by Travis Johnson, Stock Gumshoe | February 3, 2016 1:12 pm
The ad that we’re feeding into the Thinkolator today is from Bob Czeschin[1] for his Penny Oil Speculator[2], and it’s about finding opportunities in “penny oils” that he thinks will “go berserk” when oil rises significantly… as he seems to think is inevitable, given that oil is currently well below the price that most major producers outside of Saudi Arabia need for profitability.
The “13 cents to $1.61” headline isn’t about one of the stocks he’s teasing today — that’s an example of one he’s taking credit for riding in the past, when that was the profit opportunity in BNK Petroleum a few years back….
Here’s the promise from Czeschin:
“The last time oil rose more than $10 a barrel, my subscribers rode …
* Hurricane Hydrocarbons from 57¢ to $11.40
* Ultra Petroleum rose from $1.89 to $37.85
* Coastal Energy went from $1.43 to $18.04
* BNK Petroleum zoomed from 13¢ to $1.61, and …
* Antrim Energy shot up from 48¢ to $7.54“A mere $1,000 in each of these stocks when I recommended them would have put $75,900 profits in your pocket. Now’s the time to do it again!”
So that’s his idea — oil’s going up, and he thinks he has the “penny” oil stocks that will rise dramatically when that happens. If you think oil will recover there’s certainly some logic there — tiny explorers and producers are likely to be the most levered to oil on the upside, just as they’ve in many cases been catastrophically levered to oil on the downside. Of course, if oil doesn’t recover, well, the pain is likely to continue in that sector — one gets the feeling that a substantial number of companies are just holding on by their fingernails, hoping the ground comes back up to reach them before they have to let go.
What, then, are the stocks he’s suggesting? Well, he’d tell you for $1,875… but let’s see if we can identify them using the clues provided in the ad. Here’s just a wee bit more of a tease for you to get your blood rushing:
“$60 to $90 a barrel sounds like a reasonable equilibrium range for oil. Russia[3], Brazil[4], and Mexico[5] become profitable again. The oil sands[6] and shale become marginal — where some producers can make it, and some can’t.
“But $60 to $90 oil also means oil is going to double or triple soon.
“So if you ever wanted to ride a 13¢ stock like BNK Petroleum to $1.61, now’s the time to jump on board. The train is leaving the station””
And now let’s check out the clues — what hints does Czeschin drop about the first one? Here you go:
“One of them is generating so much cash even at $30 oil, it’s hiked dividends[7] twice, while other oil companies are slashing spending on everything from drilling to essential maintenance.
“There are two key reasons why this company is doing so well. First, it enjoys low production costs — just $20.71 per barrel….
“Second, it developed new technology that solves a key problem that’s bedeviled shale oil producers…. What I’m talking about is the typical shale well’s steep decline rates — often 40% to 75% in the first 12 months. The new technology effectively cuts that decline rate in half, to 22%, and stabilizes it….
“… this pipsqueak is still ramping up production and has another 162 high-probability drilling locations that ensure future production growth, and a robust dividend yield.”
So who is it? Thinkolator sez this is Granite Oil Corp (GXO in Toronto, GXOCF on the pink sheets). Which is very, very small, though some folks wouldn’t call it a penny stock — it has a market cap around C$250 million at about C$8 a share (or roughly $160 million and $5.50 in US$).
And Granite does have operating cash flow and the company is just about at break-even on the income statement as of last quarter, which was their first quarter as an independent company — Granite and Boulder Energy (BXO in Toronto) were formed when DeeThree Exploration split into two companies in May of 2015. Boulder, the riskier and more exploration-focused one, has been a disaster… Granite, the cash-flowing and dividend-paying one, has done relatively well and continued to increase the dividend as production has risen.
And yes, they do say that they have cut the celine rate to about 22% using enhanced oil recovery[8] (injecting gas, as I understand it), and that they have 162 drilling locations in their inventory. And I’m sure the stock will rise sharply if oil goes up dramatically, though I don’t know precisely where it’s likely to go. This is more of an industrial story — they know the oil is there, it’s relatively inexpensive to extract from the particular reservoir they’re hitting, it all depends on how much they invest in production, how they manage costs, and what the end price is… this is not an exploration story where they’re about to discover a huge new reservoir, so it’s not likely to post 1,000% gains in a hurry.
I also don’t know what the threshold for pain is at Granite — they have a relatively modest amount of debt and have been able to service it just fine (and pay a dividend and invest in new wells) to this point, but I’m not sure how far out into the future they’ve hedged some production or when they might start to get into trouble if oil stays in the $20s or $30s for a long time (or falls lower, as most folks seem to think is unlikely but which is, of course, eminently possible — remember, $30 oil used to be thought “impossible”).
