Kent Moors and the “All Hell is Breaking Loose in the Arctic” Russian Pipeline Play

Solving an "Energy Inner Circle" Teaser

By Travis Johnson, Stock Gumshoe, November 4, 2013

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On days like today, I don’t have to spend much time deciding which of the dozens of teaser pitches we receive to cover — it’s unanimous, Gumshoe readers are crying out for a solution to the latest pitch from Dr. Kent Moors.

Moors is an energy expert and Duquesne professor, and he sells the expertise he’s gained as an energy consultant over the years by turning it into stock ideas that are sold through both an entry level newsletter (Energy Advantage) and an “upgrade” letter for those folks who want his very best super-secret ideas called Energy Inner Circle.

That basic strategy is not, of course, unique to Dr. Moors or to his publisher, Money Map Press — every newsletter publisher’s goal is to break even on the $39 subscriptions and use those people as the marketing pool for their super-lucrative $300 or $1,200 or $5,000 newsletters. From the comments I get this makes readers crazy (“I already paid for this guy’s information that he promised would be awesome, why is he now offering to sell me something better for a lot more money?”), but it also must work great … because everyone does it.

(That’s one reason I offer only one level of paid subscription here at Stock Gumshoe, by the way, I know a lot of my thoughts and musings are worth nothing much, and some of them are valuable to some people, but how would I decide which insight or snippet of analysis is worth $49 and which is worth $500? I may have to stop the lifetime subscriptions or raise the price of those next year, but they get the same thing as everyone else — they just get it for longer).

But anyway, most of you don’t care about this “behind the veil” stuff about newsletterland — you just want the stock idea, right? So let’s try to ID it for you.

Dr. Moors’ pitch is based on the Russian push to dominate the next wave of oil discovery and production in the Arctic — they got a lot of attention for planting their flag on the sea bed at the North Pole six years ago, part of a global dispute over territory in the arctic, territory that is becoming open to energy exploration and additional sea traffic partly because of receding ice and partly because of new technologies. Norway, Denmark, Canada, the US and several other countries with arctic borders are disputing Russia’s claim that it “owns” the 2/3 or so of the subsea arctic that extends North of their land mass, and the current international agreement is for a 200 mile “economic zone,” so the political squabbling will no doubt continue for a long time — and become much more vociferous if natural resources can feasibly be extracted. Moors reports the claim that 20% of the world’s oil and gas reserves are waiting to be discovered or developed deep under the northern ice, and it’s a huge area so, well, who knows?

But his big claim for this pitch is that the other pundits who recommend the arctic explorers and the oil majors who are staking claims off of Greenland or Alaska or north of Russia or Canada aren’t the best idea for making money — largely because it will take years and years before any of this bears fruit.

No, he says that the best way to profit immediately is by buying the subsea pipeline expert that can build the infrastructure for this arctic work.

Here’s a taste of the big picture tease, just to get you up to speed:

“According to my contacts in Russia, all hell is about to break loose in the Arctic Circle.

“It revolves around $43 trillion worth of ‘Ice Oil’…

“Or the equivalent of roughly 80% of all the money in the world right now.

“And Vladimir Putin can’t wait to get his hands on it.

“It’s found around an obscure place at the top of the world called the ‘Lomonosov Ridge’ ….

“It’s buried under two and a half miles of frigid Arctic water in one of the most brutal environments in the world…

“A place where the slightest misstep can lead to catastrophe.”

He goes on to talk about the first Russian ice-resistant rig that’s producing oil & gas now, the Prirazlomnaya, and that Russia will need to build a massive network of these rigs and subsea systems to expand their production … with a possible catalyst being the opening up of Russian oil to foreign explorers. I wouldn’t hold my breath on companies eager to deal with Putin after so many Western oil companies have been shut out or effectively had their assets expropriated by state-owned companies, but if there’s a lot of oil to be found I guess oil companies will keep crawling to the front of the line to have a shot at it.

But, as I said, he doesn’t think the explorers or producers will be the moneymakers — he focuses on the need for subsea systems and pipelines and the difficulty of engineering and building these systems to withstand both the cold and the shifting ice, including the threat of icebergs that “gouge” the sea floor as they move by.

