(FRIDAY 16TH MARCH - 08:44 - JAMES GERRISH)...The US MKT was HIGHER overnight with the DOW JONES up +58pts while the S&P 500 ADDED +0.60%. European mkts were MIXED (FTSE down -0.08%, German DAX up +0.92%, French CAC up +0.44%) while locally, the SPI FUTURES mkt is pricing a HIGHER open up +21pts when trading kicks off here this morning.
Yesterday, the ASX 200 closed down -9pts or -0.22% to 4277.
OVERSEAS MKTS; More positive data out of the US overnight with another drop in jobless claims providing more evidence of a solid recovery in the US labour mkt.
Continuing claims actually fell to the lowest level in 4 years while we also saw small increases in regional manufacturing indices. As a consequence, US stocks were bid higher with the S&P 500 cracking through 1400.
AUSSIE MKT; We'll be higher this morning and we might have another crack at 4300 but I've been disappointed multiple times in the past. We can only really wait and see but I think its just a matter of time before resistance gives way.
Its not often I plug a stock, particularly at the SPEC end of the mkt however I think this one has merit....
Challenger Energy (CEL) - last close 7.3c - is starting to make some interesting moves.To give some background, it's an oil and gas exploration company with prospects in the US and South Africa. The US is in focus at the moment and in particular, the prospect known as Mercury Stetson. Over the past 10 years, the US shale gas industry has taken off and one of the core producing areas taps into the Woodford and Barnett Shales, which are geological extensions of the Arkoma and Fort Worth Basins.
The company is currently drilling and on track to punch through the Barnett & Woodford shales shortly so we should get some more detailed information from the company in the coming days. One of the key reasons why the project is particularly interesting is it includes both shale formations in the same project area which greatly improves the potential economics. Also worth noting is the significant size of the potential reserves which sits in the multiple tcf (trillion cubic feet) of gas.
The company has two other prospects that should be mentioned. Triple Crown in the US and Cranemere in South Africa.
Triple Crown was unsuccessfully drilled towards the end of last year - see attached announcement - CLICK HERE - which explains the sharp fall in the stock price (15c down to 5c)
The other is located in Sth Africa which has huge potential but is currently under a moratorium on hydraulic fracturing (fracking for short) - however there are rumblings that this moratorium may be lifted. SA faces major energy shortages and the Karoo land leases, which contain significant gas potential, is where Challenger is located.
The Karoo has three key players - Shell, Falcon and Challenger. Shell has just commissioned a study into the economic & environmental benefits (for Sth Africa) should the ban on fracking be lifted and it seems to be having a positive impact on sentiment. I'm not expecting a lot from the Sth African asset in the near term (although I think Shell wants to increase its stake in the region) however it does provide a back stop if Mercury Stetson fails.
I think its important (when looking at stocks like this) to understand that failures can occur and prospects can underwhelm as we saw with Triple Crown. The key is to have multiple targets, in diverse geographical regions, so they have a number of chances to 'get it right', particularly if they're targeting massive reserves as is the case with Challenger.
Disclosure - I own the stock so might be biased but I think its well worth a look at current levels. I first bought in at 15c a while ago now and was obviously unimpressed with what occurred at Triple Crown. I've just doubled down at 5c in the last few weeks and feel pretty comfortable with the direction of the company.
COMMODITIES; For a full list of overnight prices, CLICK HERE
AUSTRALIAN DUAL LISTED STOCKS
In New York, News Corp rose by US$0.15 to US$20.43, equivalent to A$19.41, A$0.10 above its last close on the ASX.
ResMed rose by US$0.13 to US$31.60, equivalent to A$3.00, A$0.01 above its last close on the ASX.
In London, Rio Tinto rose 75.0 pence to £35.55, A$1.12 higher in Australian currency terms.
BHP-Billiton rose 23.5 pence to £20.24, A$0.35 higher in Australian currency terms.
Henderson Group Plc rose 1.3 pence to £1.22, A$0.02 higher in Australian currency terms.
James Gerrish
