“Beware the Oil Pirates of Somalia” (Christian DeHaemer)

By Travis Johnson, Stock Gumshoe, January 24, 2011

I can’t tell you that Christian DeHaemer, who’s now one of the editors of Energy and Capital and runs the Crisis and Opportunity newsletter for those same publishers, is pushing Somali oil right now — but I can say that an offhand aside he threw into a recent free article had lots of my readers sending me questions, and there’s an interesting history so I thought I’d follow up.

Here’s what he said in the end of an article that came out on Friday (you can read the whole thing here if you like):

“A few years ago, I was following a small Australian company that had talked some tribal elders into letting them search from oil in Northern Somalia, or what is called Puntland.

“Make no mistake; Somalia has the same geography as the Arabian Peninsula, and is thought to hold a mother lode of oil — some six billion barrels.

“As you might expect, this small wildcatter ran into deadly troubles. Hand grenades were tossed into the back of their exploration vehicles.

“That’s why I was surprised when I came across this little bit of info from the PR wires:

‘Africa Oil, together with its joint venture partners, has entered into amending agreements with the Government of Puntland, represented by the Puntland Petroleum and Mineral Agency, in respect of the production sharing agreements (“PSAs”) for the Dharoor Valley Exploration Area and the Nugaal Valley Exploration Area.’

“This stock is already up 300% to 12 cents. That’s right — a Somalia penny stock.

“That’s what I’m talking about.”

You’d have to be a very long-time reader of Stock Gumshoe to have that ring a bell, but there are a few of you who’ve been with us that long (and for that, I can’t thank you enough).

At the time DeHaemer was “following” this small Australian company he was working for Taipan, a different one of the many offshoots of the mighty newsletter-spewing Agoraplex, writing a few different newsletters — and when he was getting ready to launch a new letter called Crisis Trader (which is no longer around), he used this same “small Australian company” as a teaser pitch for a “Special Report” that he thought could make you wealthy in a matter of months.

And yes, I don’t mean to rub it in when someone gets a stock wrong or overhypes it (OK, maybe I mean to rub it in a little — but we all make mistakes) — but saying that he was “following” this stock is being, shall we say, modest. What he said at the time was:

“… this tiny 50-cent oil exploration company is, hands down, the most lucrative investment opportunity I’ve seen in my entire life.”

And of course, given the huge push behind this teaser and the rosy valuations he pitched at us — he said the shares were probably worth $30, but should be at least up to $8 by October (this was back in mid-May of 2007) — it should come as no surprise that the shares went bonkers and doubled in a matter of days before they spent the next couple of years gradually returning to the earth from whence they came. This was one of the more talked-about teasers in Gumshoedom that year, and I issued a couple updates about it — you can see the basics here if you’re wondering whether your favorite Gumshoe sounded the same four years ago. And most of the original promo from Taipan is still up online, you can still see it here if they don’t take it down now that they’re being reminded of it.

In fact, one reason that this stock stands out for me (and therefore, I remembered it when these questions poured in over the weekend) is that I used it as an example of the impact of teaser ads on stock prices when I was presenting at a conference the following year (I actually featured two teaser ad campaigns in that presentation — the other one from another well-known newsletter guy with big mailing lists, Byron King, pitching what he called the “oil vacuum” … and to be honest, though both sto