Just to follow up on my post exactly one week ago on Storm Cat Energy:
Here is what happened this week:
finance.yahoo.com
Risk was substantially reduced when they announced acquistion of production in the Powder River Basin of Wyoming this past week. They also announced a Alaska acquisition. Thus revenues will begin which will enable the company to list on the Toronto exchange and get better exposure.
I am going to post the elevator pitch one last time. Note what Schaefer said on Thursday at the very bottom. I like elevator pitches because I can do due diligence very quickly on the named company. Plus it summarizes my thinking of why I believe this is a outstanding investment opportunity. I did the same thing here when I posted a elevator pitch on net-net Dixon Ticongeroga some time ago. I wish more people here would post elevator pitches so all can see the due dilgence they have done and their thought process on the selection.
The market cap of Storm Cat is still very tiny. We have only begun. Thank you for allowing me to share here. Value? What is 12 million acres of coalbed methane acres in Mongolia worth? What is a CEO like Zimmerman worth? Why CBM? No dry holes for one. To what extent is the acquisition of production reduce risk?
New Coalbed Methane Company--Wyoming-Canada-Alaska-Mongolia (China)
The September 30, 2004 $ 2.1 BILLION acquisition of Evergreen Resources, a leader in CBM technology, by Pioneer Natural Resources created this opportunity.
Evergreen's Vice President of Operations and Engineering, Scott Zimmerman, age 48, was out of a job. His annual CBM drilling budget at Evergreen was approximately $ 200 million!!!!!!!!
Scott spent from 1982 to 2002 with private JM Huber heading up their large CBM properties. He earned only a salary during that period. At Evergreen he was third in command but did not have the stock holdings that the other two had. Zimmerman was now very hungry to build his own major CBM company.
On October 19, 2004, less than one month after the Evergreen acquisition, Scott Zimmerman joined tiny ($ 30 million market cap) Storm Cat Energy (SME or SMEFF in US) as CEO and President. He has immense CBM expertise developed over 22 years. Mr. Zimmerman's references have stated he is "the BEST CBM operator in the COUNTRY."
This is a China Play also in that Storm Cat controls 12 million acres of Coalbed Methane in Mongolia. In addition the company recently acquired production in the Wyoming Powder River Basin and thus now has revenues.
Struther's Resource/Tech Alert V10 #10.6 SME Nov 16, 2004
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I have decided to send this alert out now and will have my complete report in December and will feature a new gold stock this month.
Storm Cat Energy TSXV:SME SMEFF U.S.
Shares outstanding 12.0 million approx. Very small market cap.
There is 3 main reasons to buy this stock
Management, management and management
The next 2 reasons are the huge gas potential of their Mongolia property and: Management's connections will mean some excellent acquisitions in North America such as the one announced Monday. The key thing to understand about Storm Cat is the management expertise that is assembled for this tiny junior company is as good or better than what you would find in the best senior oil&gas companies. Storm Cat has extensive expertise in Coal Bed Methane (CBM). In the current market environment of high natural gas prices and the dwindling supply of conventional gas supplies, CBM is an area that will receive a lot of focus in the years ahead. Storm Cat's personal have plenty of experience in developing CBM projects in the U.S., but the CBM potential in Canada is just in its infancy. I expect Storm Catwill pick up CBM projects in Canada as well as in the U.S., on top of the giant Mongolia project they already have.
Management
The company was formed in 2000 to focus on producing oil and gas from unconventional reservoirs: tight sandstones, coal seams, and organic rich shales, the company says on its website, www.stormcatenergy.com. These are reservoirs that have been neglected in many parts of the world, as they require extensive technical knowledge from both geological and engineering perspectives
On Oct. 19 the company announced that one of its directors, Scott Zimmerman of Denver, has been named president of the company. Until recently, Zimmerman was vice president of operations and engineering for Denver-based Evergreen Resources Inc. Evergreen Resources, a Rockies-based coalbed methane producer, has been working a coalbed methane prospect in the Matanuska-Susitna Borough north of Anchorage. Pioneer Natural Resources acquired Evergreen in May, and Storm Cat invited Zimmerman to lead Storm Cat Energy in expanding the company's coalbed methane projects and initiatives in North America and Asia, the company said.
Scott Zimmerman had twenty years of service with J.M. Huber and then two with Evergreen. Mr. Zimmerman spent 20 years specializing in CBNG exploration and development in the Rocky Mountain region, with emphasis on the San Juan and Powder River Basins. Prior to J.M. Huber, Mr. Zimmerman was the Senior Production & Reservoir Engineer with Amoco Production Company. Mr. Zimmerman received a BS in Petroleum Engineer from Texas Tech University in 1979 and is a member of the Society of Petroleum Engineers.
