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What’s the $175 Trillion Opportunity from Dr. Kent Moors?

Some Non-Answers about the latest energy teaser

By Travis Johnson, Stock Gumshoe, September 25, 2013

I wasn’t intending to write about this particular teaser pick that’s circulating from Dr. Kent Moors for his Energy Inner Circle … mostly because he doesn’t get deep enough into any clues or specifics to let us really focus on a particular company for you.

But everyone’s asking, so I figure we should at least give you a chance to chat about it if you’re interested (and I can make some guesses). So what’s the deal?

Well, Moors says that thanks to a big deal that was signed just a couple months ago his “gag order” has been lifted and the possibilities for South American oil and gas riches are really opening up. Here’s a bit in his words:

“I’m here today to tell you about what I believe to be one of the most important oil deals to come along in over a decade.

“The fact is this deal is one of the keys to unlocking an oil and gas reserve worth more than $175 trillion.

“That’s over 10 times the size of the U.S. GDP in a single year.

“So how do I know so much about this deal? I was one of the people who helped broker it.

“Today, this deal is nearing completion. And it’s going to change the dynamics of oil on a global scale….

“Just weeks ago, on July 16th, one pivotal event kicked this ‘super shift’ in oil into high gear.”

The “pivotal event” was the signing of a shale oil accord between Chevron and the state-controlled YPF (that’s the Argentinean oil company that was seized from Repsol, a Spanish oil company, by the Argentine government). Repsol is still hollering “foul” about that, but it didn’t keep Chevron from jumping in. And I can’t imagine Moors is talking about either of those two companies, his theme is that this is just the enabling deal that will bring South America back into oil prominence (along with a couple other developments, like a big Ecuadoran oil refinery and a large North/South gas pipeline being built, and increased cross-border energy cooperation among big players like Argentina, Brazil, Colombia and Venezuela.

More on that theme:

“All the big players in oil right now are looking at South America.

“The Chinese, the Russians, the U.S. and others are all making deals and jockeying for position.

“The reason is this:

“There’s A LOT more oil in South America than anyone ever thought possible.

“Couple this with HUGE foreign demand and a large number of fast-growing South American economies, and you’ve got a recipe for red-hot energy profits.

“Now just to be clear, I’m going to be able to show you dozens of ways to play this boom…

“It’s not just the usual oil majors that are going to reap the benefits. It’s also:

  • Small drillers
  • Pipeline companies
  • Oilfield services firms
  • Over-land and over-sea shippers
  • Environmental and risk management firms
  • Distribution hubs, ports and dockside facilities
  • Natural gas and petroleum liquids processors
  • And so much more…

“As I’ve been saying…

“There’s one super-urgent play I see developing on this global “super shift” to South American oil.

“However, to grasp this company’s potential you’ll need to understand some of the political changes and unlikely new alliances this newfound energy wealth is fostering.

“Brazil, for example, is reaching out to its neighbors – and extending significant capital to forge new cross-country transportation routes for oil and gas to the ultra-lucrative Asian markets.”

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And really, that’s about all he gives by way of clues — it looks like he’s setting this up as the idea that will be behind a handful of recommendations in the South American oil space as he sees the formation of a new oil power that he calls “SOPEC.”

Any more clues at all? Well, sort of … here’s what I could glean from the pitch:

“However, my most urgent play on this incredible “super shift” in South America…

“The one I’ve been saying that you’ve got to get in on RIGHT NOW…

“Isn’t any of these things.

“It’s an under-the-radar powder keg of an investment that got its fuse lit on July 16th of this year.

“That’s when a new energy mega-deal was inked between a major U.S. oil player and Argentine state-owned oil interests.

“That’s the second major catalyst signaling the rise of SOPEC…

“And ushering in a whole new world of money in energy.”

And more on that July 16th deal …

“The “lit fuse” moment happened July 16th of this year.

“That’s when an Argentine state-owned oil company signed a 50-50 partnership agreement with American oil major Chevron.

“The goal of this accord was this:

“To immediately begin tapping into the vast energy reserves locked in the Vaca Muerta shale.

“Now, as I’ve been promising…

“I’ve got a way of playing this South American “super shift” that’s miles away from the obvious move (like buying Chevron).

“A play that’s poised to soar on the strength of this July 16th mega-deal.

“But I repeat: If you want the biggest gains from this play, you’ve got to move on it RIGHT NOW.”

Presumably if it’s “miles away from the obvious” then he’s also not talking about buying Chevron’s partner, YPF (YPF), which did shoot ahead on the strength of that deal and is up 40-50% since … but that’s a possiblity. It’s the obvious play on this Argentinean shale gas, it’s clearly got better ties with the government than most companies, and it’s big and profitable — roughly an eight billion dollar market cap, and it trades at about 10X earnings.

What about if he’s really looking for something that’s less obvious? Well, Argentina seems to be allowing some profit again for private oil companies — they’re allowing exports of up to 20% of production to relax the impact of their price controls for companies that are doing meaningful investment in oil production, or something along those lines, so maybe that and the Chevron/YPF deal will spark further development in that same area?

