There’s a breaking energy story that could potentially be a repeat of Texas’ multi-billion dollar Midland Basin…
A basin that has been producing since the 1930s and won’t reach peak production until 2035 at a phenomenal 3.8 million boe/d …
The most trusted name in natural resource assessments—Wood Mackenzie--says this new discovery is analogous not just to the giant Midland, with a development value of $540 billion, but to two other world-class basins.
In fact, it could become one of the most interesting stories of 2021.
One of the key men behind this play is former Navy Submarine Force Yeoman Dan Jarvie, once searched the depths of the Pacific for submarines...
But today he is one of the most respected petroleum geochemists in the world…
And what he is uncovering could change the entire African energy sector.
A 6,000-foot-thick Permian basin that could prove up 120 billion barrels of high-quality oil and gas in place.
A MAJOR NEW PERMIAN DISCOVERY IN 2021?
During the Permian era, there was only one continent…
And the earth’s vast ocean was teeming with marine plants and animals.
This organic matter fell to the bottom of the sea... and over time turned into high-quality thick oil.
The world’s most famous Permian formations are currently in the US.
In fact, a little over a year ago, Texas’ Permian basin had become the top producer in the world, outdoing even the best the Saudis had to offer.
The Permian basin is a 250-mile-wide, 300-mile-long sedimentary basin housing the Midland Basin, the Delaware Basin and the Central Basin Platform across West Texas and Southeast New Mexico.
It currently boasts the world’s thickest deposits of sedimentary rocks formed during the Permian geological period.
It’s a geological wonder: Over nearly 300 million years, layer upon layer of rock, sand, silt, and water run-off added to the mix, creating a pressure that created one of the most lucrative bonanzas of natural resources anyone has ever seen.
We’re talking about a lucrative 28.9 billion barrels of oil and 75 trillion cubic feet of gas, with no sign of letting up. As of the time of writing, the Permian basin is producing over 4 million barrels per day. And while today the Permian Basin is synonymous with unconventional oil and gas, the majority of the production (and value) to date has come from the conventional oil and gas plays, good old fashion vertical wells which don’t need to be frac’ed, don’t need a lot of water and produce for 20 years.
THE GEOCHEMIST WHO HELPED UNCOVER IT
Dan Jarvie, one of the most respected petroleum geochemists in the world, uncovered what could be one of the largest oil basins in the world, with over 100 billion barrels of oil--and that’s what he deems to be a conservative estimate. The oil just needs to be discovered and proven out.
Daniel Jarvie is globally recognized as a leading analytical and interpretive organic geochemist and “Hart Energy’s Most Influential People for the Petroleum Industry in the Next Decade.”
He was a key force behind the giant Barnett gas play and former chief geochemist for EOG Resources.
He’s jumped on this basin because he sees a “very strong, independent junior explorer… sitting on a sedimentary basin that rivals South Texas in a massively underexplored region”.
Earlier this month, Jarvie came out with his own estimates showing the potential for this basin not only almost the size of Switzerland but to be aligned with the Permian in Texas.
The end result of Jarvie's research?
A new – Permian type– basin with an estimated 66-120 BILLION barrels of oil to be generated....
His survey only accounts for 12% of the land.
There is still 88% more that hasn't been quantified
Even better, while finalizing their drilling permits, they used two other non-invasive scientific investigations to support Jarvie's conclusions...
First, a high-density aero-mag survey...
And, second, the identification of a new Rift system that helped create the basin, by noted Ph.D. structural geologist and ReconAfrica Board member Dr. Jim Granath
The results were just as positive...
ADDITIONAL SURVEYS FIND 30,000 FT OF SEDIMENTARY ROCK BASIN FILL
The high-density aero-mag survey in this case revealed the depth of this basin and detailed its floor definition.
This high-tech survey showed up to 30,000 feet of sedimentary rock basin and showed a thick Permian petroleum system.
Those are the numbers that have attracted a “who’s who” exploration and technical team to move this project forward.
- Jay Park, RECO COB and director, is a veteran energy lawyer with tons of Africa experience and was designated Queen’s Counsel in Canada in 2011. He’s advised oil companies and governments in 50 countries, and he has a following of the best of the best.
- Scot Evans CEO, Geologist, oil expert, is an energy industry leader with a combined 35 years of experience with Exxon, Landmark Graphics and Halliburton.
