Remember Wolverine Oil, when early bird investors got staggeringly rich on this wildcatter which hit a discovery missed by the supermajors and ended up pumping 1.1 million barrels of oil in 2013? Well, Utah is back with what could be another Wolverine-style wildcat play for investors.
This time, it’s PetroTerra Corp. (PTRA: OTCQB), which is thought to be sitting on as much as 243 million barrels of oil and whose stocks just started trading in 2014 and now sit at about $0.70.
PetroTerra has a 100% working interest and an 80% net revenue interest in the Sevier and Beaver Oil projects covering three leases and over 5,950 gross acres in the prolific Central Utah Thrust Belt.
PetroTerra’s two-license Sevier prospect is the main play here and is only 18 miles south of Wolverine’s, which is now pumping 200,000 barrels of oil a month. Initial studies suggest that the two have a similar geological structure.
PetroTerra believes it has a resource range of up to 243 million barrels in Sevier’s Navajo Sandstone, with more upside potential deeper down. It’s arrived at this estimate using trap sizes, net reservoir and calculated estimated ultimate recoveries from producing wells at Covenant Field—Wolverine’s nearby field.
The promise here is the promise of the Central Utah Thrust Belt. The wider Thrust Belt is a geologic oil-producing structure that runs from Canada to the southern United States. The Central Utah Thrust Belt is a relative newcomer to the major-play scene thanks to Wolverine Oil.
Until Wolverine made its killer discovery in 2004, the main oil attractions in Utah were the Uinta Basin, the Paradox Basin and the Utah/Wyoming Thrust Belt. Now the Central Utah Thrust Belt has established its place on the map.
The other good news for potential investors in today’s oil price climate is that this is a conventional play—which means cheaper, vertical drilling.
While the reward can be massive, betting on young wildcatters can be risky. It comes down to the question of management. In October, Kurt Reinecke—a founder of the $1.2 billion market cap oil explorer, Bill Barrett Corp.—joined the PetroTerra team as Chief Operating Officer.
Reinecke has a great track record in the Rocky Mountains—on terrain similar to PetroTerra’s Utah prospect. Not only was he a founding member of Bill Barrett Corp, he is also a geologist and served as the company’s executive vice-president of exploration.
Central Utah’s place on the map has definitely been earned if you consider all the oil that’s being pumped out of this region already—and this includes Bill Barret’s 1.58 million barrels in 2013. Certainly, everyone is wondering why Reinecke was willing to give up Barret and join the PetroTerra team.
In addition to the Wolverine coup, there is a long line-up of strong Utah showings over the past couple of years—and they are all PetroTerra’s neighbors. In East-Central Utah, the Drunkard’s Wash holding owned by Devon Energy (NYSE:DVN) has produced over 460,000 barrels, while Houston-based EOG Resources (NYSE:EOG) has produced over 590,000 barrels of oil, and KerrMcGee (Anadarko) (NYSE:APC) has produced over 1 million barrels.
With numbers like these, Utah is the place to be. It may not be all the glitter and glam of the Bakken or Eagle Ford shale, but its subtle lure is that of a smashing wildcat territory with conventional wisdom, which means conventional drilling costs that can hold up in today’s market.
Four Reasons PetroTerra is an Interesting Play:
1. They are sitting on a prime location on the overthrust belt in Central Utah—a location that is a proven oil and gas producing area and where Wolverine made its fantastic discovery in 2004.
2. There are a lot of great companies drilling nearby and producing nearby. In addition to those mentioned above, Resolute Energy (NYSE:REN) pumped 2.39 million barrels out of central Utah in 2013, while Berry Petroleum (NYSE:BRY) pumped another 1.15 million barrels and—the biggest one—Newfield Exploration (NYSE:NFX), with 4.96 million barrels.
3. Estimates put the possibility here at 243 million barrels just in the Sevier prospect, and drilling deeper could increase this further.
4. The addition to the team of a legendary explorer in the form of Bill Barret Corp’s Kurt Reinecke makes this a stronger management team, especially for a young wildcatter where risk is high.
By. James Burgess of Oilprice.com
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