The Oil Bonanza China Mistakenly Gave Away For Free
LONDON, April 16, 2018 /PRNewswire/ --
Near the banks of the White Nile, in the mountains of East Africa a Chinese oil company was sitting on what might have been a major oil discovery - a 182-million-barrel probable reserve, with great potential to grow. Mentioned in today's commentary includes: Pengrowth Energy Corp. (NYSE: PGH), Pembina Pipeline Corp. (NYSE: PBA), TransCanada (NYSE: TRP), Franco-Nevada Corporation (NYSE: FNV), Enbridge, Inc (NYSE: ENB).
They spent hundreds of millions of dollars and sunk 13 wells, shot or acquired 6,700 km of 2D seismic, and shot over 1,000 km of 3D seismic. Then - thanks to a weird quirk of Sudanese geology - they gave away the entire African mother lode for free.
Now, a tiny Canadian explorer - Stamper Oil & Gas (STMP; STMGF) - stands to reap a petroleum opportunity unlike anything seen in years. And, they're doing it with an energy industry legend - the one man with a nearly perfect 40-year record of striking oil in the tricky rock of Sudan.
The story of Stamper Oil & Gas (STMP; STMGF) begins with a colossal blunder by Chinese geophysicists on the shores of the White Nile.
Beijing's Huge Mistake
15 years ago, an oil hungry China made Sudan's Al-Rawat Basin a major focus of their multi-billion-dollar energy exploration machine. They spent 10 years scouring the region for oil. Anticipating a massive find, they sank thirteen wells, acquired or shot 6,700 km. of 2D seismic and shot 1,000 sq. km. of 3D seismic spending $100s of millions in the process.
And, while they did strike a little oil - ongoing seismic studies determined their blocks held far less than they had anticipated. Eventually, they gave up. The Chinese turned everything over to the Sudanese government.
The problem? It turns out they were hunting for the wrong kind of oil formation. If they knew what to look for, they might have unlocked a major oil find. Now, Stamper Oil & Gas (STMP; STMGF) is looking to swipe the entire African oil bonanza right out from under China's nose.
And, it's all thanks to a man known as Mr. 99 percent.
Stamper Oil's Secret Weapon
George Fulford is a legend in Sudan, with 40 years of experience and connections at the highest levels of the Sudanese petroleum industry. He's also known as "Mr. 99 percent". Why? Because after drilling 77 wells across the country, he can boast an almost unparalleled success rate in the industry. No one alive knows more about Sudanese oil. So when the Chinese flopped in the Al-Rawat - it's no surprise that Fulford spotted their mistake.
Four years ago, Stamper CEO David Greenway asked Fulford to interpret seismic data that had been done on the huge Al -Rawat oil concession that the Chinese company had let go. Fulford immediately figured out what China had missed.
The Chinese were looking for so-called "structural" deposits - the kind that nearly all oil exploration in the world looks for. Big mistake. That's because the oil locked away in Sudan is not structural, but stratigraphic. These rare deposits are locked in place by cap rock, making them difficult to dislodge, and difficult to find… unless drillers know precisely what they're looking for.
That's where George Fulford comes in. He's worked with stratigraphic oil for years and Stamper Oil & Gas (STMP; STMGF) has now locked down his expertise: adding him to their technical advisory board in January.
The Latest Great Oil Discovery on Earth
Sudapet Petroleum, Sudan's national oil company, upon learning of this report drilled eight test wells. The first five "structural" oil wells proved underwhelming. But the last three "stratigraphic" holes gushed oil at a rate of up to 2,200 barrels per day (bpd), thereby proving out Fulford's hypothesis of a stratigraphic play.
Estimated probable reserves on the Al-Rawat field are around 182 million barrels.
Sudapet has 6,000 bpd ready to produce and will add the 33 wells to be drilled as they come on line, at a projected cost-per-barrel of only $17-$20 (compare that to the $50-$75 it costs to produce a barrel of oil in Alberta).
Stamper can buy 100 percent of SOC for 25 million Stamper shares and pay certain costs of SOC. SOC can earn a 35 percent interest in Block 25 developed oil fields for $40,144,000, and another $26,250,000 for the same participation in the development block of oil fields, plus its share of new well costs. All of these costs will be recovered through the Production Sharing Agreement with the Sudanese Government.
