Today, for your Friday File edutainment, a look at a teaser pitch from Keith Schaefer about a junior oil company.
I know, I know — oil is collapsing. But this is a company that doesn’t even really own anything yet, and almost certainly won’t be producing any oil for at least a couple years, so perhaps the story is cheap enough to jump aboard and see if it plays out? Let’s look at what he’s teasing and find out what the reality is.
The ad is a couple weeks old, and I’ve been thinking on it for a little while — partly because I wanted to get my head around their latest financing, and partly because the stock jumped up on attention at the same time the ad started and I was hoping it would dip back down a bit. It has, but not by a lot.
So is that enough teasing for you? Yes, you already scrolled down to the little Irregulars Quick Take box and noted that this is tiny Renaissance Oil… but let’s go through the ad, shall we? Humor me?
Schaefer starts thusly:
“After 76 years…
“One particular country is finally opening its doors and reserves to international investment.
“Experts call this significant oil and gas investment event…
The Historic Opening of an Oil Bull Market Bigger Than Texas
“… It will make early investors and junior companies outright rich.”
That’s Mexico, as you’ve probably already gathered — Mexico nationalized its oil business in 1938, but they have finally grown tired of seeing bureaucracy and lack of investment (and fraud, and embezzlement) pinch off the oil supplies (and cash flow) provided by state-owned Pemex, so they changed the constitution about two years ago to allow entities other than Pemex to own oil blocks, and they’re in the process of opening up their huge potential (and known) oil reserves to outside investors through a few bidding rounds for exploration and production blocks of conventional, unconventional, and offshore oil fields.
The process got off to a slow start, partly because they started organizing it last year just as oil was starting to collapse and partly because the big guys didn’t jump in for the first round a few months ago because of the uncertainties of (or unattractiveness of) the bidding rules and terms… the first round brought deals for only ...