So here’s how he describes the actual investment he’s pitching:

“The fastest, biggest, and most immediate gains to be had all hinge on the specialized expertise of a company that can make pipe to withstand the unbearable strain of the Arctic, like in the picture you see.

“This Arctic oil ‘wild card’ play could easily earn investors gains as high as 500% if you know what I know.

“It’s a company that doesn’t have to wait for billions of barrels of Arctic oil to start hitting the market before it can make investors filthy rich.

“In fact, this company’s rise to greatness is already starting.

“Just weeks ago — on October 9th…

“This small firm inked a joint venture with a global oil equipment player that’ll put as much as $85 million into its pockets.

“That’s just a drop in the bucket, though.

“As I’m about to show you, this company’s about to make some SERIOUS money on the Arctic oil.”

So … that counts as a wee bit of a clue, but in the interconnected and interdependent oil services sector we need all the hints we can get … any other clues?

“It’s specialty is designing and building pipelines that don’t fail… even under the most brutal conditions.

“It’s a small, UK-based company with a polar cast of all-stars including some of the Arctic drilling community’s most esteemed engineers.

“From the early exploration of the Beaufort Sea… through the development of the Northstar pipeline… and several other high-profile Arctic projects…

“This company’s polar expertise has been critical in some of the most innovative and groundbreaking frontier projects in the industry.

“A world-wide leader in the field, this relatively unknown polar outfit also provides cutting-edge technology and experience in the worst Arctic environments including:

  • Equipment
  • Logistics
  • Engineering
  • Procurement
  • Site management services
  • Maintenance and related services”

And then, one last little tidbit to throw in for you:

“…. they are practically already in the door with a prestigious contract utilizing their expertise in the Shtokman gas field in the Russian sector of the Barents Sea….

“It trades on the London exchange — but I’ve found a way to trade it directly here in the U.S.

“Now, to be sure, this is a small company…

“And maybe a bit of a ‘wild card’ play.

“But in the energy industry, small companies can turn into big ones in a hurry.”

Well, “small” is a relative term and those clues don’t make it easy to be 100% definitive — but the Thinkolator comes out pretty quick with our answer here, the best match is: John Wood Group, sometimes called just Wood Group (WG in London, WDGJF on the pink sheets — if you ever trade pink sheets tickers of foreign stocks, take care to use the home exchange price to set your limit orders, pink sheets quotes aren’t alway fair or current. At 797 pence for the last London close the US price should be roughly $12.73 currently, best prices for the pink sheets trades are typically available in the morning when both US and UK exchanges are open concurrently). It is a UK company, though many of their employees are spread around the world (including big groups in North America), and they’ve been built up through M&A over the years like many big oil services, engineering and construction companies — two of their subsidiaries, JP Kenny and IMV Projects (now part of what they call Wood Group Mustang) have been major subsea, offshore, and harsh environment pipeline players for decades.

And yes, they do claim experience in the Arctic, including early participation in the Beaufort and the development of the Northstar project offshore Northern Alaska, along with other projects like the famous Sakhalin project off eastern Siberia — it’s not surprising that Moors doesn’t mention Sakhalin, since it is another example of an early joint venture project with non-Russian oil companies (including Shell, who sunk probably $20 billion into this harsh-environment LNG export project) where the non-Russian companies got squeezed out once their capital and expertise had been used. I’m sure there’s another side to that argument, too (Shell and others were forced out in part because of environmental concerns, I have no idea whether Gazprom solved them when they took over … Putin sure said they did), but throwing out the word “Sakhalin” doesn’t make people excited about investing in Russia.

And Wood Group is, through their JP Kenny subsidiary, already involved in designing the pipeline to bring gas from the Shtokman field (also in the Arctic, in the Barents Sea northeast of Finland) home to the mainland. I don’t know how this project will turn out — the initial plan, involving Statoil and Total as junior partners, fell apart when they couldn’t reach an investment agreement by the deadline (this past Summer, I think, though maybe it was last year), so it may be that Gazprom is going it alone now — not clear if they’ll still use Wood Group for the pipeline work, but they have certainly worked in Russia and in the Arctic before.