But they’re sure doing better than most so far, and they pay a 5%+ yield. It will probably be a while before we know any more about their operations, they aren’t likely to report their fourth quarter results until the last week of March. They make a point of explaining their “investment proposition” to investors on their website, so you could browse through that here[9] if you’d like more of the story. Last quarter’s results are here if you’d like a bit more detail.
Sound interesting to you? Have any perspective or opinion on Granite or their predecessor DeeThree to share? Let us know with a comment below.
And there are two more of these “penny oil” stocks that I’ll sniff around for if there’s interest, but for now I’ll leave it at that — meetings beckon, if I find anything else that catches my eye I’ll share in a future piece. Thanks!
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Thanks Travis, these stocks-ff.v, sev.to, trxc, edap which I discovered here, have all helped keeping me green (barely) over the last few months. Just picked up a bit of gxo,
Great site!
The best small Canadian stock is Blackbird Energy , very solvent and holding a center portion of a field surounded by the ” big Boys” like Encana. Currently trading at 12 cents a share they just brought in a ” Barn Burner” with strong mutiple plays high in condensate and liquids. Because of the acreage they hold in the center of this major field somewhere down the road one of the majors will buy them. Do not take my word, read about them.
Today’s volume so far 2000 shares traded.
The info you refer to appears to be almost 1 year old to me.
Len, Is there a reason you didn’t list the trading symbol fir Blackbird Energy?
I took the bait and read about Blackbird (TSX: BBI for those who want it). They have no debt because they raise money by issuing new shares…poison for existing shareholders. Currently trading at $0.15 (Canadian, I guess) they have negative operating income and a PV-10 of just over a penny per share, based on last year’s financials, which is probably why they have not yet received any tempting buyout offers. Caveat emptor!
Bought Blackbird at US .19 now it is .11. Has been volatile, would wait for an uptrend prior to any purchase. I expect further declines in the immediate future (general oil trend).
Volume so far today…..3600 shares.
But why is he saying its a 13cent stock ? It looks like $5.72 stock.
If you read the first few paragraphs, Travis answers that question.
You are so right Bob, I’ve got to be more careful in the reading.
Thank the many that responded . 4olbear.
Travis, I would be interested in the other oil stocks if you have the time. It does seem that prices should be bottoming within the next year. Thank you.
“If you want to ride a 13¢ oil stock to $1.61, now’s the time to do it”, I just tried to buy
this, (GXOCF) and my broker has it showing $5,82.
If you read the article, you’ll see that’s not the stock Czeschin is teasing — that’s an example of a past pick he’s taking credit for.
Really screwed up on that question eh? will pay more attention
to your great info. Again I thank the responses and U Travis. 4olbear
From Travis’s review
The “13 cents to $1.61″ headline isn’t about one of the stocks he’s teasing today — that’s an example of one he’s taking credit for riding in the past, when that was the profit opportunity in BNK Petroleum a few years back….
Your broker has the right price, although it did spike a bit at the end. 🙂
Folks, you really need to read the whole story before you rush off to buy the stock.
I dumped the only oil related stock I owned a couple of months ago, and don’t expect oil prices to improve much for quite a while – there are too many oil-dependent countries with undiversified economies which will continue to be forced to pump like mad and glut the market – they don’t have the luxury of cutting back to force prices up as long as they’re having such extreme economic difficulties. If governments and central banks would allow markets to function freely, and not attempt to levitate them artificially, then we wouldn’t be in this situation where we have another global debt crisis unfolding when we haven’t even finished deleveraging from the last one. I’d like to be proven wrong on this but just don’t see how the global picture improves this year.
I completely agree. Very logical thinking.
I guess I’m illogical then, recently got into 4 smallish Canadian oil companies.
Oil is up to 75% of the GDP of some these cheap oil producing country’s. They are getting slammed like the rest of the industry, this game of ” chicken” being played has to end soon for everyone’s sake. Oil demand is still going up every year and we are still many years away from an alternate source that will significantly curb demand. My bet is late this year. I,m sure there is a lot lot of money on the sidelines waiting for a sign of life in oil, the right stocks will spike quickly. Buying in in the last 2 months hopefully minimizes the downside.
You may well be right tucker62, in which case your bets might pay off big. We’re all in murky waters here, all guessing.
