Stock Trades: Bought Second Wave Petroleum and Valeura Energy

Yesterday, I bought 1,000 shares of Second Wave Petroleum (TSE:SCS) at $2.51 in my HELOC account.

I also bought 5,000 shares of Valeura Energy (TSXV:VLE) at $0.375 in my HELOC account.

Stock Trade Commentary

Second Wave Petroleum is not new to the HELOC portfolio. Back in October I bought and sold SCS for a nice gain. SCS incurred fire damage in Judy Creek’s gas plant knocking out about 1,050 boed out of about 2,600 boed for the next month. Add to this some tax loss selling and you got a share price drifting from close to $3.00 down to $2.50.

To tell you the truth here, I was disappointed the price did not decline lower and faster. Who knows, there’s still 2 days for tax loss selling so further weakness might be witnessed. Production is still ongoing from other areas and drilling is moving along as planned. The battery is expected to be replaced with a bigger one by mid-January with production restarted by early February. No need to tell you Q4 financials will take a hit as well as a smaller one in Q1. I bought in for their land package to the south of Arcan Resources and their multizone drilling inventory. In my opinion, the share price will recover in 2011 once all of this is behind them providing oil prices remain strong i.e. above $75.

Nothing beats buying stocks on special when others are selling to lock in a loss which brings me to Valeura Energy, my first non-Canadian energy play. It feels weird to step out of my comfort zone (Western Canada) and into Turkey!

Why Valeura? Very simple actually, first let’s start with management: The CEO Jim McFarland started VLE after having sold his last international play Verenex and Abbi Badwi on the Board of Directors is the CEO of Banker’s Petroleum which went from $0.70 to $7.00. The company has no debt and recently picked up working interest in a natural gas producing property in the Thrace Basin (will pay for itself in less than 10 months). Don’t get turned off just yet, natural gas in Turkey fetches $7.60/mcf compared to the dismal prices in Canada. Turkey is under-explored and under-exploited which provides for nice opportunities. Even though my position is small (limited capital + got to remain diversified across companies) I believe this play will emerge into the spotlight well into 2011.