“World Record Oil & Gas Discovery” Matt Badiali

By Travis Johnson, Stock Gumshoe, January 4, 2010

There were any number of teasers I could have chosen to get back in the swing of things after vacation, but this one from Matt Badiali was forwarded to me more than any other over the last week or so, and it seemed a reasonable place to start.

Like so many of the great teaser emails, it involves a trip to a remote area of the world, and a record-breaking discovery that is colored with risk, and even with hints of fraud … all the better to bring in sexy gains for astute investors, of course!

Badiali’s teases often spin such tales, of course, and the teased stocks don’t always work out, but his letter is reasonably well-liked by my readers (his S&A Resource Report is in the top five commodities/resources/gold letters on the Stock Gumshoe Reviews site). So let’s have a look, shall we?

Here’s the Indiana Jones adventure part of the story:

“I just spent 40 hours traveling on 4 different planes across 9 time zones…

“Slept in a mosquito and cockroach infested ‘hotel’ and tramped through a ‘Jurassic Park’ like jungle and 100% humidity…


“Because a small group of geologists in a remote corner of the Earth have reported a ‘WORLD RECORD’ oil and gas discovery.

“Since the rumors of this discovery first surfaced on the Internet, the entire oil and gas industry has been buzzing about this industry-changing find.

“In fact, the initial test results are so extraordinary, that many in the industry (including some folks I genuinely respect) are calling it a fraud.

“If the geology is only half as good as these initial tests show, early investors are poised to make gains of 1,000% or more…

“Of course, if it’s a fraud… well… anyone who invests in this find will probably lose every penny.

“In my nearly two decades in the oil and gas industry, I have simply never seen a situation where the stakes are so high.

“That’s why I recently flew 12,000 miles around the globe to investigate this situation first-hand.”

The exciting and dramatic part of his visit to this “situation” was witnessing a flow test on a natural gas well that blew his socks off:

“You see, in the majority of wells of this type, the natural gas sits near the top of the deposit. So naturally, the first thing a company tests is the amount of natural gas that flows from the well.

“And I have to tell you, this ‘flow test’ was the most incredible thing I’ve ever seen in my 13 years as a geologist and investment researcher… and that includes the time I spent on an oilrig off the coast of Florida.

“When they lit the gas flowing out of the well, it shot a flame easily 200 feet long and the roar sounded like a jet engine….

‘The heat was so intense, it set a couple hundred yards of jungle on fire.

“In geologist speak, the well spewed out gas at a rate of more than 700 million feet per day.

“(Just for sake of comparison, that’s 23-times larger than Devon Energy’s headline-making Texas strike earlier this year, which spewed out “only” 30 million cubic feet of natural gas in a 24-hour period—and one of the biggest gas discoveries on U.S. record.)…

“In fact, this company’s ‘flow test’ nearly doubled the standing Guinness Book world record for a natural gas flow test. (The previous record was held by the same company on a well not too far from the spot where I was standing.)”

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OK, so that provides some clues to help us narrow it down … we also hear that Badiali thinks this resource might be worth $30 billion, which is ten times the market cap of the company.

So we can do some complex Gumshoe math (it’s patented, don’t try this at home!) and note that this is a $3 billion company.

And Badiali goes on to give us some more tidbits — or as we like to call them here, “clues.”

“… because there had been some skepticism about the record-breaking numbers, this small company made a clever move…

“They brought in Weatherford International, one of the industry’s biggest independent oil & gas consultants, to verify t