This is all Moors says to give any hinting about his teased pick:

“Let me GIVE you my hottest, most urgent pick on the “Rise of SOPEC” right now.

“It’s a somewhat under-the-radar South American company, one that a lot of folks don’t realize they can play on safe, familiar U.S. exchanges.

“There’s definitely some “smart money” action brewing on this company right now, though.

“In fact, its shares are up 40% in just the last 120 days – a pittance of where it’s headed.

“No doubt much of this action is coming from in-the-know energy insiders looking to bank some hefty “sure thing” profits on the side.

“And if you move fast, you can join them for the BIG returns to come.

“As SOPEC’s fortunes rise as swiftly as I believe, you could be looking at a score of six times your money.”

So … that does kind of sound like YPF (YPF), which is a South American company that’s listed in New York and very actively traded, and I suppose it’s “somewhat under-the-radar”, though not as much as it was before that deal was made.

Well, it looks like Vaca Muerte is a hot zone of potential shale production … but if we’re talking just about that area then there aren’t really any other South American companies that are US-listed beyond YPF. He could easily be talking more generally about some other South American company that’s going to profit from the general development, though, but YPF has gone up by 40% in 120 days, so on that, at least, it matches.

Any other potential plays? Well, there are a lot of Vaca Muerte plays — but not many pure plays or other companies that are heavily levered to that particular development. Big, familiar, North American companies like ExxonMobil (XOM), EOG Resources (EOG), Apache (APA) lead that pack, but EOG is the only one that’s up by 40% in recent months and they’re certainly not South American … and there are some South American/Canadian companies that have substantial exposure like Azabache (AZA.V in Canada, AZBCF) and Madalena Energy (MVN.V, MDLNF), both of which are teensy.

And there are some other solid South American oil companies that have fairly wide exposure in different countries and that have gone up by roughly 40% in the last four months — I certainly haven’t scoured them all, but probably my favorite among the relatively small ones is Gran Tierra Energy (GTE), which is profitable and reasonably priced (forward and trailing PE in the 10-11 neighborhood, much like YPF) in Colombia and does have a bit of Argentina exposure, though not primarily in the Vaca Muerte region. GTE’s a $2 billion company, and they’re really Canadian, not South American, but well, just throwing some names out there to get the guessification going for you.

So what do you think? Excited about YPF now that this deal gives a spurt to the Vaca Muerte region, or do you have any other favorite South American energy plays, or a better match for Moors’ tease? Let us know with a comment below.

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Ventureshadow
Guest
Ventureshadow
September 25, 2013 4:54 pm

It looks like BASF, EOG, and Schlumberger are involved. Who would have guessed BASF?
http://www.bnamericas.com/news/oilandgas/wintershall-deal-part-of-neuquen-road-show-in-germany

This article is incorrect about BASF being listed on the NYSE. It is only OTC as BASFY.

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Ventureshadow
Guest
Ventureshadow
September 25, 2013 4:57 pm
Reply to  Ventureshadow

While we’re at it, Vaca Muerta means dead cow. Perhaps Vaca Muerte means death by cow, is that what you meant by it?

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roger
Member
September 25, 2013 7:02 pm
Reply to  Ventureshadow

What do you think of PBR?

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Ira Cotton
Guest
Ira Cotton
September 25, 2013 4:58 pm

Who could trust any investment in Argentina, given their history of nationalization of companies such as YPF.

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Richard R
Guest
Richard R
September 26, 2013 12:32 pm
Reply to  Ira Cotton

I have spent time in Argentina. Whatever you do, stay away from companies in this country. You can’t trust the government under Kirchner – she is a thief!

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Carlos Molinelli
Member
Carlos Molinelli
September 25, 2013 5:09 pm

Beware of this. YPF was expropiated by the Argentine government and the case is not closed yet. They have not paid a single dollar to the former owners (Spanish Repsol), who are challenging the right of YPF to celebrate any contract.
Besides, the Argentine government is a cheater, known for changing the rules of the game in their own benefit.
It is true that YPF is making money now, partially thanks to being able to import gas without taxes, while the government practically blocks the production of local gas.
Furthermore, government will surely change hands in a couple of years, and the new ruling party could change everything again., giving back the property to Repsol.
Yes, Vaca Muerta is a huge reserve, but there are many dishonest around.
I am Argentine and live near Buenos Aires.

martha a. mason
Guest
September 25, 2013 5:10 pm

9/25/2013
Thank you Travis for all your work and patience. You save us lots of money. Your service is appreciated by retired people like me , trying to save our pennies. the name of the shale is vaca muerta an “a” at the end . It means dead cow. I am sure you want to know the right spelling.
Martha A. Mason

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Mike P
Guest
September 25, 2013 5:13 pm

Thanks Travis for covering this. I’ve been watching this tease too. I think you’re right about YPF. He characterizes it as “somewhat under-the-radar.” Some more obscure find would be more “enticing” to investors (seeing as he’s asking for $1,295), so you know he would have referred to it as an “obscure company” if that was the case. I would keep an eye on Madalena though. They’ve gone from $0.27 to $0.42 (over 50%) since July while AZA has gone down. MVN is operating in that basin and maybe the insiders know they are the better positioned junior.