- Daniel Jarvie is globally recognized as a leading analytical and interpretive organic geochemist of Barnett fame, and “Hart Energy’s Most Influential People for the Petroleum Industry in the Next Decade.”
- Nick Steinberger, a world-class drilling and completion expert, then innovative engineer behind the giant Barnett gas play
- Bill Cathey is a geologist to the supermajors, including Chevron, ExxonMobil, ConocoPhillips …
Using the most advanced survey technology known to the industry and decades of experience as a world-class geochemist, Jarvie estimates there could be 120 billion barrels…
Now that the drilling permits have been awarded… and a 25-year lease is locked in…
Three drills are now being moved into place. 400km of 2D seismic is being permitted and shot.
The first 12,000-foot drill is already operating... and the first 6-2 well has already been spudded.
Results should hopefully come in by quarter’s end.
Few analysts cover this little-known stock...
But Haywood Capital Markets predicts a potential 100% upside…
They’ve just increased their price target on this stock from $2.50 to $4.00 amid all the drilling excitement.
After that, expect two more drills to provide information on additional areas of the basin that Jarvie’s research, the areo-mag survey and Haliburton litho-tect survey say is underground.
If that happens, this could be front-page news …
Time will tell, but one thing is certain… smart investors will want to track this story over the coming days.
Other companies looking to win big on the rebound in oil:
British Petroleum (NYSE:BP) is a UK-based energy giant with a massive influence in the industry. BP has been criticized in the past for being slow or late to the environmental cause, but it could now leapfrog its peers. Though the world is still a long way from Beyond Petroleum, it is doing its best to make the leap. In fact, chief executive Bernard Looney believes that we are only 30 years from a net-zero BP. He has promised that in September the company will lay out a more detailed plan that shows the path to that destination. But he has shown already that there is more to his commitment to net-zero than there was to Beyond Petroleum 20 years ago.
“Renewables and natural gas together account for the great majority of the growth in primary energy. In our evolving transition scenario, 85% of new energy is lower carbon,” Spencer Dale, BP group chief economist, said, commenting on the outlook to 2040.
Like the rest of the heavily oil-focused supermajors, BP felt the full weight of the oil price collapse in 2020, and is still struggling to find its feet in the COVID-stricken marketplace. Despite this, however, bullish news is mounting for the company thanks to its diversification efforts and its key bets on natural gas. BP’s share price is already up 20% since the start of the year, and it will likely climb even higher as energy markets level out.
As the largest pure upstream company, ConocoPhillips Company (NYSE:COP) has performed relatively well in this depressed market, generating ample free cash flow and returning a good chunk of it to shareholders. Unlike many of its peers who continued to expand aggressively during the shale boom, COP has taken several steps to lower costs and fortify its balance sheet leading to one of the best cash positions in the oil patch.
ConocoPhillips has been gradually offloading non-core assets, including the sale of its North Sea oil and gas assets for $2.7B and the planned sale of its Australian assets for $1.4B. Its asset portfolio, however, remains healthy.
Conoco has been particularly bullish on oil demand outlook in 2021, and it was one of the few companies which did not partake in the mass-layoffs seen in the industry last year. In addition, Conoco has also seen a fairly decent about of insiders buying into its stock, which is a good sign.
Despite its efforts, however, Conoco was not immune to the sell-off that took the industry by surprise last year. The company saw its share price collapse by 60% in a single month, making it one of the worst-hit in the business. Since then, however, Conoco’s share price has risen by 69%, currently trading at in the $44 range.
Growing demand for the sweet crude oil grades produced by Brazil’s pre-salt oilfields sees Petrobras (NYSE:PBR) focused on developing its pre-salt operations. Brazil’s national oil company has budgeted capital spending for exploration and production activities of $46.5 billion from 2021 to 2025. Those upstream projects being approved for development must have a breakeven price of $35 per Brent or less.
Clearly, while the pandemic has hit Brazil’s oil industry causing production to fall because of savage budget cuts and well shut-ins, it appears to have done no material long-term damage. Demand for Petrobras’ low sulfur content fuel is firm and will grow because of the global push to significantly reduce sulfur emissions.
For these reasons Brazil’s oil production will grow significantly with Petrobras, which for October was responsible for 73% of the country’s oil output, targeting oil production of 2.7 million barrels daily by 2025. And with such surprising numbers, it’s no shock that Petrobras is one of the only oil and gas producers on the planet that is currently trading above its January 2020 numbers.
