Colombian field that could be hiding 300 million barrels of oil, and in Peru it has one of the largest onshore exploration land banks.
Other South American countries are being examined but Teeling cautions about "the rise of economic nationalism" making some unattractive. There are even indications that the Middle East or Africa could offer the next port of call.
In the US, Pan Andean has interests in the Gulf of Mexico and Texas. It believes its existing production sites still have plenty of energy left in them. But it suffered a sharp reverse late last year when a highly promising prospect, situated in a prolific oil and gas area 40 miles from Houston, failed to deliver. The well, where Pan Andean has a 31.25 per cent interest, has been plugged, although further exploration could take place.
Still, Teeling, a Dublin-based entrepreneur, is accustomed to the vicissitudes of exploration. His interests embrace a number of AIM-traded mining and oil groups, including African Diamonds and Petrel Resources. He also takes in one of Eire's most intoxicating success stories, Cooley Distillery. After the country's leading spirit companies, such as Jameson and Powers, fell into overseas hands, Teeling led a campaign to establish an Irish-owned whiskey group. He sought capital through an Irish version of the old Business Expansion Scheme, establishing Cooley around 20 years ago.
Cooley has grown rapidly, offering whiskey brands such as Locke's and Tyrconnell. Although still small in world terms, it has performed particularly well in the US. Rumours that Teeling plans a share flotation often circulate. With more than 300 shareholders it is, I believe, an obvious candidate for quoted life. But so far Teeling has kept Cooley well away from the stock market.
Independent Partners: See how much you could save by switching credit cards. Compare now
Geoffrey Macnab does not like the comedian's big screen debut
Look beyond the usual shows for the best festive telly
The battle for control of Stieg Larsson's £30m legacy
Bargain Hunter: Keep taking the tablets to get £30 off a new Kindle Fire
Mark Dampier: Britain's small-cap funds punched well above their weight this year
Questions of Cash: I want to top up my national insurance contributions and get a better pension
How to start your own internet business
A savings account is not the best place to save
- 1 Tim Sherwood challenges Daniel Levy to set out vision for Tottenham Hotspur’s future
- 2 French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
- 3 Sun will 'flip upside down' within weeks, says Nasa
- 4 #Teamnigella: It’s the only side to be on
- 5 Christmas comes early: Justin Bieber is 'retiring from music'
Exclusive: Young people ‘want UK to stay in Europe’: Four in 10 adults aged 18 to 24 are ‘firmly in favour’ of membership, poll shows
Tom Daley ‘is gay because his father died’ says UK evangelist
Iain Duncan Smith leaves Commons food banks debate early
Kiss and yell: Italian protester charged with sexual assault after kissing riot police officer
PM denies two child limit for benefits is part of Tory welfare policy
David Cameron takes his biggest gamble yet as he gets tough on Europe over immigration
- < Previous
- Next >
iJobs Money & Business
£59999 - £80001 per annum + Benefits: Pro-Recruitment Group: A Top 10 firm in ...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Project Manage...
£60000 - £90000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£Negotiable: Citifocus: High calibre individual with institutional client serv...
Day In a Page
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.