Will this make you rich? Well, it’s not exactly a tiny company — Wood Group is a $5 billion company, which is small compared to some (like Shlumberger), but still quite large. That’s not a surprise — you’re not going to find expert companies who can undertake massive projects who are tiny fish, this kind of expertise builds up in engineering companies over time (some acquired, some “organic” experience), and you wouldn’t trust the design of a decade-long project with huge economic and environmental ramifications to a tiny little upstart. There are other competitors, of course, but Wood is the best match for this tease that your friendly neighborhood Gumshoe can find.

How about that joint venture? Well, that’s a match in word if not in spirit — Wood Group did enter into a joint venture with Siemens on October 9 of this year, and it does have the potential to help Wood substantially, but it’s not really in the pipeline part of their business … the agreement is more about sales and service of gas turbines, largely (but not entirely) in North America, an area where, as I read between the lines, it looks like both companies were seeing mediocre performance and they thought a meeting of the minds might help.

And that’s about all I know about Wood Group — they have been beaten down a little bit this year, largely because their activity in Western Canada has been slower than hoped and that’s made them a bit tepid in their guidance (we’ve heard similar from lots of companies in the last couple years — thanks at least in part to less investment in those deeper and more expensive gas projects in Western Canada), but they did grow nicely in the first half of 2013 and there are those who are thinking it might be a bargain after falling from 900p to right around 800p over the last month or two. You can see their last interim report, in full presentation form, here on Wood Group’s website if you want a fuller look at their operations. Note that although the price for the shares is set in London in pence, the reporting is largely done in US$.

It’s still not dirt cheap by any means, this is a low-margin business and they trade at about 17X trailing earnings (13X expected full year 2013 earnings, according to Bloomberg), and the dividend, while growing quickly, is quite small (somewhere in the 1.5% neighborhood) so you do need to anticipate some growth in order to talk yourself into liking an investment in Wood Group. Whether or not the growth will continue as the rush for Arctic oil heats up again, well, that I don’t know. The Arctic is certainly a part of their business and a component of the expertise they claim — but it looks to me like other projects, including US shale pipeline expansion and the buildout of Papua New Guinea’s LNG projects among others, is at least as meaningful to their bottom line as the North Pole.

But I can sure tell you that I didn’t become an expert on Wood Group in the few hours I spent sniffing around for you today, and I know less about what Russia is calling their “continental shelf” (pretty much everything between Siberia and Santa Claus), so if you want to put your money to work, by all means, go out there and learn more about it and build yourself an opinion. If you’re moved to learn more, please share it with the rest of us with a comment below — thanks!


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42 Comments on "Kent Moors and the “All Hell is Breaking Loose in the Arctic” Russian Pipeline Play"

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vivian lewis
Guest
0
November 4, 2013 5:12 pm

Orthographe: Schlumberger Ltd, not Shlumberger, from Alsace.
But you did spell Wood right. All credit to you

Mac Heath
Guest
0
November 4, 2013 5:29 pm
A word of warning on investing in Russia. The corruption at all levels is terrible. Russian oil companies are terrible at cutting corners and one look at current run Russian oil fields will show you the disaster that will happen at some point if Russian oil companies go it alone and drill in the arctic. Russian oil companies don’t pay their people well so the experienced Russians leave Russia and go overseas to work for other companies leaving the least experienced and most corrupt to run the Russian companies. Sakhalin is the holy grail of oil. The only company with… Read more »
hal
Guest
0
hal
November 4, 2013 5:52 pm

agree 100% with Mac.

drlinks
Member
25
November 5, 2013 5:07 pm
True that. Just look at the price of their largest Gold mine, Polyus Gold (PLZLY). They have hundreds of millions of ounces of proven gold ounces and are the 8th largest gold production company on earth, yet it’s stock, Polyus, trades for a measly $3!!! Also, Gazprom (OGZPY), which is the Largest natural gas company on EARTH, yet it trades for a P/E ratio of 2.4 and trades for just $9!!! Clearly, there is an enormous disconnect between Russia’s stock market, which historically is always super cheap with a P/E at or around 5 or 6, is still not trusted… Read more »
Bob
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Bob
November 11, 2013 4:02 pm

No one can argue with the prices you quote as being some of the world’s
cheapest for the commodities, based on mistrust of Russia. Still, I’m left
wondering why all the major oil companies in the world are drilling in Russia,
why a troubled BP traded shares in the billions to buy 20% of Rosneft, why
China signed 20 year multi-billion dollar contracts and provided major financing
with Rosneft and Novatek and bought into a drilling stake with the company, or
why Exxon, is partnering with Rosneft to drill the Russian Arctic.