Ree
Guest
Ree
September 25, 2013 5:20 pm

Guyana.

dennis
Guest
September 25, 2013 5:23 pm

Sounds great. Keep the heat on this one. Dr.Kent has a lot of oil knowledge.

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hallmike
hallmike
September 25, 2013 6:00 pm

I guessed it was YPF too, but the whole deal is outside of my risk comfort zone after reading about the Argentine government and Repsol. They are threatening billion dollar lawsuits and it could be years before things settle down.

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Bob
Member
Bob
October 2, 2013 1:27 pm
Reply to  hallmike

The threat of lawsuits didn’t stop Chevron from signing a billion $ plus agreement with YPF.

Henry
Guest
Henry
September 25, 2013 7:17 pm

There is no point beating a dead cow!!!!

sagenot
Guest
sagenot
September 25, 2013 7:39 pm

One of Dr. Moors earlier teases was an oil stock that was going to BK Iran, no typo! Well, I believe there is still no way to transport this Iran killer oil to the markets, HELLO. I was once involved with his market letter awhile back, his stubborness will BK you if you go all in. I’ll never trust this guy again, sorry Travis.

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canonfodder
canonfodder
September 25, 2013 7:44 pm

I have lots of respect for Dr. Kent Moors, but I wonder what he thinks about trusting the Argentine government in such a thing as this energy business. Could he just ignore the sad facts of the governments past evil actions? I don’t think that government should be trusted, so I hesitate to get involved in this situation, even if I trust Travis’s best guess.

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tomt
tomt
September 25, 2013 8:40 pm

There is another possibility I would consider, that is backing the SOPEC pipeline, and is also behind the Syrian bruhaha with a pipeline that goes through it; GAZPROM, and it does trade in the US. Also up 50% since July with a PE >3

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dcinvest
September 25, 2013 10:30 pm

Thanks, Travis. I appreciate an open forum and opinions and even recommendations using fundamentals, recognizing we are usually limited by our sources as to what we should know. We are all responsible for our own decisions. (New to this forum.)

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shredder
Guest
shredder
September 25, 2013 10:49 pm

I signed up for Dr Kent’s $$ e mail a while back, never made me a nickel. Couple of losses and who could stomach buying all his dogs? Make enough picks…a few might be winners

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Gary H.
Member
September 25, 2013 11:13 pm

Could be Americas Petrogas, APEOF on the pink sheets, and BOE on the Canadian Venture Exchange. It is up from $.70/share on the first of July to $1.15 now. Here is a profile:
Americas Petrogas Inc. engages in the exploration, development, and production of oil and gas properties in Argentina. The company explores for conventional and unconventional oil and gas properties, including shale oil, shale gas and liquids, and tight sands. It holds interests in 16 oil and gas blocks totaling approximately 8,354 square kilometers of land in Neuquén basin, Argentina.
Here is a link to a recent SA article on APEOF: http://seekingalpha.com/article/1706322-americas-petrogas-undervalued-and-doing-something-about-it?source=yahoo

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terry
Member
terry
September 19, 2015 8:36 pm
Reply to  Gary H.

I think it is gevo check it out they are in co and they fit the bill

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Judge Dredd
Guest
Judge Dredd
September 26, 2013 12:18 am

Chevron inked a deal with YPF on July 16, 2013 to develop Vaca Muerta. However, at approximately 8:00 PM (central time) on 9/25/13 Argentine made an announcement that they were
planning to nationalize said YPF. So, now what? buy or no buy—that is the question.

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gadabout
September 26, 2013 12:24 am

I take one of Dr Moors advisement letters and the whole pitch is for his service “The Energy Inner Circle” at a HUGE savings of $1295.00. Crap! I subscribe to 5 different investment news letters and all of them seem to only want to sell another investment news letter of a co-worker or friend of looooong standing. Yes, there is some relivient information in Dr. Moors ad concerning new refineries, new pipelines, and new alliences with Ecuador and possible new Asian interest. The Ecuador situation puts shipping on the Pacific side of all the action and by passes the Panama Canel. That alone is Big to Asia.

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AlB
Member
September 26, 2013 1:09 am
Reply to  gadabout

Dr. Moors knows just enough about the oil business to lose your money when his picks go the wrong way. After losing with his bullish advice, that taught me not to trust anyone when predicting the Stock Market!

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ejay
ejay
September 26, 2013 2:23 am

no body seems to notice tgs

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Mike P
Guest
September 26, 2013 7:04 pm

TGS is an interesting call, since infrastructure co’s will be important in building out the storage/transport part of this whole development. But again, when the bucks start rolling, what’s Argentina going to do to see that the bucks stay in Argentina. I’d watch the potential Canadian participants.

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