Home Page : www.otcjournal.com
Email Questions or Comments To:
[email protected]
To
OTC Journal Members:
 |
Energy
Stocks- The NewTech Stocks? |
 |
There are many who believe $40 a
barrel oil is here to stay (over $44 today- energy stocks were on fire).
Certainly, the War with Iraq was the catalyst which sent oil prices skyrocketing,
but the surging prices may simply be reflecting the true supply/demand
dynamic. OPEC does not want to see oil prices this high. They know it hurts
their customers' economies, but there may be nothing they can do about
it despite promises to increase production.
I have recently read opinions from
several credible sources that energy stocks could become the tech stocks
of the '90's. I have noticed a few microcap energy stocks trade extremely
well even in this anemic market climate.
In short, the energy exploration
and production group cannot be overlooked in a good microcap portfolio.
Our one contribution in that arena, Hyperdynamics (OTC BB: HYPD)
has done well, and I know many of you like the long term prospects for
the company.
There will be significant exploration
in North America for new energy resources. New technologies are opening
up previously untapped reservoirs. The shortages are eye opening. There
were more than 4,000 rigs drilling for energy in North America in the early
'80s - today there are 1,200.
There are currently 5 liquefied natural
gas (LNG) plants operating in North America. We need 25 LNG plants to keep
up with natural gas demand. Canadian oil sands production needs to climb
to 2 million barrels a day (currently at about 500,000). Until we achieve
these targets, energy prices will continue to trade in bands 50%-100% higher
than "normal."
Doing the math, this means highly
productive energy exploration companies with 20% more energy resources
growth than they extract each year will double in value every two to three
years.
|
Coal
Bed Methane: A Relatively New Source Of Natural Gas |
|
The natural gas which can be extracted
from Coal Bed Methane is one of the most current technologies which will
help alleviate natural gas shortages.
Described as "sweet gas", CBM contains
up to 90% methane. This high level of methane makes it directly available
for consumption. At the end of the 80’s CBM gas was almost nonexistent.
However, by last year the production of CBM has grown to 9% of the total
US gas production.
The new technology you see pictured
here, which uses water pressure to extract natural gas from ancient coal
beds has changed the entire dynamic of CBM exploration.
The new CBM extraction technology
has led to an explosion of CBM related exploration and production. Despite
being only 9% of the total US Production, the table indicates the number
of CBM wells in the lower 48 states has grown for virtually zero in the
late '80's to a robust 10,000 plus wells in production by the turn of the
century.
The natural gas shortage is a function
of the regulatory mandates combined with regulatory restrictions on exploration.
The demand side reveals 300 plus new power plants in the US that
run only and natural gas, yielding a market environment which leaves us
above $6 per MCF for the foreseeable future.
 |
Torrent Energy
(OTC BB: TREN) Sets The Table For a Major Development Project |
|
Torrent Energy was formed
for the express purpose of developing a CBM (Coal Bed Methane) project
in the Coos Bay area in Oregon, along the Oregon/California border. Here's
a map of the area. The original with version with the keys was simply too
large for today's edition, but this gives you the general idea.
To date, Torrent has acquired
the rights to 60,000 CBM rich acres in the Coos Bar area, and intends to
acquire 40,000 more acres before year's end.
Using results from several test wells
which were drilled in 1993 and 1994, independent reservoir engineering
firm Sproule Associates (one of the largest three in North America)
estimates there are approximately 780 bcf (billion cubic feet) of CBM "Natural
Gas In Place" contained within Torrent's first 50,000 acre parcel. This
is not to be confused with proven reserves. Proven reserves are what Torrent
will set out to establish over the next several years.
Most analysts estimate 1 bcf (billion
cubic feet) of natural gas has an unextracted value of approximately $1
million. Therefore, if the 780 bcf of natural gas Sproule Associates estimates
is in the ground becomes proven reserves over time, this property could
have a value ranging upwards of $780 million. This estimate was
provided on the first 50,000 acre parcel the company acquired. Since then,
they have acquired an additional 10,000 acres, and are looking to acquire
another 40,000 acres before year's end.
|
Enter
Geroge Hampton: Bringing Credibility to the Project |
|
Today, just after the market closed,
Torrent
Energy announced an event which will bring a lot of credibility to
this company and its project. Torrent announced George Hampton
has joined the management team and become a board member of Torrent.
George Hampton was the chief
engineer and geologist of Pennaco Energy. You are looking at a chart
of the stock, which was born as a small company on the bulletin board.
Pennaco was a CBM property
developed in the Powder River Basin region of Wyoming. As you can see from
the weekly chart as measured from 1998 to 2001 when the company was bought
out, the stock traded from a low of $3 to a subsequent high of $19.
Early estimates for this region only
had the "Total Gas In Place" at 2 to 4 bcf per section. Torrent
Energy's Coos Bay property is estimated at 10 bcf per section.
According to his resume, George
Hampton served as the Project Manager and Senior Geologist for Coal
Bed Methane development of 500,000 acres for Pennaco Energy, including
geologic supervision of the drilling of nearly 75 CBM wells, and negotiation
with surface owners (Private and BLM) and coal mines in the Powder River
Basin, Wyoming.
