$82 billion opportunity disappearing soon? (Frank Curzio’s Phase 1)

Promo says "Frank has just unearthed what could be the most ridiculous windfall in the history of Phase 1"

By Travis Johnson, Stock Gumshoe, February 6, 2014

Several intrepid readers sent this pitch flying my way while we were digging out of our latest snowstorm, and I figured a nice little panic about an $82 billion “missed opportunity” ought to warm me up.

Phase 1 Investor, the big “upgrade” letter from Stansberry & Associates, usually gets our readers attention when they send out a new promotion… partly because the publisher has one of the biggest mailing lists in the world, and partly because it’s too expensive, at $5,000 (or “on sale” for $3,000) for most individual investors to seriously consider a subscription. And despite any evidence to the contrary, some investors persist in believing that more expensive newsletters automatically pick better stocks, which means these promos get even more attention.

The stocks Frank covers with this letter tend to be small and sensitive ones, usually in tech, biotech or natural resources, and they’re often quite illiquid … but they’ve almost always got a good story. So what’s the story this time?

The headline of the actual ad says that we need to “Buy this ‘Under $0.50’ Stock by February 15th, 2014” … which started to ring some memory bells in my head, and the lead-in from the email pitch got us interested thusly:

“You see, Frank has just unearthed what could be the most ridiculous windfall in the history of Phase 1.

“It’s a microscopic energy company – with a $40 million market cap. It currently trades for about 46 cents per share.

“Yet it happens to be sitting on a truly massive petroleum formation.

“We’re talking about an estimated 500 million barrels of oil… and 7 trillion cubic feet of natural gas.

“The estimated net present value: $49 billion in crude oil… and $33.4 billion in natural gas.

“Yeah, that’s about $82 billion – some 2,050 times bigger than the company’s current market cap.”

Yes, $40 million is “microscopic” and we run the danger of helping Stansberry & Associates draw too much attention to the name just by writing about it here but, well, what are you gonna do?

I do draw the line at some stocks, some of the time — I unveiled a little $10 million market cap name being teased now earlier today, but I assuaged my guilt a bit on that one by limiting the article to the much, much, much smaller group of Irregulars (those are our paying members) … still, when you’re talking about a stock with a sub-$50 million market cap any yahoo with a blog or a twitter account can probably impact the price if he makes an effort, so, as always, be careful and think for yourself.

What’s Frank pitching now, then?

Well, it turns out that we were right to think it sounded familiar — this is a slight revision of a teaser that Curzio sent out last Fall and that we covered here about four months ago , and in fact the “presentation” still carries the “October 2013” date down by his signature, though they have updated the “Must buy by November 1” to “Must buy by February 15” … and they did add in a couple other edits to refer to their 2014 drilling program instead of the 2013 one … but this is still East West Petroleum (EW in Canada, EWPMF on the pink sheets), and news is still fairly slow in developing.

I own East West Petroleum shares — I picked some up when I wrote about them last Fall, largely because they had some catalysts coming in the form of drilling in New Zealand and possibly the start to their Romanian drilling campaign that’s been delayed for a couple years, and the news so far has been fairly ho-hum in New Zealand and nonexistent in Romania so I’m still sitting on my shares and watching. Curzio’s attention drove it from 40 cents to about 70 cents very briefly, as he loaded on the enthusiasm and hosted a conference call with the company’s management, but it’s now back to about where it was in October.

And yes, it’s pretty disingenuous to say Curzio “just unearthed what could be the most ridiculous windfall in the history of Phase 1” when you’re talking about a stock that he originally pitched almost two years ago.

So, now what? I guess this gives me a chance to take another look at the stock, something I’ve been meaning to do anyway. Win-win!

East West Petroleum has two important as