Seven Year Blockade Lifted from “Gunboat Basin”

By Travis Johnson, Stock Gumshoe, December 10, 2007

Once again, Streetsifter has scooped the Gumshoe and written up another one for you, this one on a way to “profit from Exxon’s misfortune” and “turn $4 into $45” — just when the Gumshoe runs short on time, our friend Streetsifter seems to pull a great nicely-summarized sleuth job out of his hat for all of you. The following are mostly his words, with a few edits and minor additions:

The latest teaser ad for Christian DeHaemer’s Crisis Trader has all the necessary elements for a Hollywood action film, to the point where the copy writer must have been licking their literary chops as they composed the ad.

You can imagine the Hollywood agent giving the pitch to the A list movie producer. “The picture opens with this drill crew for a small Canadian energy company trying to commence operations of the coast of South America under grants from Undisclosed South American Country “A”, when suddenly gunboats from neighboring Undisclosed South American Country “B” show up in the middle of the night and force the drillers to evacuate, claiming the site falls within their territorial borders!” Then Country B tows the drill rig from the disputed waters. The two countries amass their military forces along their land border (but they’re small countries, so there’s not many forces to amass), and our offshore drilling crew is prevented from performing any work at ‘Gunboat Basin’, where an estimated $1.35 trillion in oil and gas lies beneath the ocean floor!”

Our imaginary Hollywood agent’s voice becomes more animated, and the producer listens intently as the pitch continues. “So now we segue seven years into the future, and the two countries have finally agreed to turn the dispute over to the United Nations international court. The fate of our Canadian energy company hangs in the balance as the court announces their unanimous decision. And the winner is . . Country A! The energy company now has rights to proceed with offshore drilling operations, and the major oil companies are likely to start a bidding war that will propel the tiny company’s stock, currently selling under $4 per share, up to as much as $45 dollars per share or more!”

And your price of admission for Mr. DeHaemer’s action packed “Gunboat Basin” adventure is a “special rate” subscription fee of $1,750, instead of the usual $5,000 fee. But, if you’re a regular Gumshoe reader, you already know that we can arrange a special pass to this feature at a far more reasonable rate.

Working off tips provided on the Stock Gumshoe Forum by Womanwithportfolio and by paid-up Gumshoe Irregular, Streetsifter, the Thinkolater comes up with:

CGX Energy (CGXEF: OTC or OYL.U on the TSX)

A press release from the CGX Energy website fills in the blanks from the teaser, stating, “the International Tribunal on the Law of the Sea (ITLOS) award on the maritime boundary dispute between Guyana and Suriname was released at 4:0 pm EST September 20, 2007.” The press release continues, “The decision is extremely positive for CGX, as it concludes that 93% of CGX’s Corentyne Licence and 100% of our Georgetown Licence are in Guyana territory” and it also provides confirmation of the gunboat incident, “In June 2000, a jack-up drilling rig leased by CGX from an American drilling contractor and operating under licence from the Government of Guyana was forced off its Eagle drilling location by gunboats from the Surinamese navy.”

The DeHaemer teaser compares the potential gains for CGX to those of another Canadian oil company, PetroKazakhstan, that was taken over by China National Petroleum Corporation at $55 per share. In bold print, the ad says the CGX is sitting on 30 times as much oil at PetroKazakhstan. CGX’s over-the-counter shares closed at $3.08 last Friday.

But the Gumshoe has covered other DeHaemer mining picks in the past, including Range Resources, which is down 10% since being added to our list of solutions (though “down 10%” is perhaps not a descriptive enough assessment of the wild volatility that stock has shown over the last six months — check out the chart and the announcements from the Somali parliament over the summer if you want to watch a crazy mover that follows wildly unpredictable news).

The GHX website includes a disclaimer, “There have been oil and gas shows in many of the 30 wells that have been drilled offshore Guyana and Suriname, but no discoveries. As a result, there are no hydrocarbon reserves attributable to these properties, only an estimate of resource potential based on wellbore and seismic analysis, and analogy to known reservoirs in the Atlantic margin”. And since the UN ruling only was issued in late September, it will be some time before the company can even commence drilling, much less actually extract oil. This may put GHX in the “lottery ticket” category for investors.

As always, you should perform your own due diligence, and anyone with insight to Guyana offshore drilling operations is welcome to share their knowledge on the Stock Gumshoe Forum. Thanks once again to Womanwithportfolio and Streetsifter for their contribution to this solution.

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...



This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inline Feedbacks
View all comments
December 17, 2007 7:18 am

In spite of its small size CGX may have a future since it recently succeeded in raising capital ($30 millions)which will allow to drill at least one exploration hole if the funds are not wasted elsewhere. Or it may get a good offer to sell the rights to the exploration acreage by a big oil company.
A common series of pitfalls affect most penny stocks touted by teasers especialy (but not uniquely) small canadian mining & oil exploration companies. A careful reading of annual reports can give a partial idea of how some significant fractions of funds get into the pockets of the insiders before any exploration is carried out. There is of course the case of the very cheap stock options acquired by the insiders before a touted public stock offering has raised the share price. Even if there is a compusory holding period for the optioned shares there is a practice by insiders to short the stock after the offe