But there are others who believe in the “Peak Oil” argument, the ultimate end-game, like a Suburban crushing a Subaru at the end of a long hill. Peak Oil enthusiasts will point to long lists of numbers, detailed maps of known reserves, past prognosticators of genius, and declare with tinfoil-hat fervor that “we are running out of oil.”

I’ve read these books and listened to the speeches. The idea that there is a finite amount of oil on the planet, and we are near the point where we will extract less in the next hundred years than we did in the past. Makes sense to me, as does the business cycle. I don’t know if the hundred-year history of the oil cycle is over. There is always a “this time it’s different” ideology at the peak. But then again, sometimes, it is different.

What we do know — what isn’t in dispute — is that oil is expensive, and that by all accounts the easy oil has already been found and is being extracted at a furious pace.

And this has led the industrial countries on a desperate search for this ever-scarcer commodity.

Russia, China, India, Brazil, Canada, Europe and the U.S. are fighting an anxious and diminishing struggle for the last of the world’s hydrocarbons. Russia is sending submarines to plant national flags at the bottom of the Arctic Ocean. China has moved aggressively to acquire oil holdings from Kazakhstan to Somalia. India has gotten in bed with the genocidal regime of the Sudan to the tune a $45 billion natural gas pipeline. The U.S. is spending trillions in treasury and thousands in lives to make sure the oil flows from the Middle East.

The Guardian of UK fame recently reported that “money is no object as the big players grab what is left of a diminishing resource.” (This was after China’s Sinopec paid $1 billion for the right to explore for oil in deep water off Angola.) Just a few years ago, such a deal would have sold for a mere $35 million. But competition is fierce over the last remaining frontiers where vast quantities of oil might be found.

If you add Latin American governments and Russia’s success at renationalized oil and gas assets, and the fact that many reserves in the Middle East are off-limits… you have a situation where the oil majors are going to the politically difficult and geographically inhospitable locations to find oil.

The oil game isn’t over by a long shot. One successful investment strategy is to find oil assets selling on the cheap and buy them before the big players show up.

I’ve discovered one such place off the cost of South America. For seven years a border dispute has stopped the drilling in what the United State Geological Survey (USGS) calls “the second-largest unexplored oil reserve in world.”

It’s a place we like to call the Gunboat Basin. It’s about 100 miles off South America’s coast. The USGS estimates that this oil basin contains 15 billion barrels of oil as well as 42 trillion cubic feet of natural gas. This location is one of the most sought-after oil regions on the planet. Not only is it a strategic replacement to Venezuela, but it is also brimming with precious crude. Only one problem: For the last seven years, the oil has been locked down and under armed guard!

But over the summer, the United Nations was able to hand down a ruling that averted a war and will benefit all parties. As I write this, seismic explorer vessels are on their way. Exxon Mobil and other large oil companies have formed partnerships.

There is a perfect way to play this which involves one small $3 company that owns the offshore rights. To protect my paying subscribers of Crisis Trader, I cannot reveal the name of this micro-cap explorer that trades on the Toronto Venture Exchange. However, it does show you how persistent research can turn up the kind of companies long overlooked by Wall Street — that can make investors a handsome return.

This $3 company is a Canada-based oil and gas explorer with an interest in 9.8 million acres (7.7 million net) offshore Guyana, South America, an area ranked second among the world’s under-explored basins. Exploration in the basin has been deferred by each of the offshore operators — Exxon and Repsol — as well as this $3 company which had been forced off its Eagle location by Surinamese gunboats in June 2000.

This tiny oil and gas exploration company has funded $8.9 million, the majority of Guyana’s legal expense, for resolution of the maritime border with Suriname by the International Tribunal on Law of the Sea. Oral hearings were first heard in December 2006 and a binding decision on the maritime border was established by the U.N. on September 20, 2007.

It has been agreed to by both Guyana and Suriname. Furthermore, it favors the holdings of this company that I had recommended to my readers. Guyana is preparing for renewed exploration by each of the operators following resolution.

This little-known $3 company has identified many significant oil targets off the coast of Guyana. One stratigraphic trap called Eagle at 13,500 feet has an estimated resource potential of 610 million barrels. Even more interesting is a deeper region (18,000 feet), which is called Eagle Deep.

To the west of that, this tiny exploration company has identified several targets similar to the Eagle plays. This is a region in which this company has partnered with Repsol. Repsol is also the operator and has found a number of other targets.

Repsol, Occidental and Noble plan to drill two wells at an estimated cost of $100 million offshore Suriname, just to the east of and on trend with this company’s Corentyne prospecting license for offshore Guyana.

To the west, this company’s Pomeroon prospecting license showed two discoveries greater than 6 trillion cubic feet have been made offshore of Venezuela.

The CEO of the company has recently stated, “During the last year, [the company] has received a number of unsolicited expressions of interest from international oil and gas companies regarding the possibility of participating in the exploration of the Corentyne PPL, pending the resolution of the maritime border between Guyana and Suriname.”

As you can understand, in dealing with small-cap energy explorers in places such as Guyana and Venezuela, this is certainly qualifies a speculative play. So it’s not for the faint of heart. But the upside can be lucrative, with the stock more than doubling to $7 based on my conservative projections.

