Matt Badiali runs the S&A Resource Report newsletter, which recommends mostly energy and commodity stocks. The teases he uses to promote his newsletter are usually pretty compelling and hyperbolic, and from what we’ve heard at Stock Gumshoe Reviews his letter is one of the favorites in the commodity space, so I always like to take a look when a new ad comes rolling in — add that to the fact that my readers have been pummeling me with questions about this so-called “Project Bronco,” and it seemed high time to take a look at our latest teaser about an ocean of oil that’s just sitting there in the U.S., waiting to be tapped.
Interestingly enough, I’ve even been getting questions from folks who subscribe to S&A Resource Report — at least one of whom didn’t think this sounded like one of the stocks that they’d actually been told about yet in the monthly newsletter issues. I suspect it’s just that the tease is so mysterious that subscribers might not immediately associate the “Project Bronco” pick with one of the stocks that has been covered, but I don’t really know.
So what are we looking at today? This is all about producing the “stranded” oil from old and well-known U.S. oil fields. Or, as Badiali puts it,
“Trapped for over four decades, one of the single largest oil resources in the world is finally tapped. Early investors stand to make an absolute fortune.”
Sounds good, right? Here’s some more from the opening of the letter, just to get you in the mood:
“With the support of the U.S. government, American companies are now mobilizing on a massive oil reserve…
“A cache that could hold as much as 430 billion barrels.
“To put that in perspective, that’s more than all the oil in Iraq and Saudi Arabia, combined…
“And it’s right here in the United States.
“No, I’m not talking about ‘oil sands,’ or any kind of ‘oil equivalent.’
“I’m talking about liquid, bubbling crude. Stuff we can just pull out of the ground and use. Stuff that’s been buried right underneath our feet for decades… but has been impossible to tap…
“‘The recoverable resource would last over 400 years,’ says the RAND Corporation, an elite government think tank.
“‘That’s more than all the proven oil reserves of crude oil in the world today,’ reports the Denver Post….
“Claims are being staked — huge projects that will likely make millions for many folks. In fact, the Department of Energy (DOE) has already written big checks to get these projects going….
“No oil company can even think about drilling if they don’t have access to a brand new, revolutionary drilling technology…
“A device that allows oil firms to finally access this ocean of oil… from areas once thought impenetrable.
“As geologist Mike Boyles says: ‘[It’s] the magic drug for getting [this] oil out of the ground.'”
OK — so we get a few more pages on extracting oil from old fields that has been previously “stranded”, and about how many efforts the government has made to find ways to extract that oil over the years. And there really was a “Project Bronco,” it was a plan to explode a 50 kiloton nuclear warhead underground to fracture oil shale and, I presume, heat the shale to extract the oil somehow. They didn’t actually end up doing this, of course, but it was, interestingly enough, designed as a concept for the Piceance Basin — the oft-studied shale oil resource in Colorado that supposedly has 1.5 trillion barrels of oil that still can’t be profitably tapped… which, in a walk down memory lane, takes me back to the first Badiali teaser I ever wrote about in this space (about three years ago), all about that trapped oil shale resource and yet another experiment to extract it.
But though the concept is somewhat similar — finding new technologies to extract “stranded” oil — in this case what Badiali is teasing is the company that dominates the use of a “magic drug” for extracting oil from conventional fields that have just been effectively “tapped out” by a lack of pressure.
And, as he does eventually go on to clarify, this “magic drug” is CO2, which is injected into old oil wells to increase pressure, which then can help them extract more oil from those fields.
So what clues do we get about the specific company doing this CO2 work? Let’s see …
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“I’ve just discovered one small Texas firm that’s the undisputed leader in this new technology…
“A tiny firm that, I believe, will soon start collecting the lion’s share of profits thanks to the legacy of ‘Project Bronco’ and the release of centuries worth of untapped oil.
“Forbes calls them ‘the undisputed leader’ in their field…
“The Department of Energy (DOE) calls the technology they’re using ‘state of the art.'”
And a bit more …
“the DOE just did a study of 200 oil wells in the Gulf Coast region.
“The study showed that this small area alone had an additional 3 to 5 billion barrels of oil, which could be recovered with this innovative process.
“Incredibly, the small Texas company is the ONLY company in the world who has the infrastructure and the resources in this area to make a killing off this oil.
“At today’s oil prices, this one area alone could produce more than $62 billion in future earnings – over 15 times this company’s current market cap.”
OK, so … a company based in Texas, with infrastructure for “magic” CO2 injection “in the area” of the Gulf Coast, with a market cap of something under, but probably pretty close to $4 billion ($62 divided by 15).
“They’re also involved in major projects in the Rocky Mountains. In April 2008, the U.S. Geological Survey estimated 4.3 billion barrels of recoverable oil sits in old fields in that region alone.
“Combined, these projects could be worth $160 billion in future earnings.
“And this is just the beginning of a nationwide effort that could last for decades.”
Finally, the P.S. — always the favorite part of a sales letter … and, If I remember correctly from way back when I was writing fundraising letters, often the only part of a letter that people read …