derrilyn underwhelming but great story, page-3

Jojo,

It's amazing how long you can be wrong, before the market wakes up and decides it was wrong instead.

I noticed in one of your posts you also sat patiently on COE last year as I did (and still do - I think it's a fantastic story - but now some of the exploration priced in ,and therefore more risky than STU). I hold COE now on the strength of the mgmt and international assets, but when I bought in Feb 05 it was sp being less than the value of cash plus reserves, with a good track record and the exploration acreage for less than free.

Although I'll be positively suprised if STU pick up the international upside COE has, I believe they are otherwise where COE was 12 mths ago valuation wise.

To balance the lack of international upside, I believe STU has several strongly positive attributes:
1) STU has developed and will further develop far superior production capability than COE. STU is already way out of it's league there, being in the league of ARQ, BPT, AZA, and PSA. Just look in contrast at how hard GOG, ITC/RPM/VPE, MOS, ITC, etc make it look going from discovery to meaningful production. This is an undervalued skill which IMHO will provide STU with opportunities for it's leap outside the Cooper.
2) TWO drilling rigs LONGTERM, AND an enviable prospect inventory on high percentages (generally twice COE % levels). Mostly modest but low risk prospects. I particularly like how they are derisking followup targets. Arwon wasn't a good example but Toporoa (followup to Derrilyn) and now Dalray (to Padulla). It's a full on action company.
3) The refinery. No-one seems to appreciate this (probably because it's not risky enough), but they will.

The market is also IMHO probably grossly overweighting the negative of the hedges (which are now be down to about 4% of reserves).

Another story (albeit a bit riskier) that I can't understand is IPM (down about 10% on my entry). Once again too BORING for the market, producing oil, making VERY high margins, and as with STU (or PSA) you can almost predict the value mgmt is going to add (in all 3 cases pretty much what they say, or infer).

I've been learning the hard way, you make money on the producers (pref with "free" exploration upside), and lose it on the pure explorers.

I don't know whether you've had any great successes on the pure explorers, I haven't (except BAS - getting most out before the verdict).

Entropylord