It took three years to develop this
natural gas project. As the company developed wells and started to generate
revenues, they were able to upgrade their listing from the Bulletin Board
to the American Stock Exchange.
On December 22, 2000, Pennaco
Energy was bought out by US Marathon (NYSE: MRO) for $19
per share, netting 1998 shareholders about a 500% return on investment
over the three year period.
|
Conclusion |
|
Energy stocks are a must for your
microcap portfolio. Many analysts believe energy stocks will become the
tech stocks of the 90's. The supply/demand dynamic is extremely compelling.
Torrent Energy is just getting
rolling. Early independent estimates have the potential value of the "Total
Gas in Place" at $780 million. Their program to prove out
the reserves begins this year. They are scheduled to submit drilling applications
to the State of Oregon in September. Currently, they are estimating the
first wells will be drilled in November. Sproule also estimates it could
take as many as 300 wells to fully develop the area.
They expect to complete the acquisition
of an additional 40,000 acres in September.
George Hampton, senior geologist
of huge CBM shareholder win Pennaco Energy joined the board today
and is expected to become intimately involved in the company.
At the same time, construction is
being completed on a natural gas pipeline originating out of the Coos Bay
region, thereby assuring a mechanism for delivery of the natural gas.
There are approximately 15 million
shares issued and outstanding, yielding a market cap of about $13.5
million at the closing price of $.90. All in all it seems like
a speculation with significant upside as the potential value of the natural
gas in the ground equates $780 million according to independent
reservoir firm Sproule Associates.
I'm not sure how much effect the
George
Hampton announcement will have on the stock. It seems it should at
least be able to trade back to its previous high of $1.25. The reasonable
market valuation, coupled with the industry group, early reviews of the
potential by a highly regarded independent third party, and the credibility
of the management team make this one a great speculation in your microcap
portfolio.
Here is the complete text of today's
press release for your review:
| Press Release Source:
Torrent Energy Corporation
Torrent Energy Announces
Appointment of CBM Executive to the Board of Directors
Tuesday August 3, 4:05
pm ET
VANCOUVER, B.C.--(BUSINESS
WIRE)--Aug. 3, 2004--Torrent Energy Corporation ("Torrent" or the "Company")
(OTCBB:TREN - News), is pleased to announce that George L. Hampton III
has joined the board of directors effective immediately.
Mr. Hampton is a highly
respected professional in the coalbed methane ("CBM") industry. Since 1980,
he has been extensively involved with the evaluation and exploration of
multiple CBM projects with companies such as Amoco, TEC Resources, Pennaco
Energy and JM Huber, primarily in the United States. Since 1986, he has
also been active through Hampton & Associates in managing CBM projects,
supervising drilling of CBM wells, conducting feasibility studies, and
generating CBM prospects. Mr. Hampton is a qualified geologist with a Masters
of Science from Brigham Young University. He is also one of the founding
members of GeoTrends-Hampton International, LLC ("GHI"), which secured
the Coos Bay Basin prospect (see June 23, 2004 press release).
"The addition of George
to the board," said Thomas Mills, President of Torrent, "will complement
the engineering skills of our other director, John Carlson. Since our operating
subsidiary is being managed by George's colleagues in GHI, Steven P. Pappajohn
and Thomas J. Deacon, this appointment brings together a proven team, and
should ensure continued development of our CBM project in Oregon on an
aggressive schedule."
Mr. Hampton offered these
comments: "I am delighted to join the Torrent board and be actively involved
in the Company's exciting future. We have assembled a team of industry
veterans to move this project forward and to determine the economic viability
of this project."
About Torrent Energy
Corporation
Torrent Energy Corporation
is engaged in the acquisition, exploration and development of natural gas
and coalbed methane properties in the United States. Its current focus
is on the exploration of the Coos Bay Basin project in Oregon.
On behalf of the Board
of Directors,
TORRENT ENERGY CORPORATION
Thomas Mills, President
Safe Harbor Statement
This news release includes
statements about expected future events and/or results that are forward-looking
in nature and subject to risks and uncertainties. Forward-looking statements
in this release include, but are not limited to, continued development
of the CBM project on an aggressive schedule. It is important to note that
actual outcomes and the Company's actual results could differ materially
from those in such forward-looking statements. Factors that could cause
actual results to differ materially include general factors that affect
all companies that explore for coalbed methane gas, such as the uncertainty
of the requirements demanded by environmental agencies, the impact of competitive
products and pricing, the fact that coalbed methane gas extraction and
production is still partly experimental, the price of oil and gas, and
specific risks such as the Company's ability to raise financing for acquisitions
or operations, inability to hire qualified employees in a timely manner,
and the likelihood that no commercial quantities of gas are found or recoverable.
Readers should refer to risk disclosure in our 8-K dated June 22, 2004.
--------------------------------------------------------------------------------
Contact:
Torrent Energy Corporation
Thomas Mills, 604-639-3178
--------------------------------------------------------------------------------
Source: Torrent Energy
Corporation |
Charts Provided Courtesy
Of TradePortal.com |
