Penny Oil Speculator: 15-cent Brazil Oil

By Travis Johnson, Stock Gumshoe, March 13, 2008

Here’s one that got the attention of many of my readers: it’s a microcap oil play, one that our advertiser believes will send shares from 15 cents to (possibly) $5 a share. They apparently have leases in Brazil in some prime oil territory.

Some excerpts from the ad:

“When you sign on to Penny Oil Speculator, the first thing
you’ll get is Chuck’s full report on this little 15¢-a-share
penny oil sitting on as much as $5.1 billion of oil.”

“Right now, with shares selling for 15¢ each, your $2,400
savings is enough to buy about 16,000 shares. But that won’t
last very long: the company is already drilling its second
well, with 3 more on the way. Once the results start to
confirm the findings of their first test well, I think you’re
going to have to pay two, three, even four times what the
shares are selling for today.”

And …

“Long-term, as I mentioned earlier, Chuck thinks these shares have a good chance of piling up gains as big as those I have on Carnarvon ($2,640 into $64,500). And if the shares go all the way to $5 — as Chuck is expecting — you could walk away with $100,000 from this one, single stock!”

The “his” in this case is Bob Czeschin of the Oil & Energy Investment Report, but what he’s trying to sell you is a subscription to the Penny Oil Speculator, which will run you about $5,000 a year.

Now here’s the bad new: I haven’t found the solution to this one, or looked into it yet.

The good news? One of your fellow readers, who goes by the moniker “nanopole” over at the Gumshoe forum, thinks he’s found the solution for you. So since I’ve had lots of requests for this, and I haven’t had a chance to check it yet, I thought I’d get it out to the broader Gumshoe readership in case y’all want to researchify it a bit on your own.

It should go without saying that a teensy tiny microcap penny oil stock (this one’s an Australian company with some Brazilian concessions, including some mixed drilling results so far) scares the bejeezus out of me, and I hope you get at least half a bejeezus out of it. The folks who run newsletters like this count on a few 10,000% winners to mix in with a long littany of bankruptcies and disappearing acts, so I’d be even more cautious about this than I would about any other stock that you get a tip on out of the blue.

That, and the pink sheets shares for this one are traded only by tiny investors (which probably includes most of you, and certainly includes me) — only about $3,500 worth of shares exchange hands on the pink sheets on an average day. Even on its home market down under this stock only causes about $10,000 to change hands per day. That means that any one of us could individually have a huge impact on the price of these shares if we so choose. That brings a double bejeezus.

But hey, maybe Bob Czeschin and his advisor “Chuck” are right on this one. And maybe nanopole has picked the right stock. I went so far as to check that they do have drilling operations in Brazil and some further Brazilian leases, and to make sure that the clues match the 15 cents a share teaser hint. But that’s all I’ve done. I hope it goes without saying that that’s not enough.

This is doubtless a tiny newsletter, since it’s high cost and focused on microcaps, so I have absolutely no idea what their long term track record is. They claim plenty of wins in the ad copy, of course, but I’m afraid there aren’t many advisers who do otherwise. So buyer beware, but this stock, according to nanopole, is …

Eromanga Hydrocarbons (pink sheets at ERHYF, in Australia at ERH)

The discussion, however brief, of this one at the forum is here. Feel free to comment here or there if you’d like to add to the research on this one.

full disclosure: I don’t own shares in this one, and I definitely don’t see that changing anytime soon. If I were to invest in Brazilian oil, I’m afraid I’d be Mr. Boring and pick up some shares of Petrobras (which I’ve mentioned before, in case you’re bored and are looking for another fascinating Gumshoe writeup to go to right now).


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22 Comments on "Penny Oil Speculator: 15-cent Brazil Oil"

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Catawba
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Catawba
March 13, 2008 10:49 pm

The pink sheet symbol is ERHYF (or ERHYF.PK on some sites).

Gravity Switch
Admin
11
March 14, 2008 1:48 pm

Catawba, thanks for catching my typo. I fixed it.

James Zuchelli
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James Zuchelli
March 14, 2008 2:15 pm
Thanks to Catawba, I found the company Eromanga Hydrocarbons (www.erohydro.com. Listed on the ASX as ERH, ERHO, and ERHCA. (I don’t understand the three symbols because the data is the same for all three). On the OTC it’s ERHYF.PK. They are drilling in the Sergipe Alagoas Basin in Brazil. They have a well drilled to 660 m and its a re-entry welll PTA-3 The company is partnered with Gavea (the driller, who has 60% of the interests) and also has a joint venture with Blue Marlin. This well hit Gas and oil but you’ll need to read the disclosures at… Read more »
Dave
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Dave
March 15, 2008 2:43 am

if u read the competent persons report at

http://www.erohydro.com/Mercury_Brazil.pdf

It uses oil prices that are out of date which suggests that by inputting the new oil price the prospects are even better.

It also includes several assumptions which may or may not be valid.

Does anyone know what obligations are placed on the reporter to be honest and truthfull, as the caveats suggest that they can report anything they want and not be liable if you act upon the advice given

singh
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March 15, 2008 10:13 am
singh
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0
March 15, 2008 10:19 am
BbRoad
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BbRoad
March 15, 2008 11:37 pm

So, according to your last entry, Singh, the CEO says that the company has yet to determine if this “hit” will be commercially viable. Ugh!

