largest oil field in China is Liaohe, but production is
slowing there as well. China has lifted many barriers to allow foreign
investment to help develop and preserve China’s oil
fields and lay the infrastructure for oil and gas deliv-
ery in China. Current offshore drilling projects that China is
invested in center around the Bohai Sea area east of
Tianjin and the Pearl River Mouth area. And given
improving relations with Vietnam, China has begun
oil and gas exploration in the Beibu Gulf. Onshore, the Dagang oil field may be China’s
largest condensate/gas field. So what oil exploration
company is helping China explore this field? Ivanhoe Energy
(IVAN:NASDAQ) After four years of laying the groundwork, Ivanhoe Energy and its Chinese subsidiary, Sunwing Energy,
began drilling its first well at the end of 2003. Over
the next several years, IVAN will drill up to 115 new
oil wells and 28 re-completions. The target is to pump out 14,000 barrels per day by 2006. The project could generate an estimated operating
cash flow of more than US$40 million in 2005 and
over US$60 million in 2006. These estimates assume
a price of US$26 per barrel of oil. Under the initial terms, IVAN was to fund the work
development, operate the project and fund 100% of
the development costs. In return, IVAN would receive
82% of the net revenue until payout and 49% there-
after. But IVAN has been able to ink a deal with China
International Trust & Investment Corp. (CTIC). CTIC
will receive a 40% stake in the China oil project. In
exchange, CTIC will pay Sunwing US$20 million to
help fund the initial phase. Now here’s the kicker: CTIC is contemplating
exchanging its equity interest in the project for
Ivanhoe or its Chinese unit’s shares. But what’s really
exciting is that the Sunwing subsidiary is looking for
an exchange listing. Ka-ching. Ivanhoe Energy (IVAN:NASDSAQ) is currently pulling back. It is a speculative buy under US$4.00. n In the January 6, 2004, edition
of the 247profits e-Dispatch, I
told you I’d have more Cepheid (CPHD:NASDAQ) info for you in this issue. So sound the trum-
pets and roll out the red carpet,
because here comes the good
stuff… If you didn’t already know, the first three days of 2004 were pretty exciting for CPHD. First, the price
crept up on news of more Mad Cow outbreaks. I
covered that in the last e-Dispatch of 2003. Here’s
what I wrote: “Today, CPHD hit a new 52-week high of
US$9.99. I was itching to pull the trigger on it and
take the 122% gain. But then I saw two things that
stopped me dead in my tracks: “One, CPHD is developing some on-site screen-
ers. Big deal, right? Think again. These on-site
screening systems will be used to detect contami-
nants in foodstuffs. We know that contaminated
meat has been and always will be a problem, no
matter if we’re talking Mad Cow Disease or the far more widespread and dangerous E. coli. CPHD
appears to be nipping the problem in the bud. This
stock is hitting for the fences. The roof is on fire “And a one-year CPHD chart backs me up on
that. See that huge volume spike that occurred earli-
er this month? Immediately following the spike, the
price started another bull run. All that combined
with CPHD’s solution to the Mad Cow crisis adds up
to a potential 2004 barnburner.” That bull run is still going strong. As I write this,
CPHD has hit a high of US$13.13. That gives us a
189% gain in the position. We got in at US$4.40. As
I’ve said before, making a profit with CPHD has been
a long crawl. So why are we in the money now? There’s no resistance US$4.00 is the closest thing you can get to a CPHD resistance level. If you take a look at a two-
year chart, you’ll notice CPHD has been teasing
US$4 for two years, wavering up and down faster
than Louie Anderson’s weight on a yo-yo diet. The good news is, we haven’t kissed US$4.00
since last August. CPHD took the summertime 9 www.taipanonline.com FEBRUARY 2004 Next… Lighting 2004’s fire William Colburn