To me, that means it is a buyout candidate and is waiting for an offer it cannot refuse. Until that happens, it will explore its holdings and make announcements as to what it establishes. Each of these will be a catalyst for share price appreciation.

In many ways, this company is classic emerging-market energy play.

It has very little revenue as of yet. It holds a great deal of rights to a large oil field. Some of its holdings have been licensed out to major oil firms. Add it all up and this company is extremely undervalued based on its holdings. It’s exactly the kind of undiscovered gem you hope to find when making an energy play in emerging markets.

– Christian DeHaemer

Source: A Speculative Buy on the Second-Largest, Unexplored Oil Reserve in the World

Maryland Mayer and the Dakota Oil Rush

Isabella Lucy Bird (1831-1904) was an amazing traveler and a pretty good writer. I have a soft spot for adventurers. Especially for those who can write well. In her time, she traveled all over the world. She traveled throughout Asia. She lived for a time among the Ainu people in northern Japan. Bird also made it to Hawaii, where she climbed the Mauna Loa volcano. She also wandered in Australia and rode horses in Persia. This is just a snippet of her life’s itinerary. She got around.

In 1873, Bird set off for the Rocky Mountains. Back then, the Rocky Mountain region was an untamed wilderness, peopled with a few hardscrabble pioneers. Bird began her journey in San Francisco. She headed west across Nevada and then trudged into the Colorado Territory. Bird set her adventures down in a series of letters to her sister Henrietta. She stitched them together in a book, published in 1879.

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Here she records her vivid descriptions of the landscapes of the Rockies. She writes of the “snow-splotched mountains,” the glades and sloping lawns, the elk and the bears. One bear came so close she “heard the grass, crisp with hoar frost, crackle under his feet.” She writes of the profound stillness and “cherry-fringed beds of dry streams.” And the “deep, vast, canyons…[that] lie in purple gloom.”

It’s that vastness and beauty, that sense of exploring, that still gives the Rocky Mountains a romantic aura even to this day. I enjoyed reading Bird’s letters…and they got me in the mood for today’s column. Today, despite all of our sophisticated toys, the Rocky Mountains remain mysterious in ways of oil and gas.

Oilmen and speculators wonder just how much oil and gas might lie in this region. Some of the hottest exploratory regions in America lie in the Rocky Mountain region. In particular, in the so-called Bakken Trend.

Steven Ward is a former employee of Amoco Oil. He now works as an independent oil analyst specializing in Canadian and Western European oil companies. He wrote a neat piece that I stumbled on as I was researching my next recommendation. The title was “The Bakken Trend: Lost Dutchmen Mine of the Oil Patch?”

The Lost Dutchmen Mine is a legendary gold mine somewhere in the Superstition Mountains east of Phoenix. It’s a fascinating story. If you Google “Lost Dutchmen Mine,” you’ll come up with all kinds of interesting commentary. But Ward used the Dutchmen legend as a takeoff to talk about various similar legends about oil riches in oddball places. “Stories abound about great oil riches in faraway places yet undiscovered; the foot of the Himalayas, the Spratly Islands, the Atlantic Rockall volcanic peak,” Ward writes.

He relates how similar legends exist about the continental U.S. and Canada. Specifically, these legends proliferate around a region called the Bakken Trend. It lies in the giant Williston Basin that stretches across parts of the Dakotas, Montana, Manitoba and Saskatchewan.

He writes about geochemist L.C. Price, who worked for the U.S. Geological Survey. Price delivered a stunning report on the Bakken Trend. He concluded that it contained 200-500 billion barrels of oil. He turned in his report to the USGS, which began its review. But Price died in 2002 with the USGS still holding onto the report, refusing to release it.

Here you have similarities to the story of the Lost Dutchmen Mine. In this tale, a German immigrant named Jacob Walz supposedly found gold in the Superstition Mountains. He died before vindicating his claim. Ward writes, “Bakken oil remained elusive…the stuff that makes a good story around bars filled with oilmen.”

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Long story short, the Bakken is getting attention again. New work on the area confirms the essence of Price’s research, if not the 200-500 billion barrel estimate. “Finally,” Ward writes, “it now appears that the Bakken Rush is finally on in the U.S. as well as in Canada.”

A number of companies have been buying up unexplored land areas in the Bakken. EOG Resources is one significant producer in the Bakken. Marathon Oil, according to Ward, is the only integrated oil company with an office in North Dakota. Its sole mission: Explore the Bakken.

“Still doubting?” Ward writes. He offers more recent analysis by geologists, from 2006. This work put the estimated barrels in place at 300 billion in North Dakota and Montana alone. Also, geologist Julie LeFever, who worked with L.C. Price on his initial report, published a paper adding that additional barrels lie in various layers of the Bakken. “The rush for the Bakken is finally on,” Ward writes. “Investors should catch it if they can.”

I recently recommended a play on the Bakken Trend to the subscribers of my investment service, Mayer’s Special Situations. The company I recommended holds significant assets in the Bakken. It also has another, potentially bigger asset in a rich basin in Wyoming. This stock has already performed extremely well since I recommended it, but I’m still expecting larger gains.

Meanwhile, I’m continuing to explore for other stocks that are focused on the Bakken Trend. I would encourage all investors to do the same. The investment opportunities in the Bakken are just beginning to emerge.

Regards,

Chris Mayer -Whiskey & Gunpowder

Source: North Dakota Oil