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AXPL is a new recommendation by RedHot Stocks at the following: redhotstocks.com Any and all insight into this stock and its technology is greatly appreciated. Following is a brief summary of their analysis: THE COMPANY ----------------------------------------------- "Amalgamated is an oil, gas, and gold exploration company with impressive lease holdings and a newly-acquired exploration technology that makes them an incredible prospect for growth. In December of 1996, just one month ago, Amalgamated completed the acquisition of a one-man Texas based exploration firm named MSP Technologies. MSP was acquired for 300,000 shares of AXPL stock. What makes a one man company worth $1.8 million dollars in stock? Good question. THE ELECTROTELLURIC SURVEY ----------------------------------------------- MSP's founder, Mr. John Jackson, has developed a device called the Electrotelluric Survey that quickly and accurately detects hydrocarbons (oil and gas deposits) to depths of 17,000 feet. With this device, oil and gas companies can eliminate their greatest expense: dry holes. The Electrotelluric Survey is a low frequency telluric instrument used to map hydrocarbons in the Earth's subsurface strata. The system incorporates digital signal processing (DSP) software and acquisition hardware. The survey can be run either digitally or analog, or on a strip chart recorder for immediate field review. MSP describes it's technology as, "The relationship between the frequency of the electromagnetic wave front and the depth it will penetrate a resistive Earth is generally accepted as the skin depth law, often referred to as a piecewise continuous function of depth. Formation activity, induced by ionospheric pulsations interacting with the formation's dipole movement, results in scalar potentials, which in turn, result in discontinuities in an otherwise homogeneously continuous steady state output at the surface. The receiver detects these extremely low level induced currents governed by the electrical properties of the formation and records them in terms of the frequency tuned." Here's our understanding of the technology: There are extremely low frequency electromagnetic waves that pass naturally through the earth. (These are the same waves that create the aurora borealis during certain atmospheric conditions.) These waves develop anomalies or disturbances as they pass through oil and gas deposits (hydrocarbons). The electrotelluric survey measures these waves across a range of low frequencies and records the anomalies, with each frequency corresponding to a certain depth. The measurements are output in the field through a pen recorder, or can be stored digitally for computer signal processing. The result is a true hard copy with no interpretation need. Of course Mr. Jackson applied for patents on his invention, which were subsequently acquired by Amalgamated Explorations. According to Mr. Jackson, the telluric survey has been around since the 1940s when the Germans used it to search for submarines. Today, the U.S. Navy uses a similar technique to map the ocean floor. But never has anyone been able to identify the particular "signature" unique to hydrocarbon deposits. The identity of this signature, in addition to the survey's ability to scan rapidly through a frequency range (and therefore, depth range) is what Mr. Jackson's patent application is all about. Why has it taken since the 1940s to develop this device? Mr. Jackson states that, "Not until the age of the Pentium computer were there electronic components reliable enough and sensitive enough to construct the electrotelluric survey for hydrocarbons." We reviewed the device during a June demonstration prior to Amalgamated's acquisition of MSP Technologies. The survey not only identified oil and gas deposits, but told how large the deposits were and at what depth they were located. At commercial well sites where our test team held the production logs, the electrotelluric survey matched with 95% accuracy the known producing deposits. The value of a device of this type is almost inestimable. Even with all the advanced geological exploration methods and 3-D seismic surveys, 9 out of 10 wells drilled are dry or not commercially viable. Each well costs between $100,000 and $1 million to drill and a run of bad luck can ruin smaller oil companies. The electrotelluric survey could change all that. 3-D SEISMIC vs. ELECTROTELLURIC ----------------------------------------------- The breadth and depth of potential application of electrotelluric technology is simply staggering. Currently, the most widely accepted subsurface exploration technique is 3-D seismic. This method surveys subterranean structure, allowing geologists to identify areas that display structure of a type that has traditionally been indicative of potential hydrocarbon deposits. 3-D seismic DOES NOT detect the hydrocarbon deposits, only structures that may or may not contain hydrocarbons. Drilling test holes is still required to accurately gauge the presence of commercial quantities of hydrocarbons. The biggest problem with seismic, however, lies in the interpretation of the data. This type of survey sends shockwaves through the earth, either from huge mechanized "thumpers" that pound the ground, or from explosive charges placed in the earth. The vibrations that result pass through different densities of rock and can show desirable structure where none exists. Interpretation of the data gathered can require weeks of heavy computer-driven calculations-even then, the interpretation is largely subject to the skill and luck of the operator conducting the survey! Dry holes can and do still occur, even with the best 3-D seismic operators. Overall, 3-D seismic is an expensive, time consuming, labor intensive process. But it's still a TEN BILLION DOLLAR BUSINESS! Amalgamated's Electrotelluric Survey addresses all of these problems. The survey equipment can be carried and operated by one man. The testing itself takes approximately five minutes per location. There is no disruptive pounding of the earth or underground explosions. Interpretation is not part of the process-the survey accurately discloses hydrocarbon deposits while still on the site. Varying densities of the earth do not affect the survey, since the device measures not vibrations but natural, passive, extremely-low-frequency electromagnetic waves that pass through the earth. Off-premise number crunching is not necessary. Finally, the electrotelluric survey is environmentally friendly. There is no disruption from this test except the footprints of one man. THE