Brian Mahood is a senior exploration and development geologist with over 34 years experience in the Canadian petroleum industry. Mr. Mahood obtained a Bachelor of Science (Geology) degree from the University of British Columbia in 1970 and completed the majority of a Master of Business Administration from the University of Calgary. He has held intermediate and senior management positions with both junior and senior oil and gas companies. Mr. Mahood has extensive experience in conventional and coalbed methane exploration and development geology, acquisition and divestiture of properties, horizontal well feasibility studies, project economics and the management of exploration strategy, programs and budgets. He was a member of the Alberta Department of Energy 2001 Coalbed Methane Economics
Sub-Committee.
Yaro Horachek is President of Geo-ing Resource Consulting Ltd. He has 30 years of experience in Coal exploration, Coal-bed methane exploration and evaluation, development, and planning of Coal deposits in western Canada and internationally. His experience with industry and government includes Shell Oil, Energy Utility Board of Alberta, Alberta and British Columbia governments, and numerous oil and gas and mining companies.
Dr. Bereskin, director is President of Bereskin and Associates Inc. He has 20 years of experience consulting in the petroleum industry domestically and internationally, most of which involve coal bed methane and tight gas operations. Importantly, Dr. Bereskin is a pioneer in recent technological advances of shale gas production in the United States, such as the Barnett shale. He is also currently an adjunct professor at the University of Utah, responsible for teaching courses in petroleum geology.
Technical Advisory Board
The Advisory board is made up of 4 members that include:
Dr. John Seidle has more than twenty years experience in unconventional gas, primarily in coalbed methane. As a Senior Reservoir Engineer with Sproule Associates, Inc in Denver, Colorado, he is involved in the technical and economic aspects of coalbed methane exploration, production, and enhanced recovery and teaches an industry short course on CBM. His extensive experience includes US, Canadian, and several international coal basins. He received his Ph.D. in Mechanical Engineering from the University of Colorado and is a Registered Professional Engineer in Oklahoma, Colorado, and Wyoming. He has authored nineteen technical papers and has been awarded six patents.
Dr. R. Marc Bustin is professor of petroleum and coal geology in the Department of Earth and Ocean Sciences at the University of British Columbia (UBC) and president of RMB Earth Science Consultants and a principal of CBM Solutions Ltd. He has over 30 years experience in the petroleum sector, with broad experience in the realm of fossil fuels both in research and in his consultancy practice. His professionalexperience includes employment by Mobil Oil Canada, Gulf Canada Resources (prior to joining UBC) and subsequently one year with Elf-Aquitaine (France), CSIRO (France) and CNRS (Australia). Dr. Bustin has published over 150 scientific articles on fossil fuels.
Properties
Mongolia exploration ---China Connection
The company is about to become a production company with news of a new acquisition, but most important is their actively in Mongolia, where they signed a production sharing contract with the Petroleum Authority of Mongolia in February, an agreement ratified by the government of Mongolia in May. The agreement requires a minimum commitment of US$4.8 million over a five-year term and allows for the exploration and development of natural gas from coal. Storm Cat said Oct. 21 that it completed a planned surface mapping project this summer in Southern Gobi in Mongolia, and then began stratigraphic drilling in the Narlin Sikhait region of southern Mongolia, collecting continuous core samples from eight exploratory holes.
Storm Cat said it cored important coal accumulation of more than 41 meters in total thickness, occurring in as many as 10 separate seams. Most drilling depths were limited to 150 meters due to mechanical constraints of the cost-effective Mongolian rig. The company said it designed the shallow drilling locations to sub-parallel the coal exposures along the 70 kilometer length of the Narlin Sukrait thrust fault.
To put the next paragraph in perspective, coal seams with a thickness of just 1 meter (3 feet) can be economic to develop. Storm Cat’s coalbeds in Mongolia consist of at least nine coal seams lying on top of each other. The thickest individual coal seam is over 250 feet thick! This is over double the thickness of the thickest and richest coal seams in the entire United States and this is only one coal seam out nine known to exist.
Storm Cat said seven of these eight exploratory wells encountered substantial amounts of coal. Management concluded the eighth well bore was simply unable to reach the coal-bearing intervals due to the depth restrictions of the small drilling rig.
A larger drilling rig from another driller is moving into selected locations where up to three wells will be drilled and cores taken down to 900 meters south of the Narlin Sukhait thrust fault, where gas content work will evaluatethe gas richness of the various coal seams, Storm Cat said. A North American gas content or desorption company Hampton, Waechter & Associates is assisting with data collection and is providing gas content measurements. These deeper tests will also attempt to document the occurrence of coal
cleating, Storm Cat said.