I bought into a small Canadian operation drilling in New Zealand. All I can say is that it has been a real headache thus far. If it goes belly up, I won’t have lost thousands, but I will have learned something more about choosing stocks and finding the caution signs.

COCOON
Guest
0
March 16, 2008 3:13 pm

I’m a newbie to Gumshoo, but are you guys playing with ‘Monopoly’ money? Or, you all must have sky high RISK tolerance. Look at BSC, all fine Tues., bail-out Thur. [Maybe it was Wed.-Fri.]

Eric
Guest
0
March 16, 2008 4:46 pm

This was the only place that I could get free advice about the trade that was better than gold or almost like gold by Dr. Steve Sjuggerud. I have to think there is something are to the falling dollar and know that people have been requesting euros such as Venezuela but for this guy to say that there’s a secret currency that basically amounts to be collecting coins/gold coins is ludicrous because it is all in the eye of the holder.
Thanks a lot, I will definitely bookmark this page.
E

singh
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0
March 16, 2008 9:52 pm

only thing i can htink og is this stock if i buy i buy with GAMBLE money i.e. 3000 shares at 450 dollars
it may be PUMPED by socalled GURUS in newar future by PAID newsletters but i already lost almost 2800 now since i got 100 BSC a/h at 29.90 lol

Brian B.
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Brian B.
March 17, 2008 4:30 pm

It’s exploring,,,way to early to say anything of earnings?? Well we have another week and change,,, before the chart guru’s say it’s safe to buy again. I’d wait and see how this stock plays out for the next two weeks. Even if’s up to .25 or .30 it’s worth researching this more.

singh
Guest
0
March 21, 2008 1:29 pm

I GRABBED 5K IN IRA
700 risk

bhuff
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bhuff
May 21, 2008 5:43 am

erhyf has now tripled, a new recommendation for stock in the bakken formation I think id painted pony petro (pink sheets pdpyf)

GPJ
Guest
0
May 27, 2008 12:57 am
“Chuck” is Chuck de Castro who’s Editor (or co-Editor with Bob Czeschin) of this particular report. Eromanga recently reported an oil find which resulted in a pretty big price (and volume) jump from A$0.15 to A$0.50 over the last week or so. On May 26, 2008 the stats were: CLOSE A$0.54 HIGH $0.70 LOW $0.465 The volume: 26 May 14,733,243 23 May 4,614,572 22 May 2,936,621 21 May 7,319,321 20 May 28,048,802 Investors have probably gotten a little too excited by the news, so I’m guessing the stock is likely to fall back again in the next couple of weeks.… Read more »
GPJ
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GPJ
May 27, 2008 1:16 am

A couple of extra points to my last post:

ASX:ERH is here:
http://www.asx.com.au/asx/research/CompanyInfoSearchResults.jsp?searchBy=asxCode&allinfo=on&asxCode=ERH

Also I noticed this from the original posting: “Even on its home market down under this stock only causes about $10,000 to change hands per day.” (At around A$0.15 this is about 100,000 shares.)

On May 26, the volume is close to 15m. Let’s guess at an average of A$0.50, so that’s A$7.5m or USD$7.2m. That’s x700 the above! Which seems like a pretty huge volume spike to me.

So perhaps there is something more going on than just a bit of over-enthusiastic reading of the company’s Brazil announcement?

Cdchi1
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Cdchi1
May 28, 2008 6:51 am
Gday I am a VERY large holder in the ERH options. In a week or two flow testing (ie how profitable, re commercial) will either give me a very early retirement…or I will be back to square one (ie my entry price). If the latter, it would be a great buying opportunity as they have shown proof that their oil prospects in Brazil (and they have plenty more) are highly prospective. If the former…well now is a great buying price…but there is a risk involved. Its quite amazing that the market seems to have forgotten their original oil hit at… Read more »
Cdchi1
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0
Cdchi1
May 28, 2008 6:53 am

By the way, if interested, that Penny Investments newsletter your referring to has just made another reccomendation which is Kentor Gold which also trades on the ASX (code: KGL).

Very large holder in that as well…and hoping for big things from it…though more a long term play.

Cheers

Cdchi1

PaulHunt
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PaulHunt
June 10, 2008 9:00 am
Brazil is either very smart or very lucky to have found this oil now. While I look at the oil crisis as a double edged sword, good because its forcing us to conserve and innovate new technologies but bad because these high prices are really ravaging people with low incomes, I think that America should be drilling for oil off our coasts. While it will be an eye sore and probably not too great for the ocean it might be able to alleviate some of the pain until we find the alternative energies we can use safely, cleanly, cheaply, and… Read more »
Rich
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Rich
July 25, 2008 3:36 pm

Interesting how most of these tout sheets manage to put tops on stocks. Pump and dump?

bhuff
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bhuff
June 27, 2008 9:37 pm

I have gotten a new advertisement, for a gold company that has reopen after 80 years and where a 200 lbs gold nugget was found. Any ideas of the name of the company?

glharris
Member
0
glharris
July 10, 2008 3:52 pm

Gentleman,

Do you happen to know the current Penny-Stock reco from Chuck and his Penny-Stock Hotline???

GH Harris – E-mail: harrisglouis@aol.com

glharris
Member
0
glharris
July 10, 2008 3:55 pm

Sir,

How do you buy these options???

Also, do you happen to know the name of the current recommendation from the Penny-Stock Hotline???

Thanks,

GL HARRIS

E-mail : Harrisglouis@aolo.com

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