Source: Andrew O’Donnell for Streetwise Reports 08/29/2018
Andrew O’Donnell of Supercharged Stocks delves into an oil and gas company that is in the midst of acquiring land in the Eagle Ford formation in South Texas.
Oracle Energy Corporation: “Effective at the open…. the company’s shares will resume.”
The incredible advantage of being a newsletter writer for equities is that you build relationships and networks with dedicated and brilliant people, research-oriented analysts that are covering a wide range of companies. These networks are great sounding boards and resources. This network spreads out, reaches throughout regions, countries and continents focusing on various sectors, commodities and companies.
I learned a valuable lesson early in my career: always listen to people smarter than you, or have more experience and more success than you. It seems to work! So, when a successful and smarter person called me and mentioned Oracle Energy Corp. (OEC:TSX.V; OECCF:OTC), I was going to listen and take notes.
Oracle Energy was handed to me with a beautiful bow on it. Presumably as a belated birthday present. This person said, “Andrew, I believe this company checks a lot of boxes in your model; however, it is not in mining but oil and gas.”
He told me the basic story and I went digging. I sifted through the news releases and saw the opportunity. I called him up and said: “It is a resource in the ground that you drill for…same thing!”
With that silly comment and a heartfelt thank you, I pulled up the chart.
Now, I am not a technician. Analyzing charts is not my specialty, but I did show this chart (without the stock symbol) to a technical analyst; greedily enthusiastic would be the best description of his reaction. Even with my rudimentary understanding of charts, it was clear. This stock is posed to climb. It wants to. It is primed to. My hope is that a technician will see this article and chart above and will follow up with a full analysis of Oracle, but even I can see the resistance lines, the two cups and other markers that scream opportunity.
Let’s jump into the fundamentals.
Geopolitically, accessing and shipping oil and gas assets is becoming onerous. We hear President Trump speaking out against the EU purchasing oil and gas from Russia. We read that issues are still developing in Iran and the Middle East with sanctions, escalations of rhetoric tensions at a tipping point. Venezuela is in complete disarray and getting hammered economically as it continues down its socialist disaster. We know all the problems with mining in most of Africa and the news out of places like South Africa is dismal. Money coming back home is attractive and having access to production in the U.S. is going to be key. In the end, Oracles is coming out of the gate spending $5 million and getting strong production with enormous potential fracking and upside potential. Money is coming home, and assets are being developed back in safe zones.
Back at the end of last year, December 27 to be exact, Oracle announced a share consolidation. That decision can be upsetting for existing shareholders, but as new shareholders this is good news. In doing so it was looking at an acquisition back in the U.S. Money coming back home, a story I love, and a termination of assets in Africa, which is perfect. The risk in most of that continent is beyond consideration right now.
There were three step rounds of financing: the first was $2.5 million at $0.075 and $1.5 million at $0.11 a couple of months later, and one final financing on June 5 for $1,.5 million. The total was $5.5 million. Press releases from Oracle mentioned that it had some obligations and debts of a couple hundred thousand dollars, but more importantly it started hinting at a major purchase in Texas. The company was restructuring, selling the “exotic risk” in Africa and it announced an evaluation of an acquisition in the prolific Eagle Ford Shale Formation in Eagle Ford district of South Texas.
Quickly a new vision was taking shape. The announcement from this past Monday, August 27, announcing the purchase of this property was the actualization of an incredible plan with potential. It began back at the start of the year with this evaluation leading to a partnership with Petrie Partners as financial advisors. If you do not know this boutique investment bank, you should research them. It is a specialist bank and its advisors with Oracle Energy management achieved an excellent result. Petrie Partners is an alliance of astute bankers from Bank of America Merrill Lynch and Petrie Parkman & Co. The senior members of the Petrie team bring more than 25 years of energy investment banking experience, including over 300 energy M&A and capital raising transactions representing over $350 billion of aggregate consideration. This is the team that Oracle partnered with to aid in the transaction.
Oracle and Petrie negotiated for a 10% down payment on a $5 million land package with a producing asset, more land and the following highlights:
- 2,547 net acres of mineral lease rights of which 613 acres are to the base of the Buda, 640 acres are to the base of the Eagle Ford and 1,294 acres are to the base of the Austin Chalk.
- Six producing wells, seven shut in wells and the production infrastructure situated on the properties.
- The asset is producing approximately 70 boepd and has the opportunity for well workovers to significantly increase production.
- The July production was 1,273 barrels of oil and 5,020 thousand cubic feet of gas.
- Pursuant to the terms of the purchase agreement the company will acquire a 100% working interest and a
- 74% net revenue interest.
- An option on a second asset done with four arm’s length private entities, which own acreages adjoining the assets. This option adds 6,310 net acres of which 4,923 acres are for all depths, 613 acres are to the …read more
From:: The Energy Report