hadar
Member
0
hadar
November 9, 2013 9:58 am

Agree 120%. I will never believe them.

catfish77
Irregular
3
catfish77
November 4, 2013 6:51 pm

You don’t trust the Russians?? Racist!!!! But on the other hand, if Wood gets its money on a pay-as-you-go basis, they can minimize their exposure. Putin will have to have the money at hand to do this. Any catastrophys “will be the fault of the pipeline”……of course! I don’t know that any infrastructure outfit would go in there blind hoping to get paid at the “end”. Putin is stuck with the best in the business…….on their terms.

drlinks
Member
25
November 9, 2013 3:28 am
Yep, I’m a HUGE Racist, having to be 25% Rusky, 25% Swedish, and 50% Afro American, you pecksniffian mooncalf asshat! I was speaking in general terms of how the Russian stock market is perceived, which is just a cut above the Chinese. Sorry Mr. Pollyanna P.C. Idealists Zealot, but somebody has to break the facts re: the austere World we live in out here, and clearly nobody has of yet broke your newbie nuts in ‘NO ELLE’, so I’ll school you on how s%&t works. , WITH PROVEN EXAMPLES OF WHY IN THE FU#K THE COUNTRIES 2 most SACROSANCT and… Read more »
Dave
Guest
0
Dave
November 9, 2013 11:32 am

Stephen L., best to get the chip off your shoulder and learn to recognize humor when it appears in front of you.

drlinks
Member
25
November 9, 2013 2:38 pm

Thanks Dave

mac
Guest
0
November 9, 2013 7:40 am
Mr. Lundquist, The comment the guy made about being a racist was probably directed at me and it was purely a joke. I spent considerable time living and working in country. Lighten up!! You are right on in your views on the situation in Russia and about the pipelines and Syria. You want to know why anything happens between governments… just follow the money. Remember Travis was describing a company that may do business in Russia. The question is would that company be a good investment and could we make money… Stay focused… nuff said..
drlinks
Member
25
November 9, 2013 2:46 pm

True that—I got hot because I’m the polar opposite of a racist as I’m biracial myself, so it bothered me that this kid could’t take my objective analysis for for what it was and I thought that he was replying to me, discarding the facts and only focusing on race bating, which is symptomatic of a larger PC agenda that’s IMHO one of a coterie of issues that are ruining America….

Joan in Houston
Guest
0
Joan in Houston
November 4, 2013 6:53 pm

Over the years, more than one of my clients has gotten stiffed — not paid for work performed in Russia for Russian companies.

Joan in Houston
Guest
0
Joan in Houston
November 4, 2013 7:01 pm

Hi, Travis! Thanks for your observation that prospective buyers subscribe to an inexpensive publication, and then ending up on the sucker-list for the more expensive one. I got hoodwinked once, but I never will be again.

Rich
Guest
0
Rich
November 4, 2013 7:53 pm

Kent Moore is incredibly naive to think the humble engineering contractor could make such remarkable returns. It’s analogous to the architect of a building project, they get paid for the hours they work but that’s basically it. On large subsea pipeline projects they are making less than 10% of the total project cost but often less than 5%. The logic here is basically nonsense.

Mac Heath
Guest
0
November 4, 2013 8:00 pm

No racism in my observations. Russia has the most beautiful women in the world. Russians are great and proud people. Lived in worked in the oilfields of Russia and seen it all first hand.

Walter Starck
Guest
0
November 4, 2013 8:30 pm
Dual level subscription services amount to a virtual guarantee of loss making advice for the regular service. Trying to outguess the market is at best high risk. When the most lucrative and sound info has to be reserved for a premium service the quality of advice left for the regular service must be reduced accordingly. Starting with a high risk to begin with this would make the regular service an almost sure loser. Of course, if any investment guru were consistently more right than wrong their best return would not be to sell the info but to use it themselves… Read more »
tom t
Guest
0
tom t
November 4, 2013 11:54 pm
Well said Travis. Seems like the man is selling some good stats on his 2013 picks though. Some big lessons from this are 1. not to expect this performance to continue indefinitely. 2. Even this pick may be an example of a long term hold, though often the stock will fall again until actual profitability is assured. In this case, he may be correct, I don’t know, but you bring up a point about the higher tier picks being riskier, and less liquid. I have experienced a fairly complete blow out from betting on a whole raft of stocks in… Read more »
Roberto
Guest
0
Roberto
November 5, 2013 1:11 am

Seems that this Russian project is an ecological hazard. Greenpeace made a big demonstration against it, and even some of their activists were imprisioned there. The most probable event is that this project will never become a reality. At least for our lifetime.

