LONDON, Jan. 12, 2021 /PRNewswire/ -- 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 … Mentioned in today's commentary includes: British Petroleum (NYSE: BP), ConocoPhillips Company (NYSE: COP), Petrobras (NYSE: PBR), Enbridge (NYSE: ENB), CNOOC Limited (NYSE: CEO).
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 million, but to two other world-class basins. In fact, it could become the biggest oil story of 2021… And the oil and gas rights to the ENTIRE Basin is owned by one small under the radar oil company that is quickly making waves amongst investors called Reconnaissance Energy Africa (RECO.V, RECAF)
One of the key men behind what could end up being the onshore exploration play of the decade, former Navy 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.
This might soon become the largest oil play in the last 20-30 years...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 in to 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 Texas and 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.
This is 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. And now Recon Africa (RECO.V, RECAF) has locked up what even WoodMackenzie sees as a potential NEW Permian basin with conventional oil and gas potential… for 25 years.
THE GEOCHEMIST GENIUS WHO UNCOVERED IT
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....
And, the craziest fact of all? 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 PHD 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 with Reconnaissance Energy Africa (RECO.V, RECAF)
In short…Using the most advanced survey technology known to the industry and decades of experience as a world-class geochemist, Jarvie estimates 120 billion barrels…Investors will find out soon as Reconnaissance Africa's 3-test drill results come in.
$98 MILLION COMPANY HOLDING ALL RIGHTS TO POTENTIALLY THE NEXT PERMIAN BASIN
Reconnaissance Africa could be the best oil play for 2021. Now that the drilling permits have been awarded… and a 25-year lease is locked in…Three drills are now being moved in to 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 come in by quarter's end.Few analysts cover this little-known company...But Haywood Capital Markets predicts a quick 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.
OIL MAJORS LOOK TO CAPITALIZE 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 the company is 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.
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.
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. 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.
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) 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.
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.
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) 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.
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.
By. Freddie Lambert
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