I don’t know but I believe oil is heading lower. I have heard of so many alternative energy plays out there especially with low cost Solar that Walmart is supposedly installing in all locations. Not sure if that directly affects oil but it affects energy and the old ways.
I personally would, at least, wait until oil starts heading up before buying. This is not over. by a long shot. I surely am just guessing.
War will run the price right back up there. And this should do it.
https://www.rt.com/news/331278-turkey-military-invasion-syria/
Wednesday’s Close was $5.98 (USD), up 0.57 on a volume of just over 15,000 shares.
Dividends are being paid monthly, and were raised last November. A yield of 7% is currently shown; the actual amount is confusing – probably because of $C vs USD.
Volume from my chart for this stock is meaningless because it shows about 1.25 million shares were traded on 1/19/2016 with only a 9 cent /share increase. Two days later a 101,000 share day bumped the price up 59 cents. It looks like typical volume is in the 10,000 to 15,000 shares range. I plan to put it on a watch list to see how well they survive the current dismal pricing for crude. White Rabbit
What we all need is a crystal ball!!?!
About a hundred years ago this same clown cost me twenty-thousand on a stock called COHO ENERGY.
I put all these teasers on my watch list. There are very few winners as far as I can see so far.
Hallo Travis,
thank you once more for your good work.
Like Greg Courson I would like to know also the names of the other mentioned companies.
Maybe you may bring some light on it? Thanks in advance!
As for my opinion oil prices will go up for the long. I`m a shareholder in Granite after the Dee Three split.
Interesting article. Thank you.
I have been researching Canadian companies. I think the current exchange rate gives us a cushion. The Canadian dollar is tied to commodities. Investing in more stable companies may give you the same returns without the risk of being invested in the energy sector.
As an example the Bank of Montreal ( BMO ) is down 10% over the last year. The yield is 4.5% and the bank has paid a dividend since the 1800’s.
If oil rises in price, the Canadian dollar will become stronger. Investors will reap the benefits through the FOREX on the stock price.
While you are waiting, enjoy the dividend.
As for an energy speculative play, Awilco Drilling ( AWLCF) has caught my eye. @ mid water submersibles are owned by the company. One is currently “warm stacked”, the other is going to be scheduled for maintenance and is still under contract. The day costs are about $85,000 and day rate is over $300,000.
The lowcost of operations make me think they will be able to underbid the larger gys ( RIG, SDRL ) and get a new contract for their idled rig.
Take a look and tell me what you think.
I could get all “analytical”,..but I won’t.
To me is simpler….Oil …WAS $130 something…now $30 something.
Yes we will continue to use…and consume oil.
Will oil go UP from $20-30….YES
Buy and hold.
Can the Great Gumshoe give us some information on the Tiny $2.00 stock that ends surgery forever? Promoted heavily by Money Map Press
http://www.stockgumshoe.com/reviews/bioscience-millionaire/whats-the-bionic-surgeon-looking-for-imminent-fda-approval/
Hey Gumshoe,
I’d like to hear about the other 2 oil stocks that were teased.
If you want the volatility of the oil market without the credit risk (company, not your own account) just buy uwti.
Travis, I can only tell you that I SO enjoy your site!! You give us facts with no b.s. and manage to make me laugh at a dire time in my life. I am a tiny investor, but I am so very sick of the “teasers” most of these people publish that I’ve eliminated most of them. I have enough to read each day to keep up with the market without adding the endless crap “they” send, which in the end is mostly useless to me and often turns out to be outright lies. They are too in love with their own words on paper to be of any real use to anyone. Why waste my time on them.
And I LOVE their disclaimers. In a nutshell: We’re a highly respected firm, and we want you to invest in this stock, which is going to “skyrocket,” but don’t invest in it, and we had nothing to do with it if you invest and lose your shirt.
Thanks! Sorry it’s a dire time for you — but I’m glad you’re here to read our stuff.
Of course, my disclaimers say much the same thing — “I’ve got my opinions, but they’re often wrong.”
“but they’re often wrong.” I wonder. It would be really cool to find out your Thinkolator is 90% right. Just my personal but too rarely satisfied itch to see bullsh*t exposed.
The Thinkolator’s teaser solutions are correct more than 99% of the time… It’s my own opinions about what investments will do well that have a less lofty accuracy rate. Good with the clues, less good with predicting the future 🙂
For anyone interested in oil, BNK is at .76. I noticed it quickly spikes to .90 on the slightest sign of good news. Potential tax issues with the Albanian gov. and of course, low oil are keeping it at what I believe is very close to bottom. Should be a quick double, maybe triple when oil rebounds.