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CCX |
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Cubacan Expl. (CCX - ASE) holds two onshore oil exploration blocks in the Republic of Cuba. In a previous issue of The Cuban Investment Letter, I gave my subscribers some initial details on their involvement in what could turn out to be a very important oil play in southeastern Cuba. Cubacan has been conducting seismic surveys on one of their blocks and has identified a massive reef structure which appears to have the potential to hold 200/250 million bbls of oil. I have been following this company for some time now, mainly because they are involved in Cuba, which is my only focus. The management is sound (Allan Kent is the president and Francis P. Elliott - the professional geologist who helped put together Abacan Resources' Nigerian oil play - is a director) and just as important, they have excellent concessions. They have now advanced this project to the point where they are now close to resolving one of the last hurdles...i.e. financing of what looks like 3 wells costing approx. $15 million. The company recently completed a fully subscribed units offering for $2.1 million (1 share and 2 wts - first wt plus .45 for 1 sh to Jan/97 and the second wt plus .60 for 1 sh to June/97).
I am bringing this company to your attention since a resolution of this last remaining issue would clear the way for the drilling of these wells, and if successful, bring about what I believe would be a major turning point in the economy of Cuba. Keep in mind that the company has a production sharing agreement with the Cuban state oil company, CUPET, and the net /bbl to the company is actually higher than what they could get in North America or most other countries.
Cuba now struggles to produce and sell its sugar for valuable hard currency, which is then used to help pay for the importation of oil in order to keep the country running. Consumption of oil in Cuba is about 100,000 bbls/day (even in the present depressed economy) and production runs around 30/35,000 bbls/day. This puts an enormous strain on the finances of the country. A discovery of this size would have an immediate impact on the future direction of the country's economy and the political structure.
Look for some anticipation to start building in the stock as these decisions are made. Call me for further information at 1-800-246-9938.
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