Penny Oil Speculator: 15-cent Brazil Oil

By Travis Johnson, Stock Gumshoe, March 13, 2008

Here’s one that got the attention of many of my readers: it’s a microcap oil play, one that our advertiser believes will send shares from 15 cents to (possibly) $5 a share. They apparently have leases in Brazil in some prime oil territory.

Some excerpts from the ad:

“When you sign on to Penny Oil Speculator, the first thing
you’ll get is Chuck’s full report on this little 15¢-a-share
penny oil sitting on as much as $5.1 billion of oil.”

“Right now, with shares selling for 15¢ each, your $2,400
savings is enough to buy about 16,000 shares. But that won’t
last very long: the company is already drilling its second
well, with 3 more on the way. Once the results start to
confirm the findings of their first test well, I think you’re
going to have to pay two, three, even four times what the
shares are selling for today.”

And …

“Long-term, as I mentioned earlier, Chuck thinks these shares have a good chance of piling up gains as big as those I have on Carnarvon ($2,640 into $64,500). And if the shares go all the way to $5 — as Chuck is expecting — you could walk away with $100,000 from this one, single stock!”

The “his” in this case is Bob Czeschin of the Oil & Energy Investment Report, but what he’s trying to sell you is a subscription to the Penny Oil Speculator, which will run you about $5,000 a year.

Now here’s the bad new: I haven’t found the solution to this one, or looked into it yet.

The good news? One of your fellow readers, who goes by the moniker “nanopole” over at the Gumshoe forum, thinks he’s found the solution for you. So since I’ve had lots of requests for this, and I haven’t had a chance to check it yet, I thought I’d get it out to the broader Gumshoe readership in case y’all want to researchify it a bit on your own.

It should go without saying that a teensy tiny microcap penny oil stock (this one’s an Australian company with some Brazilian concessions, including some mixed drilling results so far) scares the bejeezus out of me, and I hope you get at least half a bejeezus out of it. The folks who run newsletters like this count on a few 10,000% winners to mix in with a long littany of bankruptcies and disappearing acts, so I’d be even more cautious about this than I would about any other stock that you get a tip on out of the blue.

That, and the pink sheets shares for this one are traded only by tiny investors (which probably includes most of you, and certainly includes me) — only about $3,500 worth of shares exchange hands on the pink sheets on an average day. Even on its home market down under this stock only causes about $10,000 to change hands per day. That means that any one of us could individually have a huge impact on the price of these shares if we so choose. That brings a double bejeezus.

But hey, maybe Bob Czeschin and his advisor “Chuck” are right on this one. And maybe nanopole has picked the right stock. I went so far as to check that they do have drilling operations in Brazil and some further Brazilian leases, and to make sure that the clues match the 15 cents a share teaser hint. But that’s all I’ve done. I hope it goes without saying that that’s not enough.

This is doubtless a tiny newsletter, since it’s high cost and focused on microcaps, so I have absolutely no idea what their long term track record is. They claim plenty of wins in the ad copy, of course, but I’m afraid there aren’t many advisers who do otherwise. So buyer beware, but this stock, according to nanopole, is …

Eromanga Hydrocarbons (pink sheets at ERHYF, in Australia at ERH)

The discussion, however brief, of this one at the forum is here. Feel free to comment here or there if you’d like to add to the research on this one.

full disclosure: I don’t own shares in this one, and I definitely don’t see that changing anytime soon. If I were to invest in Brazilian oil, I’m afraid I’d be Mr. Boring and pick up some shares of Petrobras (which I’ve mentioned before, in case you’re bored and are looking for another fascinating Gumshoe writeup to go to right now).

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March 13, 2008 10:49 pm

The pink sheet symbol is ERHYF (or ERHYF.PK on some sites).