Buck
Guest
0
November 25, 2013 4:05 pm

Roberto ,with any luck Russia will keep the Green Peace in jail for a hundred years, Greenpeace is a corporation like any other except it’s product it high visibility law breaking begging! It needs 350 million a year to break the law ,endanger peoples lives, and lie! In the face of overwhelming truth and science Greenpeace lies, the Keystone pipeline is a example! Like I said Russia should keep these spoiled brats locked up for a hundred years ! Buck

Allan
Guest
0
Allan
November 5, 2013 8:11 am

Any comments on the Jim Cramer newsletter?
Is it worth $99-$300/yr?
Booyah!

Dusty
Guest
0
Dusty
November 9, 2013 11:51 am
The rule for investment advice is to not spend more than 2% of new investment money each year on advice, fees, other charges and surcharges, inclusive. So if the cost of a newsletter is maybe less than 0.1% of the new money you fully expect to have available, feel free to try it for a year. Send a check or money order. That makes it more difficult for the newsletter company to ‘automatically’ renew without you approving in advance. I would say that there are plenty of newsletters with subscription fees of ~$49 to ~$99 and any one of them… Read more »
Ian Shearer
Guest
0
Ian Shearer
November 5, 2013 12:23 pm
Wood Group is actively traded on LSE so I would not bother with the pink sheets and like most UK companies who effectively trade in US dollars the share price moves to compensate for any FX movement. In the West it is just possible that Greenpeace might exert some influence over oil prospecting, though even here if it is worth enough their arguments will be overlooked, But in Russia they take a dim view of Greenpeace and its seaborne hooliganism so protesters may be cooling their heels in a Gulag. Wood Group are far too smart to get caught unpaid… Read more »
Arblaster
Guest
0
Arblaster
November 6, 2013 4:06 pm

I live in the UK. I read this thing from Kent Moors, too. It took me about 10 minutes to track down JP Kenny and Wood Group. [LSE:WG.] I do not give stock tips, but I do not have a reason for not buying shares in Wood Group. Last time I looked the dividend yield was 1.33 percent.

Rhonda
Guest
0
November 8, 2013 6:00 pm

Yeah, I subscribed to Kent Moors subscription, was most annoyed that you have to pay for more juicy info to the tune of over 1200.00 and beyond, give you all the promises on the first initial newsletter, I suppose you get what you pay for “not”

Ron
Guest
0
Ron
November 9, 2013 1:31 pm

Stay away from Kent Moors’ products. Subscribed to his Energy Advantage for about 6-8 months. Lost more money with this guy than anyone ever before in my 25 years of market experience. Some of his highly touted plays were OUT OF BUSINESS less than a year later (SATC). True, he puts limits on the downside, but with all his inside “connections” to sheiks and whatnot, the volume and intensity of his incorrect recos and timing was astounding.
His dart board needs calibrating.

Dave
Guest
0
Dave
November 21, 2013 11:49 pm

Agreed…SATC…still growling to myself about that one.

dave
Guest
0
dave
November 9, 2013 4:05 pm
I knew the Russian engineering bureau that designed the Sakhalin/Prirazlomonye ice resistant platforms and was the first Westerner to see a model of it. That was in 1995… I also knew of the site that the Russians then hoped to use to build these units. The company is now called Sevmash and their enormous covered submarine yard at Severodvinsk in the Arctic previously built the ‘Kursk’ and other items. The Russians are terrific engineers. But, I have to agree… I would not go near any company that depends entirely on the Russian market as IMO ( from the mid-1990s on… Read more »
hotrhonda
Member
3
November 9, 2013 4:54 pm

