Niko Resources plans on drilling in Indonesia but not until later in the year

Apr 8th, 2011 – Comment

The company intends on drilling a 14-16 well program in Indonesia starting later in 2011 which in my experience will be the stick that stirs this drink.


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Hi Lou,

What’s your opinion on NKO-T. Buy now or hold?

 Thanks,

Jag

 

Hi Jag,

Niko Resources Ltd. (NKO TSX) has been actively developing energy resources in India for the last decade and has been extremely successful. The company has a 10% working interest in the D6 block that has close to 40 trillion cubic feet of natural gas in place. The company is using the cash flow from those operations to fund the hunt for other elephant fields on the 33 exploration blocks covering 37 million acres in 7 countries it controls.

The charts will provide some guidance to your question whether NKO is a buy or a hold.

The three year chart illustrates  that there is resistance at $115.00 and support at $77.50.  The stock gaped down in February on concerns about production cutbacks at D6 but NKO caught a bounce off $77.50. The  mid February advance has created an ascending triangle pattern which suggests that the move up will continue but that will require further research.

The six month chart depicts the bounce off of $77.50  as the RSI indicated that it had become oversold. The MACD generated a buy signal at $82.50. However  the repeated attempts to break above resistance at $94.00 have not been on increasing volume. Although there is what appears to be an ascending triangle on the chart without an increase in volume to confirm the move it makes me cautious. In addition the MACD seems to be rounding out and trending lower.

At this point I would have to say that there are not enough indicators in place to signal a buy. If you take a look at the activities scheduled by the company most of 2011 is consumed with seismic data processing  and interpretation which generally are not the subject of news releases that could drive market activity.

The company intends on drilling a 14-16 well program in Indonesia starting later in 2011 which in my experience will be the stick that stirs this drink.  In the final analysis I would say keep your power dry and buy on a pull back.

MAKE IT A MASSIVE WEEKEND AND HAPPY CAPITALISM!

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