Storm Cat said Oct. 28 that it has agreed in principle with the Petroleum Authority of Mongolia to negotiate terms of a formal joint exploration agreement covering coal deposits which the company believes may contain natural gas. It is also important to note that China is developing a new gas
pipeline that will run near the project area, so any gas foundcan be brought to market in the not too distant future.
While Mongolia is important, I expect Mr. Zimmerman he is going to focus on Wyoming and also in Canada. Mongolia is huge (12 million acres) and potentially contains 3 to 7 trillion cubic feet of gas, but this may turn out to be just the icing on the cake. They will probably do a JV in Mongolia and then focus their resources in the areas that Zimmerman knows in the U.S. and Canada.
Storm Cat is already in negotiations for acquisitions in Western Canada. The Western Canadian operations are headed up by the talented Brian Mahood and Mike O’byrne. Brian is a 30 year veteran of the Western Canadian oil & gas scene specializing in coalbed methane opportunities for StormCat. Mike O’byrne is a well-respected landman that has worked in Western Canada all his life.
Wyoming, 1481 acres
On November 15th Storm Cat announced the acquisition of a 100-per-cent working interest (81.5-per-cent net interest) in 1,481 acres of the Jamison/North Twenty Mile fields located in Campbell county, Wyoming. Geologically, these fields are located on the eastern flank of the Powder River basin coal bed natural gas region.
Originally placed in production in early 2002, these fields are currently producing at a rate of approximately one million cubic feet per day of natural gas from 28 producing wells. The current production derives from the Anderson and Canyon coal seams, with gross and net proven reserves of 1.148 billion cubic feet and 0.842 billion cubic feet,respectively, and gross and net probable reserves of 3.231 billion cubic feet and 2.37 billion cubic feet, respectively. The reserve estimates were provided by Sproule Associates in Denver, Colo.
In consideration of the acquisition, the company has paid $1.25-million (U.S.) for the properties. The effective date of the transaction is Dec. 1, 2004.
A total of six coal seams exist in the area, including the Anderson and Canyon. The company believes two of the lower coal seams, the Cook and the Wall, provide sufficient thickness to warrant testing and development through the drilling of new wells. In addition, the company feels the Smith coal seam is a good candidate for recompletion of certain existing wells, but no reserves were attributed to it in the Sproule analysis.
Financial
As of June 30 2004 the company had $1.1 million in cash and no long term debt. A $3.4 million financing was announced on November 1st.
Summary
I expect further acquisitions will help push the stock higher along with positive exploration results in Mongolia and North American properties.
I believe that the management behind this company intends on building a substantial oil& gas company focusing on CBM and with any luck this
stock might do half as well as Ultra Petroleum did for us ($1.30 to $65).
The stock chart may look like the stock has already seen a substantial move but the company is still only valued at C$30 million and I would expect we could easily see $4 to $5 with this stock in the next 6 months and maybe sooner, depending how quickly SME moves to acquire other projects and what stage of development they are at.
The recent acquisition in Campbell county, Wyoming is such a project that could easily be developed further to bring production up to multiples of the current 1 mcf/d. I expect it will take at least 6 to 12 months before we see these production increases, but the stock will likely anticipate these developments as new well test results come in.
finance.yahoo.com Canadian dollar quote
US Symbol: SMEFF
stockhouse.com
Storm Cat Energy
Suite 100 - 521 3rd Avenue, SW
Calgary, Alberta Canada T2P 3T3
Telephone 403-261-3605
email info@stormcatenergy.com
Website stormcatenergy.com
Schaefer Newsletter November 18, 2004 stated:
StormCat SME-TSX.V announced an actual production acquisition in the Powder River Basin of Wyoming. I believe this makes StormCat the first and only junior Canadian explorer with actual CBM production.
StormCat bought this property because they believe they can increase production significantly in a relatively short period of time. This property will generate a good deal of cashflow and increased production means increased cashflow. This is just the beginning.
When I first introduced StormCat President Scott Zimmerman to you, I told you he was a company builder. I didn’t say that because it sounded good, I said it because that is what this guy lives and breathes for. He is a company builder. He has the expertise, the knowledge, the contacts, and the experience when it comes to unconventional gas to get the job done.
That’s why I say this is only the beginning for StormCat Energy. This company is going to grow rapidly through both exploration and acquisition.
A year from now we’ll look back and say how lucky we are we were able to get in at $2.00 a share. " END
The Kottmeier Resolution Group
Investor Relations
Phone: Toll Free: 1-87STORMCAT (1-877-867-6228)
Emai: info@stormcatenergy.com
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