These are the kinds of ads that we used to see all the time, during the fun and exciting days when oil was first headed toward $100 a barrel… there’s not so much of that “next Bakken” talk anymore, given the softness in the oil markets, but perhaps that’s a reason to look more closely.
After all, if you invest heavily in these kinds of stocks when natural resources stocks are popular, when gold is soaring or oil is hitting new highs every day, you’re probably the sucker in the room.
The ad is from Christian DeHaemer, who has been touting little teensy oil and mining stocks for years at his Crisis & Opportunity newsletter — sometimes they turn out to do very well, sometimes not, as I suppose is the fate of every junior operator that’s exploring for oil or gold or nickel or whatever. He’s currently peddling his newsletter for $1,599 a year and promising to reveal “The Mexican Oil Play That Can Change Your Life.”
So let’s figure that out for you and get the tension out of the room, shall we? Then you can decide to subscribe or not, no pressure, and you can probably be more sober in your assessment of the prospects for this “secret” stock if you haven’t paid $1,599 to learn about it.
Here’s the intro from DeHaemer:
“Read This Or Miss The Next Bakken
“A tiny oil company has won the right to tap into $490 billion worth of proven oil reserves in Mexico
“This development is giving investors just like you a brief opportunity to make 600% on your money by year’s end
“(And millions of dollars in the coming years)”
So we’re dealing with something in the “gradually opening up to privatization” Mexican oil industry, which has been in decline for many years because Pemex, the state-owned near-monopoly oil company in Mexico, is under pressure to deliver cash to the government, not so much to reinvest for future field development or growth. There’s a good recent (and short) article about this from Bloomberg here if you want to catch up with the basics.
But which stock is it that Dehaemer is pitching? He starts the story with the Cerro Azul No. 4 well, which was a discovery in the Tampico-Misantla basin about 100 years ago, somewhat analagous to the Spindletop “explosive” discovery in Texas.
And the pitch is that the field became less important for Pemex as the oil flow dwindled to almost nothing, but that more oil is going to be recovered there again thanks to a micro-cap company. Here’s a bit from the spiel:
“In fact, there’s at least another 5 billion barrels of oil waiting to be tapped there, according to IHS Markit.
“And all that oil is about to do for Mexico what the Bakken did for the U.S.
“One micro-cap company is playing a key role in recovering that oil, as it won a bid on a prime block of Tampico-Misantla property last year.
“Since then, its stock has risen 171%.
“But I’m convinced that’s just the beginning.
“As of this writing, you can get this stock for under a dollar.
“Quite a bit under, actually.
“In fact, as I write to you now, it’s selling for $0.32 a share.
“A penny stock, yes…
“But this is no ordinary penny stock. In fact, it has the potential to make you a millionaire.Are you getting our free Daily Update
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“That’s because in a few years — and I know this sounds hard to believe — this small-cap energy company could become a serious mid-tier producer worth $10 or more a share….
“In the short term, I fully expect it to give you 600% gains by year’s end.”
OK, so it’s an onshore oil field we’re dealing with here (most of Mexico’s focus is on offshore fields, which is also where most of the bidding is from oil majors in Mexico’s recent auctions)… do we get any other clues?
This burst of production that Dehaemer sees coming is going to be driven by fracking and horizontal drilling, we’re told…
“The only way to access these kinds of deposits is to use horizontal multistage frac wells… the kind that freed up all that Bakken oil.
“Extracting oil through frac wells is something this little micro-cap oil producer excels in.
“In fact, it was an early adopter of the technique and has drilled over 100 frac wells in Alberta.
“Over the years, it’s become ever more efficient and cost effective.
For example, since 2011 this company has cut the operational costs of producing a barrel of oil in Canada from $22.35 to $13.68.”
We’re also told some of this history in the ad, that this company won one block in the December 2015 auctions that first opened up Mexican oil to foreign firms — back when oil was collapsing in price, which kept a lot of bidders away. More details from the ad:
“This winning bid made it the first junior oil company to gain access to Mexico’s massive oil wealth.
“The block it won is a mature oil field comprising 7.2 square kilometers in the Golden Lane Trend of the Tampico-Misantla basin.”
We’re also told that this bid was made in partnership with a “major Mexican energy company” who provides the local support, including infrastructure and distribution, and that their management team has a lot of experience, with C-suite execs from Arcan Resources and Pacalta Resources and a boardmember who used to be CFO of Pemex… and that they’re going to use their “first mover” advantage to bid on more blocks over the next couple years.
And then we have the “urgent” push… which, I’m sad to say, has already passed (that’s what I get for taking a vacation):
“… when the company announced in January it was offering over 8 million private placement shares at $0.28 apiece, high net worth investors snapped them all up in just one month.
“As a result, the company raised enough money — $5.095 million (Canadian) — to meet 2017 work commitments at its Tampico-Misantla block.
“Now those investors are in prime position to make obscene profits from this company.
“They know gaining future oil blocks in upcoming auctions will skyrocket its share price.
“How much? Well, when it won the Golden Lane block from the first auction, its price shot up 171%.
“You can bet it’ll go up MUCH more next time.
“The second round of auctions is due for completion by July 14.
“That’s why you need to get in now.”
So what’s th