Karim Rahemtulla is pitching a newsletter called The Resource Millionaire — I haven’t heard of this one, but it looks like it probably is just their replacement for the Oil & Energy Confidential service that he launched last year and that has disappeared from their website. So perhaps that one didn’t catch on, despite Rahemtulla’s claim that he is “easily the most influential independent resource expert on the planet.”
Or maybe it was just too pricey — his previous letter claimed a list price of $4,500, this one says it will be priced at $2,500 but is “on sale” now for $695 (and the “money-back guarantee” is now for 14 days, down from 60). The pitch we looked at when that previous letter launched teased Noble Energy (NBL) because of its discovery of gas offshore Cyprus, and Eurasian Minerals (EMXX) for one of their high-grade gold discoveries. NBL has done pretty well, beating the market by a little bit, EMXX has been a disaster over the last year (no surprise, given the climate in the sector — it’s dependent on folks building gold mines and generating royalties for them).
So what is Rahemtulla teasing this time around that has folks so intrigued? He says he has a “compass” that points him to where the next big oil profits will be made… and he teases one in particular:
“As you read this, please understand that the compass just pointed toward a swatch of land ready to burst at the seams with oil.
“It’s among a slew of expected gushers this summer, with gains that could easily run north of 893%.
“Of course, virtually no one – outside of oilmen, drillers, CEO’s and geologists – realize that this is about to happen.
“However, with just a quick skim of the last 25 years of industry data, it’s clear this compass could’ve pointed to virtually every oil fortune in recent history.”
What is this compass? Well, it seems to essentially be, “Karim scours data about energy exploration and production and pinpoints the stocks that are going to spike up because of big discoveries or beginning production,” leveraging what he says are incredible connections in the industry. But yes, it sounds better when you call it an “insider’s compass.”
And yes, for those who are pausing to read between the lines, you could also just say “every great fortune made from oil was made by someone who discovered or produced a lot of it.” Golly.
Here’s how he says you get rich:
“As long as you buy shares alongside 1) reports of new discoveries, or 2) reports that oil is gushing from the ground… Well, millions of dollars in petro-profits could be yours for the taking.
“Investing at the onset of either of these two critical events is the easiest route to the biggest profits.”
So apparently, buying oil stocks as they make big discoveries or start selling a lot of oil is a great way to make money. Go figure. Here’s more:
“If you buy an oil company during a time when the compass is idle, you’re at a significantly heightened risk of losing money. Yes, the compass is that sensitive.
“Why? Because oil stocks tend to decline during costly periods when economic feasibility studies are being done… Or when there’s bureaucratic red tape to cut through… Or when management is raising more capital.
“The compass can’t point to a gusher when the drillbits aren’t spinning, right?
“History bears this out time and again.
“Odds are, though, by the time you hear about either of the two events that can trigger the compass, it’s already too late to profit.
“What you really need is someone who’s mastered the compass, like me.
“Heck, just a few days ago, an inner circle of my best readers had a chance to witness the full glory of the compass in action.”
What is that “full glory?” It’s the stock Rahemtulla referred to above and keeps teasing for a while as he recklessly throws around that $14 billion number for the potential value of their “discovery” … here’s more on his “mastery of the compass” …
“I was in the Orlando airport when the insider’s compass locked-on to a small independent oil driller trying to manage the prospect of owning a real gusher.Are you getting our free Daily Update
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“Tiny companies don’t typically have such “super wells” on their properties.
“The stock was only trading for $3 when the needle started moving. So I immediately took the long journey to the company’s property.
“This particular ‘hot zone’ sits on one of the most remote stretches of land anywhere in the United States.
“It took over 20 hours of flights and seven hours of all-terrain driving just to reach this 96,000-acre outpost.
“Boy was it worth the trek, though.
“The land is oozing with an estimated six billion barrels of oil, making it one of the most prolific energy caches in the world.
“Heck, the recoverable reserves alone are more than double that of the next largest oilfield in all of North America.”
Don’t get too excited about that six billion number just yet, that’s got little connection to the specific stock he’s teasing. So what’s the stock? We get some more clues:
“You see, directly adjacent to the property resides big-oil goliath, Conoco Phillips (COP), which is already producing copious amounts of crude.
“BP (BP) is also nearby. In fact, it’s adding two more rigs to its booming operation, and plans to invest another billion dollars into the project.
“Imagine enjoying all of the same upside of a $50 driller, like BP, yet only having to pay $3 for shares.
“Well, thanks to a sweetheart deal with a silent partner – one who’s funding the entire exploration effort – this rising star has muscled its way right into the world’s new epicenter of oil profits.”
And yes, Rahemtulla throws in a few more hints — just to make sure that the Mighty, Mighty Thinkolator has plenty to chew on, no doubt:
“How confident was I that this company would announce a major discovery in the same vein as the heavyweights?
“Enough to recommend that my readers buy the stock.
“You’ll recall that news of a major discovery is one of two catalysts that will always drive share prices higher. (The other catalyst is news that oil is gushing from the ground.)
“Well, like clockwork, the company just announced its 3D seismic results.
“The results confirmed a large drillable target and potential oil reserves as high as the company’s most optimistic estimates.
“The compass had struck again!
“Within hours of the news, shares of this $3 stock were up over 30%.
“I believe that’s only a preview of what the insider’s compass indicates is a much bigger move toward $30….
“In all my years in the trenches, this is the most uniquely profitable scenario the compass has ever pinpointed.”
But it’s not just the 3D seismic “discovery” that’s exciting, apparently:
“Just days ago, the company quietly announced the results of an independent property analysis done by the highly regarded oil council, Netherland, Sewell & Associates.
“The third-party analysis confirmed the presence of as much as 325.3 million barrels of oil, of which 14% to 42% is recoverable.
“Let’s say only 14% is ultimately recoverable, well… at today’s prices, that’s $4.7 billion worth of oil!”
OK, so the Thinkolator can confirm for us that this is Royale Energy (ROYL), a tiny little $50 million oil explorer on Alaska’s North Slope. You can see the press release for that Netherland, Sewell & Associates analysis here from about two weeks ago. And in it you’ll note that yes, they do say the original oil in place (STOOIP) high scenario is 325.3 million barrels — though the “best guess” scenario is 77.5 million and the low scenario is 17 million (the dream scenario, with 42% recovery and the high-end “oil in place” number, is where you get the wildly optimistic $14 billion value).
If Rahemtulla had used the more depressing low-end scenario of 17 million barrels and 14% recov