This delightful ad has clearly graced many an inbox over the past few days — I know I’ve gotten it about a dozen times myself, not to mention the hundreds of Gumshoe readers who have also been kind enough to send it along.
OK, dozens. Still.
So the marketing push is on …
… but, just in case you don’t feel like shelling out $999 for a subscription to Pure Energy Trader, let’s look into this and see if we can figure out what they’re talking about.
This is another Ian Cooper service, though the letter came from his publisher, Brian Hicks. The last time we looked at a stock being teased by Ian it was InterOil, and he thought it could double or triple after the stock released results in March. A quick glance at the chart will tell you that IOC actually went down by about 20% in March (it recovered signficiantly in the past week, but still has yet to go up much from his recommendation, let alone double or triple) …
… but that doesn’t mean we shouldn’t at least take a gander at his next idea. He claims an enviable record as a fast-trigger trader, and I don’t have any evidence to dispute that — I know only that the teaser stocks his letters have put out have been long-term duds over the past year.
So far … is change in the wind?
This is somewhat related to the Bakken/Williston oil teasers, in that it’s talking about new drilling approvals … and that’s the area where a lot of this drilling activity is taking place right now, both in Montana and in North Dakota.
But the central idea of this teaser is that there are particular “3160 letters” that the government issues that presage a stock price’s launch into the stratosphere.
In their words,
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“If a company’s “3160 Letter” is declined, for example, their share price could plummet.
“But when a “3160 letter” is approved, something ridiculously profitable seems to happen to the company’s stock…
“Usually, within a matter of just two to four weeks, the company’s share price surges – anywhere from 18% to 49.5%.”
They also give a few examples — companies like MDU and Noble Energy that saw big price climbs after receiving these “3160” approvals.
“… in short, when the government approves this document, the company is given the green light to operate and drill for precious oil. Almost instantly, the company’s share price seems to skyrocket as news of the approval makes it way through the company and eventually out to the market.”
OK, so that sounds pretty good, huh?
The teaser leans on this idea of a little backwater federal office building in Bismarck, ND that processes a lot of these 3160 forms — giving us both the idea that these are genuine federal government approvals, and that we couldn’t possibly find them without a guide.
Cooper would like to be that guide, natch. And Hicks would like to cash your checks.
Who knows, maybe they are better at figuring out which of these approvals to follow closely … but before we give them credit for that, let’s look and see what these letters are … and see if a sleepy ‘ol Gumshoe can understand where to find them or what they mean.
Hicks says that:
“Even more amazing, for people like you and me, the U.S. Government now publishes the results of their approved ‘3160 letters’ with plenty of time to lock in a position before a company’s share price moves!
“In fact, we track “3160 Letters” so closely that we can buy the company’s stock the very day they receive approval. In other words, we can buy it way before Wall Street finds out.”
Well, if that’s true … then you can, too. You might not want to, but it’s a lead-pipe cinch that Brian Hicks is not talking about insider information that only he can get from the government. If that were the case, the SEC would have to arrest its friends over at BLM.
And that’s what we’re really talking about here — the approvals process for exploring and drilling for oil and gas, and that approval process is largely managed by the Federal Bureau of Land Management, through local offices all over the country.
But as you might expect, ever since Al Gore brought us the Internet and the “paperwork reduction act” swung into force, the forms have been filed online … and the results can be reviewed by investors online, too, at least to some degree.
Now, the blank forms obviously wouldn’t do you much good. But they also allow you to search the approvals database. It is a little bit obscure, but that can’t deter your friendly neighborhood Gumshoe.
So first … what is a 3160 letter?
There are actually several versions of this form, but I assume that what they’re talking about is the 3160-3, which is the BLM application for a permit to drill for oil and gas — they usually refer to it as an APD (Application for Permit to Drill). It’s a pretty simple form, actually, just a single page that describes where and how the drilling will take place and who will be doing it — though there’s a lot more than just one form that you have to do before getting permission to drill for oil, including a site visit. The 3160 comes from the section of the Code of Federal Regulations that requires this permitting and sets the procedure, you can find it at 43 CFR 3160 if you’re compelled to do so. If you don’t normally read the Federal Register, you might not enjoy it.