Enbridge (NYSE:ENB, TSX:ENB) is in a unique position as oil and gas stages its 2021 comeback. As one of the more potentially undervalued companies in the sector, it could be set to win big this year. But that’s only if it can overcome some of the challenges in its path. Most specifically, its Line 3 project which has faced scrutiny from environmentalists.
The $2.6-billion project plans to replace Enbridge's existing 282 miles of 34-inch pipeline with 337 miles of 36-inch pipe. The new Line 3 would have the capacity to move 370,000 barrels of oil per day, alleviating the takeaway capacity constraints that Canadian oil producers have been struggling with for years now. Line 3 is one of two pipeline projects in the works that are—in their unfinished state—keeping Canada's oil industry from reaching its potential.
While this challenge may prove difficult for Enbridge to overcome, the health of the Canadian oil industry is improving, and with it, the outlook for Canadian producers such as Enbridge. The company has already started the year off strong, and if it can continue its momentum, it will likely be able to see a sustained rally in its share price over the course of the year.
CNOOC Limited (NYSE:CEO, TSX:CNU) is one of China’s oil majors. It’s the country’s most significant producer of offshore crude oil and natural gas, and may well be one of the most controversial oil stocks for investors on the market. A label that has nothing to do with its operations, however.
Recently, U.S. regulators announced their intention to de-list Chinese companies from the New York Stock Exchange, going back on their announcement just a few days later. The sustained negative press surrounding Chinese companies, however, has put CNOOC in an uncomfortable position for investors. While many analysts see the company as significantly undervalued, it is still struggling to gain traction in U.S. markets.
It's only natural to wonder why CNOOC was targeted and not CNPC or Sinopec. Lin Boqiang, dean of the China Energy Policy Research Institute at Xiamen University in southern ChinaSo, suspects CNOOC's drilling activity in the South China Sea area is responsible for putting it at loggerheads with U.S. authorities.
It's not yet clear how the growing antipathy between the two nations will affect the U.S. natural gas sector, given that CNOOC is China's largest importer of LNG. But as the Biden Administration prepares to take power, Chinese companies, including CNOOC, are likely to breathe freely once again, and it could be a boon for Chinese stocks.
Franco-Nevada Corporation (TSX:FNV) specializes in securing precious-metal streams, but the company also works in the oil and gas industry. With key assets in some of North America’s most desirable oil and gas plays, including Texas, Oklahoma and Alberta, it is clear that the company has amazing potential in the coming years.
Cenovus Energy (TSX:CVE) is most known for its oil business, but it is also actively investing in renewable energy. More importantly, however, is that it has set truly ambitious sustainability goals for itself, aiming to cut emissions by a massive 30% in just 10 years.
This is one of the most actively traded stocks on the TSX. The potential is certainly here for this oil company, so for investors who are bullish on the return of the oil markets, this is a perfect pick in the Canadian market.
Inter Pipeline Ltd (TSX:IPL) is another pipeline company that holds plenty of upside for the coming year, IPL is particularly interesting for its exposure to the oil sands sector which is sure to see a boost in production as more and more companies focus on increasing output in the new high oil price environment.
The crisis in Venezuela has already seen heavy oil imports to North America drop, and as demand for the product increases and prices for oil continue to rise, companies in the space are sure to see growth.
By. Freddie Lambert
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Forward-Looking Statements. Statements contained in this document that are not historical facts are forward-looking statements that involve various risks and uncertainty affecting the business of Recon. All estimates and statements with respect to Recon’s operations, its plans and projections, size of potential oil reserves, comparisons to other oil producing fields, oil prices, recoverable oil, production targets, production and other operating costs and likelihood of oil recoverability are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties including, without limitation: risks associated with oil and gas exploration, timing of reports, development, exploitation and production, geological risks, marketing and transportation, availability of adequate funding, volatility of commodity prices, imprecision of reserve and resource estimates, environmental risks, competition from other producers, government regulation, dates of commencement of production and changes in the regulatory and taxation environment. Actual results may vary materially from the information provided in this document, and there is no representation that the actual results realized in the future will be the same in whole or in part as those presented herein. Other factors that could cause actual results to differ from those contained in the forward-looking statements are also set forth in filings that Recon and its technical analysts have made, We undertake no obligation, except as otherwise required by law, to update these forward-looking statements except as required by law.
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