Sefton Resources

REDUCE

12/05/2011 Robert Tyerman

Shares in Sefton Resources (SER) have more than doubled on an independent 'competent person's report' valuing its Kansas assets at £60m. Dr. Nafi Onat of Sure Engineering, based like Sefton in Denver, Colorado, has produced a report suggesting the company could have prospective resources of 1.7bn barrels of oil and 15.7bn cubic feet of gas at prospects in Kansas, with a potential net present value of $68.9 million (£43 million), not far short of the currently claimed net present value of all its assets, in California as well as Kansas.

That has sent long-time AIM dog Sefton's tightly-held shares up by 2p this morning to 3.88p, where they value the company, steered by entrepreneurial acting chairman and chief executive Jim Ellerton, at £10.85m. Sefton has also completed the acquisition of acreage, equipment and technical data from Cholla Production, close to the Cholla pipeline in the same region, for $200,000, subject to 'additional due diligence'.

The company, which turned $317,000 losses into $338,000 pre-tax profits in the first nine months of 2010, has 100% of two oil fields in California's Ventura Basin, Tapia Canyon with heavy oil and Eureka Canyon with medium gravity oil. In East Kansas, Sefton holds 45,000 acres in the Forest City Basin, where it is targeting coal bed methane as well as conventional oil and gas deposits.

Floated 11 years ago at 5p, Sefton's shares were dismal performers for a long time, as progress proved painfully slow, and Ellerton is not without his critics in the market. Having fallen as low as 0.5p and highlighted by Growth Company Investor as a punt at 2p in February, their latest spurt to 3.88p could provide an opportunity for partial profit taking, while holding a fair chunk for a possible further rally.