So what we’d want to find, one assumes, is the response to these applications for permits — the theory being, if you find the folks who get a permit to drill in a particular area, maybe they’ll do great once they get the permit.
Just in case it’s not clear yet, I’m no expert on BLM procedures, and I’m neither a geologist nor a master of oil and gas exploration or technology or terminology.
So, how does one get an Application for a Permit to Drill (APD) approved? Generally, the process is fairly quick once the permit application is filed, from my reading of the CFR it looks like most applications have to be processed within a month — but that is, of course, after all the EPA, historic preservation, endangered species and related stuff is dealt with and after the applicant has, one assumes already done quite a bit of work to make sure they’re ready for approval. It looks to me like the permits are generally good for two years, and there are often a whole series of APDs that are part of one master site plan.
Again, your Gumshoe is neither an expert nor a lawyer, this is just my reading.
The reporting of this data appears to be primarily managed by BLM through their LR2000 system — which is just as ridiculous and hard to navigate as you might imagine. You can access the database of their public report actions at http://www.blm.gov/lr2000/index.htm
So what else can I tell you? I’m going to blockquote this little section so you can ignore it if you want to, since this path would not be of interest to many of you.
The database is ridiculous, but I already told you that. There are some canned reports, including reports about leases that are set to expire. And there are other reports that are semi-canned to get you started, including several that cover the Case Recordation Reports, which I assume is where all the approvals will be recorded.
But even within that, it’s going to take a bit of time to learn the database. I know we have a few enthusiastic researchers out there in Gumshoeland, including some folks who might be able to dig into these old databases and find some interesting stuff … but frankly, I ran out of steam on this one.
I did run a report looking at all the approvals issued by the BLM for Wyoming just to see what it included — it wasn’t precise enough to be very helpful, since it included all approvals in BLM history, going back a century or more, but it did have lots of records. I also don’t use Internet Explorer, so it didn’t work quite perfectly for me.
If you do want to start exploring, here’s where you can get started:
The dataset that I think you want is Pub CR Case Action Info.
You can choose a state if you want — Wyoming, for example.
If you like, you can limit the casetype to those that start with 31, which is oil and gas stuff. This might be redundant, given the next step.
The code for APD approval, which is what I assume we’re interested in, is 576, so you can choose that.
I selected a timeframe of about the last 18 months.
And there were nine results back from the database.
Which is when I got sick of dealing with it. If you’d like to dig in further and see if you can find some interesting companies, or if you have specific plots of land you’re interested in, then you can always go the next step and figure out which of those companies happen to be publicly traded … and which of those are worth your time … and, well, knock yourself out.
The other option, and probably an easier one, is that you can go by individual offices — so if you’re interested in the developments in North Dakota, for example, you can get to the APDs that are pending or approved for each of the offices there here: http://www.blm.gov/mt/st/en/prog/energy/oil_and_gas/apds.html — this, while a limited set of data since each list is for just one office, is much easier to understand and follow, and it includes the company name and all that good stuff. If you check out the North Dakota office’s final approvals, you’ll see that the most recent ones (which are sorted to the top, thankfully) are for Whiting, Petrohunt, and Continental.
Does that mean their shares are going to shoot up? Beats me. Those particular approvals were about a month ago, and I haven’t checked the share prices for any of those companies (don’t even know if they’re all public).
Personally, I can understand that the approval of a drilling permit might move the share price of some stocks … but I wouldn’t necessarily assume that it always does so. I’m afraid that my personal interest in digging up this kind of detailed information about these particular companies isn’t strong enough to let me get through all those awful reports, but it looks like the data is there if you want to find it. It also might behoove you to track the applications that are filed instead of just approved, since it looks like most applications do get approved.
Or, if you think quick trading based on this information is going to be your meal ticket, maybe you’d like to pay Ian Cooper a thousand bucks to find the best of them for you. Maybe he’ll do a good job.
Or you can just keep rechecking the APDs for individual offices in key areas and see if any interesting names crop up.
Or, if you’re like me, you can look for an easier and more interesting way to make money.
Your money, your call.