Bit late now Ron, but I will be keeping a objective view to his so called get rich picks, thanks for that info. Why haven’t I found this site before, great to read all your views, keep up the good work

RW
Guest
0
RW
November 16, 2013 3:26 pm

Hi there Ove:
Went looking for your rec’s of Nordic Mines & Aqualis under symbols you gave and came up ‘zeros’ using Schwab’s Streetsmart Edge here in the US. A search on Google gave me OSE:AQUA with choices for Nordic Mines AB (NOMI:OMX & NOMI:SS) or Nordic Mining ASA (NOM:NO)…confusing…I am wondering if these are the same company or different companies and how I may easily find investment details for them on US exchanges.
Thanks

Ove J.Aspen
Guest
0
November 10, 2013 12:39 pm
I just got the tip from Dr.Kent Moore about the Arctic Cirle and his English -Pipeline Moving Producer,and started googling instantly.10 seconds more Travis article about same Theme showed up.Funny,I have been a paying member of Dr.Moore and I am a free member of of Travis services. Regarding AleX Green of the OxfordClub.com the best way is probably to be a member of same association.Will cost about 40 Dollars a year, and around 650 Dollars for a lifetime membership(I am a lifetime-member) Then you get their Magazine “The Communiqe) in the prize giving you all their best Shares and investment… Read more »
slogan61
Member
0
slogan61
November 11, 2013 9:29 am

Any newer update on this?
This Obscure Stock is About to Go Ballistic.
It revolves around the highly specialized Russian oil rig you see pictured here.
KentMoors

Dr. Axel Henschel
Guest
0
Dr. Axel Henschel
November 12, 2013 6:44 pm

I am a medical doctor and I am wondering what kind of doctor Kent Moors is? I have never come across a so-called doctor turned into an abysmal salesperson. There is a total lack of integrity, just HYPE of the worst degree (maybe a doctorate in Hype). Remember his last HYPE down under in Australia (Linc Energy).
Dr. Axel Henschel

Dr. Axel Henschel
Guest
0
Dr. Axel Henschel
November 12, 2013 8:16 pm

As a follow-up to my previous e-mail, I have just learned more about Dr. Kent Moore’s CV (curriculum vitae) from Money Morning publication. His CV is actually very impressive, but it is beyond my comprehension that a Professor can become embroiled in HYPE for financial gain. He may well be a Guru in his field of Oil and Energy, but he certainly is not a Guru in financial investments/stocks advice. I would have been struck off the register in my profession. Dear investor, please trust your instinct what is pure sales hype or reputable info.
Dr. Axel Henschel

Dr. J R Deam
Guest
0
Dr. J R Deam
November 21, 2013 10:28 pm

Dr. Moors’ CV may be quite legitimate. And he may move in the higher circles of oil and gas players. But I would be very wary about the ethics of pumping investments while holding down a faculty position. Dr. Moors may very well have another degree. In the words of the famous philosopher W. C. Fields, he may have a degree in MBSCSDD — Master of Back Stabbing, Cork Screwing, and Dirty Dealing.

Buck
Guest
0
November 25, 2013 3:57 pm
We flew the Canadian Arctic for twenty years , Dome Petroleum , Shell, Imperial, Smiling Jack Gallager, we drilled hundreds of wells both land and sea, a loaded Hercules needs 54 inches of clear blue sea ice and we hit Gas,trillions of CF of Gas , and Oil light enough to put directly into a Diesel engine and it’s all still up there north of the 65 th line of latitude! We even had to invent a new way of navigating that close to the pole we called it offset destination to compensate for the longitudinal compression going north! I… Read more »
DallasGirl
Guest
0
DallasGirl
January 1, 2014 5:17 pm

It is gratifying to read Stock gumshoe readers’ articles on Dr. Kent Moors stock money grubbing promotionals. Yes, I have gotten suckered into being a subscriber to Energy Advantage. Unfortunately, at least weekly I receive e-mails from Moor touting just another “subscription” starting at least $2,000 to $5,000 annually for just another peek at a new hot energy stock. Enough of him already. Thanks for your commentaries on this money grubbing wh _ _ _ !

JCharos
Guest
0
January 4, 2014 9:29 pm

Has anyone herd of LomonosovOil.com. I’am just waiting for it to click. I hope they start drilling soon as long as they know what their doing.

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