 China and Bankers Pete
Bob Moriarty
Archives
October 4, 2004
For months now I have been
trying to get across to our readers how important China is to
the price of all commodities, not just gold and silver. I got
back from a two week trip to China last week and boy
have I been wrong in how I was looking at China.
I sorta thought the demand
from China might be responsible for 50% of the price of any commodity.
Wrong. On my first day in Beijing, I was looking out of the 18th
floor window of my room at the China World Hotel and I counted
20 building cranes. Then I flew to Xinjiang province in Western
China and all I could
see was building cranes
outside my window. Then I flew back to Beijing and on to Shandong
province in Eastern China and all I could see was building cranes
and worker bees swarming over construction sites seven days a
week.
China doesn't just have an
impact on commodity prices, it is everything. And prices are
going up from here on copper, iron, moly, silver, gold, oil and
everything else you need to construct a modern economy in the
shortest timeframe in all of recorded history. What is going
on in China will determine commodity prices for many years to
come.
What exactly does that mean
for the price of petroleum in Albania you may wonder?
One of the figures I came across in an article in the China Daily
about Chinese consumption was an increase in imports of 39% of
crude oil in the first eight months of 2004. In an economy of
1.2 billion people, that's enormous. Not in terms of overall
demand, But in relative increase. In China, consumers only use 1/13th of the energy Americans use. But that figure
is rising rapidly and the interstructure must be built to handle
that increase in demand.
All of which needs energy,
and oil provides energy the fastest. Don't look for $20 oil anytime
soon, It's more probable that you will see $60 oil before you
see $40 oil. And a phone call from Robert Cross of Northern Orion
fame last week gave me a partial solution you may be interested
in knowing about.
 Bob Cross is
a director of a newly-formed oil company named Bankers Petroleum
which just did a deal with the state oil company Albpetrol in
Albania. Kinda rolls off your tongue. (Bankers Petroleum BNK-V
$.65 Canadian 259 million shares outstanding, 279 million shares
fully diluted) http://www.bankerspete.com/.
Basically, the Albanian state
oil company Albpetrol realized they needed access to both technical
expertise and capital from the west. The President of Bankers
Petroleum, Richard Wadsworth has worked on the biggest heavy
oil field in Europe at Patos Marinza for the past three years
and he came up with a win-win situation for everyone.
Albpetrol signed
a deal with Bankers Petroleum this past June 19th whereby Bankers
Petroleum would take control of 28 oil wells immediately in Albania
at Patos Marinza. In return for a $2 million work commitment,
Bankers Pete would take control of a number of oil wells at the
field. Banker Pete gets 30% of the existing production and 95%
of all increase in production from the wells under their control.
Albpetrol gets 70% of all existing
production and a 1% override on all increase in production increasing
to 5% override when Bankers Pete has recouped their initial investment.
The deal is working for everyone.
Since June, by spending an average of $50,000 per well to optimize
production, Bankers Pete has brought 25 wells on line and is
netting 1,200 barrels of oil a day. Bankers Pete anticipates
production of about 1.25 million barrels per year by the end
of 2005.
It's a good time to be in the
oil business, especially when someone will hand you dozens of
wells and allow you to keep 95% of what you can increase in production.
It's a brilliant move by Albpetrol and obviously by Bankers Pete
whose shares have rocketed from $.45 in late August to $.65 today.
The word is getting out and volume was a blistering 1.2 million
shares this past Friday.
Bob Cross was candid with me
in our phone call. They came out of the blocks running and their
feet have yet to hit the ground. By any measure, oil reserves
in the ground should be worth $2-$4 in US dollar terms so the
stock is still cheap. The Canadian standard for reporting reserves
and resources is called 51-101 and BNK is in the process of upgrading
a prior report of 129 million barrels in reserves. The 51-101
should be complete by December.
But one thing Bob Cross told
me really rang my bell. Bankers Pete is going to use the Wheaton
River model. Remember Wheaton River? Three years ago they were
selling for about the money they had in the bank, $30 million.
They had no projects but did have some pretty dynamic management
in the form of Ian Telfer who believed gold and silver were headed
higher. Now Wheaton Rivers has a market cap over $2 billion after
a series of brilliant takeovers.
So my ears perked up when Bob
mentioned Wheaton River. Since this deal seemed almost too easy,
I asked him if it could be duplicated. He laughed and said, "Yes."
If it can and if they do as well as they have coming out of the
chocks, the price is headed a lot higher.
Naturally we suggest our readers
do their own due diligence. It's your money, guard it carefully
and invest in any stock after you have looked into them. Don't
listen and invest blindly on the basis of what anyone says.
Bankers Pete is not an advertiser.
But I don't write about stocks unless I like them and the ones
I like the best, I buy as soon as I put the phone down. That's
what I did here. So you can safely assume we have a vested interest.
The company has experienced
management, I like their business model and it certainly seems
a good time to be taking an interest in any energy stocks. Don't
get carried away chasing the stock higher, stocks go up and down
and pick any entry point carefully. It's only natural that stocks
experience a bounce when anyone writes about them.
Another trip. By the time you read this I will be
once again in the Wilds of Beautiful British Columbia, looking
at Eagle Plains Galore Creek/Copper Canyon project, before they
get snowed in.
I will be back on Sat Oct 9th, so please don't send me email until then.
October 4, 2004
Bob Moriarty
President:
321gold Inc
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