Two interesting updates from the resources sector which tells us that although prices and conditions might be tough, there’s still value and gains to be made.
ERA yesterday revealed that there was a golden side to last week’s encouraging second quarter and half year production report with news of an increase of more than 300% in net earnings for the six months to June.
ERA shares jumped $1.26, more than 5%, to $24.62 yesterday.
A week ago they closed at $21, so the rise has been a startling 20% since the production report last Tuesday.
In an update to the ASX yesterday, ERA said "Although the half year accounts have not yet been finalised, the company expects to announce on 31 July 2009 net earnings for the June 2009 half year in excess of $120 million (June 2008 half year: $39 million)".
Last week, the company reported a 44% improvement in uranium oxide production to 1,481 tonnes for the June 2009 quarter, compared to the June quarter of 2008 when 1,030 tonnes were produced.
That was also 22% up on the March quarter on this year.
Uranium produced for the first six months to the end of June was 2,695 tonnes, or 5,942 pounds, up 14% on the prior first half.
Ore milled for the June quarter was 21% higher, at 597,000 tonnes, than the March quarter and 7% above the June 2008 quarter, due to improved utilisation and milling rates.
Ore grade processed was 0.28% uranium oxide in June, down from 0.29% in March but up 29% on the June 2008 quarter.
And BHP Billiton released an intriguing update on a US oil prospect it and its partners are gradually uncovering in the Gulf of Mexico.
In a release dated July 17 (last Friday), BHP said that the Mad Dog South (826-5) appraisal well and sidetrack, drilled and operated by BHP Billiton, had encountered significant hydrocarbon bearing reservoir.
Mad Dog is already producing and has been since 2005, the well referred to in this statement would seem to indicate there’s a sizeable extension of the oil pool in the process of being outlined.
BHP is the operator of this well BP has a major 60% stake in mad Dog. BHP and Chevron have smaller holdings.
"The 826-5 well is located on Gulf of Mexico Green Canyon block 826 approximately 100 miles (160 kilometers) south of Grand Isle, Louisiana, in approximately 5,100 feet (1,554 meters) of water.
"The well encountered 280 net feet (85 meters) of hydrocarbons in the objective, Miocene, hydrocarbon bearing sands. The subsequent sidetrack reached a total measured depth of 27,143 feet and discovered an oil column of more than 2,200 feet (670 meters).
"The results from this well continue the successful phased development of the Mad Dog field and build upon the success of the A-7 well which came online in February 2008 in the western part of the field and encountered more than 2,500-foot (762 meter) hydrocarbon column, and 275 feet of net pay (84 meters).
"J. Michael Yeager, Chief Executive, BHP Billiton Petroleum, said the exceptional result is a further positive step forward in BHP Billiton’s goal to build an increasingly material business in the Gulf of Mexico.
“The Mad Dog South well results indicate a significant opportunity for further field development. We are also very proud of our drilling team as they continue to demonstrate BHP Billiton’s ability to safely and successfully execute complex work plans in a technically challenging environment.”
"The Mad Dog facility began production in January 2005 from Green Canyon Block 782 located approximately 120 miles off the Louisiana coastline. The facility has a nominal capacity of 80,000 barrels of oil per day.
"BHP Billiton holds a 23.9 percent working interest in Mad Dog. While BHP Billiton was the designated operator for the purposes of drilling the Mad Dog South well and sidetrack, BP is the field operator with a 60.5 percent working interest. Chevron holds a 15.6 percent working interest in Mad Dog."
BHP shares ended up 80 cents at $36 a share.