The White Nile Dream Team
The management at Stamper has the skills needed to reinvent the Sudanese oil industry - and capitalize on what might be the one of the last great discoveries on Earth.
- The industry's biggest players already know about George Fulford. He's the gold standard in Sudanese oil exploration.
- CEO David Greenway has two decades of experience in managing, financing and developing growth for junior public resource companies like Stamper.
- Chairman Lutfur Rahman Khan has more than three decades of experience in the oil and gas sector. He's well aware of the difficulties of working in Sudan.
- As Chairman of Arakis Energy Corporation from 1995 to 1999, he oversaw the acquisition of a 12.2-million- acre oil concession in Sudan. Mr. Khan has also been active throughout Canada, Africa and the Middle East and controls several companies in the upstream and downstream sectors.
With over one hundred years of cumulative experience of its people and immense knowledge of working in Sudan, Stamper Oil & Gas (STMP; STMGF) is superbly positioned.
A Multi- Million Gift from China
With the potential of a project like this, with probable reserves bordering 182 million barrels, located deep in the remote border regions of Sudan - drillers would typically be facing hundreds of millions in exploration costs.
But, once again - Stamper has an ace in the hole. The Chinese built up $100s of millions of exploration in their failed search for structural oil deposits. They abandoned these assets as good as new. Stamper Oil & Gas through its partner State Oil are going to help develop them.
Years from now, experts may view the story of Stamper Oil as one of the greatest "scoops" in the history of energy exploration. It may also be one of China's biggest blunders, a potential 182-million-barrel probable reserve discovery.
Other energy companies to watch with huge potential this year:
Pengrowth Energy Corp. (NYSE: PGH): Another company that looks to have halted its falling stock price and is now preparing to ride the bullish sentiment in oil markets. Having shed a lot of excess weight this year in massive asset selloffs, investors can expect a much leaner and meaner Pengrowth in 2018.
Pembina Pipeline Corp. (NYSE: PBA): The North American pipeline industry has had a tough year, but the recent approval of the Keystone XL pipeline route and the growing need for transportation capacity should act as a boon for the sector. Pembina Pipeline Corp. has ridden the oil price crash in an impressive manner, maintaining a good stock price and increasing its dividend.
TransCanada (NYSE: TRP): is a major oil and energy company based in Calgary, Canada. The company owns and operates energy infrastructure throughout North America. TransCanada is one of the continent's largest providers of gas storage and owns and has interests in approximately 11,800 megawatts of power generations.
Franco-Nevada Corporation (NYSE: 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.
Enbridge, Inc (NYSE: ENB), based in Canada's oil sands capital Alberta, is an energy delivery company focusing on transportation, distribution, and generation of energy. Operating in the United States and Canada, Enbridge owns and operates the largest natural gas distribution network in Canada and the longest crude oil transportation system in the world.
By. Ian Jenkins
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This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that the Sudan oil discovery will prove as large and as significant as expected; that probably reserves can become proven reserves and that the reserves can be produced; that SOC will have sufficient funds to acquire and will pay for 35 percent of the developed oilfields of over $40M and then the undeveloped oilfields of over $26M,and that Stamper will be able to purchase 100 percent of SOC; that the Sudan project will be able to produce oil as currently scheduled and at the targeted low costs from its Sudan property; that STAMPER will obtain operating permits on its properties; that the oil when produced by STAMPER will be high quality suitable for standard use; and that STAMPER will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that Stamper may not get TSXV approval for its purchase of SOC; SOC may not be able to pay the costs of acquiring its 35 percent of Block 25; the group may not get regulatory approval for their operations, aspects or all of the properties' development may not be successful, production of oil may not be cost effective as expected; there is substantial political risk and also risk of war in Sudan, which have the potential of disrupting or destroying production and assets; STAMPER may not raise sufficient funds to carry out its plans, changing costs for extraction and processing; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on current data that may change with more detailed information or testing; potential process methods and resource recoveries assumptions based on limited test work with further test work may not be viable; world oil prices may drop; the availability of labour, equipment and markets for the products produced; and despite the current expected viability of its projects, that the oil reserves are not proven or cannot be economically produced on its properties, or that the required permits to build and operate the envisaged facilities cannot be obtained. Currently, STAMPER has no revenues. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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