Paul, sorry for the delay in responding...
to your post regarding international embargos on oil from Libya, Iran, and Iraq. I do not follow this subject much, but I do believe the bans are NOT new. The U.S. has not purchased oil from Iran since the early 80's or Libya for about as long. I believe other nations such as Japan (Iranian oil) and Italy (Libyan oil) do not restrict imports from the respective suppliers. Iraq is blackballed by all nations right now except for a small supply they can sell in exchange to buy food and medical supplies from the developed countries. So when it comes right down to it, the Iraqi embargo is probably the one that counts.
The lack of Iraqui oil in the world market has served to hold prices up, and hence it is the imposition of this embargo (not the lack of it) that has helped the small North American oil companies. If Iraqui oil became available tomorrow, I think we'd see ALL oil stocks drop in price along with the spot price in crude.
Perhaps more significant to the "baby oils" is the abandonment of domestic development by the majors. They have had to focus exploration and development in those regions of the world that can yield immense new reserves. In doing so, small companies like Energas have been able to compete in the auction of leaseholds and obtain decent properties without the majors outbidding them. Hence, Energas,
literally a three person company ( = little overhead!) can acquire potential reserves which in terms of their market capitalization allows them to be worth much more than their share price. To be specific...in the case of Energas (17,000,000 shares) has a market capitalization of about US $5,000,000. With the Finley #1 well producing 1 MCF/day natuaral gas and 150 bbl/day of sweet crude, the well will produce pre-tax revenues of US$4000/day. Energas will hold 3/8 ths of an interest in this well by year's end so will get about $1500/day pre-tax or about US$550,000 per year. NOT BAD for their DISCOVEWRY WELL!!! (Please do not take my numbers as gospel; they are based only on my estimates after having been given the production estimates from Mr. Shaw, the Energas CEO.)
The company estimates the Rusty Creek prospect (location of Finley well) can accommodate 40 more wells that draw from the Dakota zone, only one of four or five possible pay zones in this field. Seismic studys confirm the presence of a much deeper zone, the Leo, which is a prolific producer judging from nearby fields. The company will drill their next well to test the Leo.
Without resorting to hype, Mr. Shaw quoted the company's geologist in saying there is good possibility that Energas could have 25 to 50 million barrels of crude under their Rusty Creek leasehold. When I asked him if the figure could be as high as 100 million, he said yes, but "wanted to be conservative." Well, 100 million works out to US$2.00 billion. If 3/8ths of that is theirs, then that equates to US$750,000,000 in the ground or $US44/share. The shares are trading for less than 1/100 th of that right now! Perhaps you see why I am enthusiastic about this little company.
So if things happen to go well for Energas, I think international oil politics and economics have very little to do with the "undervaluedness" of this company. IMHO Energas is providing a tremendous ground floor opportunity for investors right now.
EEG trades on the Vancouver. The company is located in Oklahoma City.
They have not renewed their contract with Tandemn Capital for IR, but will handle it in-house beginning this month. Their toll-free USline is 1-800-365-6201.
I own shares in Energas and have a vested interest in share appreciation. Investment decisions made by others should be based on their own prior due diligence without regard to facts, opinions, or estimates stated by me.
Regards,
Don DeKold
Gainesville, FL
|
