The information presented below was handpicked by me from a Jennings Capital research report done by Gregory Chornoboy to alert and pique your interests. Do not invest or trade based on it and always do you own due diligence.
Click here to download the entire research report by Gregory Chornoboy of Jennings Capital (PDF)
Norwood is the owner of an 805,000 acre concession in western Nicaragua and has a 70% after payout working interest in the project. 3 wells have already been drilled on the concession and shown hydrocarbons on one or more mud logs, electric logs and wells tests but testing to date has been inconclusive due to inadequate equipment and techniques.
With 10 prospects in the Paleocene Brito sandstone and 3 more in the Oligocene Masachapa, the initial estimates indicate that the block boasts recoverable oil ranging from 7 to 127 MMBbl for individual prospects, with a total gross aggregate of 582 MMBbl. However, since the outlined prospects are located in northern third of the concession that leaves the rest of the concession fair game for additional exploration that may result in the delineation of further prospects.
Norwood should have begun testing on Maderas Negras-1 (“MN-1”) and San Bartolo-1 (“SB-1”) in mid-August with results expected in mid to late September. Chornoboy of Jennings Capital writes “Analysis by Schlumberger suggests that just one of the 11 prospective zones originally identified in SB-1 could be capable of 800 Bbl/d. If the remaining zones also prove productive, aggregate test rates could be over 2,000 Bbl/d. Everything being equal, the thicker net pay in MN-1 could produce even more. Allowing for a learning curve on completions and stimulations though, we would be hopeful for aggregate test rates between 500 – 1,000 Bbl/d per well.”
Assuming successful tests at MN-1 and SB-1, Chornoboy believes “a reasonable range may be gross production between 500 and 1,000 Bbl/d, although this estimate is subject to substantial revision once the test rates are available.” The graph below shows Chornoboy’s estimates of after tax cash flow for various gross production rates.
Norwood also has a deep gas prospect in Texas called Bigfoot for which the company is presently considering various strategic options.
Lastly, to sum up Norwood’s potential, Chornoboy writes that Norwood offers “
Exposure to over $65.00/sh of unrisked value in Nicaragua alone. On a risked basis, the exposure is $11.92/sh. The Bigfoot play adds another $33.00/sh (but less than $1.00/sh on a risked basis).” If that doesn’t get your greedy tongues salivating, I don’t know what will.
HOWEVER, keep in mind that there are a number of risks associated with Norwood, some of which include exploration risk, geo-political risk, commodity price risks etc. Carefully read over Chornoboy’s entire report to get a somewhat of a handle on the potential upside and downside on Norwood Resources. Also of note, Norwood's share price has appreciated approximately 24% since Chornoboy released his report (the share price at that time was $1.00)
Click here to download the entire research report by Gregory Chornoboy of Jennings Capital (PDF)
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Last update : 04-09-2008 05:00
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