INDUSTRY ----------------------------------------------- According to the Oil Daily and other industry publications, oil and gas stocks are on the rise. After years of shunning the industry, analysts are finding deep-pocket investors are returning to oil and gas, drawn by the prospect of cheap, but potentially highly profitable, deals. Oil and gas prices are seeing a steady upswing and the harsh winter weather should offer an even greater boost. Contributing factors include an upbeat commodities market, declining oil and gas exploration costs, and a hunt for attractively priced investments outside the booming stock market. MANAGEMENT ----------------------------------------------- One of the things we like best about this company is it's size. They have only five or six people on the payroll. Amalgamated appears to be an extremely lean, efficient organization. The President and CEO is also the company founder, Mr. Ted Murer. Mr. Murer graduated the Colorado School of Mines and has been an exploration geologist and consultant for 33 years. At one time he held leases on all of the Cave Gulch area of Wyoming (where Amalgamated has property to this day--See "Properties"--Next Section) but as an individual did not have the resources to singlehandedly develop the area. Even so, he is generally credited with the discovery of Cave Gulch and he is recognized in industry circles as being an expert on the geology of the region. Mr. John Jackson has over 20 years experience in the oil and gas industry with hands-on experience in uranium, coal, and oil and gas exploration. His experience and practical knowledge is dwarfed only by his inventions. In addition to the electrotelluric survey, Mr. Jackson also developed the E.M. tool, a cased hole passive electromagnetic logging tool used to aid in determining the oil-water contact in oil formations. For complete coverage of Amalgamated's management, visit their web page at findoil.com. PROPERTIES ----------------------------------------------- Amalgamated's core business is oil and gas exploration. They have 2600 acres on the Boone Dome field, (which the electrotelluric survey predicts to be as large as the Cave Gulch field) and 640 acres on Cave Gulch itself. The Cave Gulch Field: In August 1994, Ted Murer teamed with joint venture partner Barrett Resources and drilled the Cave Gulch Federal Unit #l natural gas well in Fremon County, Wyoming. As of May 22, 1995, 246 feet of 481 feet of pay was open to production at 10.2 million cubic feet of gas per day. The well was selected for the "Best Of The Rockies" award for 1994 by Hart's Oil And Gas World Magazine. Industry estimates credit this one well with 5% of Wyoming's total gas production. To date, 36 wells have been drilled in the Cave Gulch field. Five of the wells are each producing approximately 54 MMCF per day ($50,000 per day). Amalgamated is also involved in gold exploration. The "Paymaster Project" in Esmeralda County, Nevada is home to gold and silver claims, among others. Amalgamated has a 40,000 acre claim in a natural basin located downhill from precious-metals-producing volcanic vents. Amalgamated plans to conduct a 10-hole drilling exploration program for precious metals and lithium which the Company believes accumulated in the bottom of the basin more than twenty million years ago when volcanic vents from Goldfield to Tonopah erupted. Such volcanic eruptions have yielded some of North America's largest gold and silver deposits. Some fifteen or more of these deposits have reserves in excess of 500,000 contained troy ounces of gold and range up to 20.2 million contained ounces. FINANCIAL PROJECTIONS ----------------------------------------------- We feel that the electrotelluric survey alone could yield $1 billion in yearly revenues. There is no other technology like it and once the industry learns about it, it will cause a frenzy. Regarding oil properties: According to a U.S. Bureau of Land Management Report dated April 12, 1996, there are natural gas reserves totaling 580 Billion cubic feet in the Cave Gulch area alone. Amalgamated holds 640 acres of this area. In addition, Amalgamated holds at least 2600 acres on Boone Dome, 12 miles from Cave Gulch. Judging from results obtained by electrotelluric survey, Amalgamated expects Boone Dome to be as large or larger than Cave Gulch. One well on Boone Dome producing $30 million in profits per year could generate roughly $10 earnings per share. At a P/E ratio of 10:1, those earnings result in a $100 per share price! Amalgamated could potentially drill several wells on Boone Dome alone. The numbers are staggering. Gold property: Mr. Murer's analysis of Gold Basin can be summed up in these words: "If you believe in gravity, there is only one place for a billion dollars worth of precious metals to accumulate--in this basin." In short, we expect the near-term price of this stock to go through the roof! STOCK ANALYSIS ----------------------------------------------- At RedHotStocks, we have had our eye on this company since early 1996 based on their lease holdings alone. With the addition of the electrotelluric survey, it's a must buy! In addition to it's holdings and exploration technologies, Amalgamated holds leases jointly with Barrett Resources (NYSE: BRR) and Chevron Corporation (NYSE: CHV). The company became public through a merger into a public shell in April of 1996. There are approximately 3.2 million issued and 500,000 or so in the actual float. The 52 week low is $2.50, and the year high is $6.75. As of this writing, stock is trading between $6 and $6.50 per share. DEBT ----------------------------------------------- None. This company carries no long or short-term debt. RISK ----------------------------------------------- Considering the value of the Electrotelluric Survey Technology alone, not to mention the huge reserves detected on both the Cave Gulch and Boone Dome leases and the high probability for success at the Nevada Gold Basin, we feel that downside risk is minimal. The company is growing, attracting attention, raising capital, and will proceed with planned exploration and drilling programs. SUMMARY ----------------------------------------------- Amalgamated has the technology to find oil deposits. They can quietly snap up all the best leases in undiscovered territories. Prospecting can be accurately accomplished by one man on foot. They will drill fewer, if any, dry holes. They have properties that geology and electrotelluric survey show could be major producers. BUY!" Special thanks to RedHotStocks for this info. DD | ||||||||||||
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