Be A SuperStar Energy Investor in 5 Minutes

By
Keith Schaefer
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It has been two years since I was earnestly combing through junior oil producers to find the best investment. But now that oil prices have moved up from $26-$46/barrel since mid-February, there are—believe it or not—a (very) few junior producers who can grow production within cash flow at these prices.

I’ve spent the last two years mostly investing in refineries and SmartGrid stocks—all “downstream” investments. Now could be the time to study the “upstream” producers again.

In this 5 min video, I tell you my top research points. What am I looking for in corporate powerpoints and company financials? And what are the key questions I want to ask management?

There’s no sales pitch here, it’s just a short educational video that prepares you to start investing in junior producers again—without being bamboozled by statistics.

– Keith

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The Most Precious Commodity is Always—People

By
Keith Schaefer
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0

I’ve been following one management team in the oilpatch for years, because I know they are among the best in the business.

They have built and sold junior producers before—in fact, there was a bidding war for their last one.

They are the types of serial entrepreneurs that I love to invest alongside.

These guys live to create value for shareholders—and that’s because they themselves are major shareholders.

The last company that they built and sold looked like this:

1. Very rapid production growth.
2. Prudent management of the corporate balance sheet.
3. Exceptional ability to lock down a world class oil play.
4. Very happy shareholders.

In the last few months, they have locked up an incredible land package that surrounds one of the biggest success stories in the global oil patch.

That’s in addition to them producing millions in free cash flow this year from existing production—that’s right, free cash flow at these low oil prices.

These new properties have locked in massive production growth for the coming years.

But it will grow this year as well—because of its incredibly low cost production.  You see, there is huge upside in this, their new company’s stock price today, simply from the panic in the oil sector subsiding.

Yes even in 2016 with oil prices at ridiculously low levels my OGIB conventional oil pick will grow production.

When oil prices start to rise it will grow even faster—like it did over the past five years as production soared 600%–into the tens of thousands of barrels a day.

That’s right, I’m not talking about a start-up junior that is going from 200 to 1000 barrels a day. This is the Real McCoy.

I believe that oil prices are likely to rise moderately.

I see a range between $45 to $60 per barrel in the coming few years.

The Saudis aren’t going to let the shale producers breathe.

That price environment is perfect for my OGIB conventional oil pick.

All the while, management at shale producers have to obsess about the price of oil.

Management at my conventional oil pick knows that it is built for any oil price.

Get this stock’s symbol RIGHT AWAY—CLICK HERE.

Who Makes the MOST Money if Oil Now Runs to $65

By
Keith Schaefer
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0

Heavy oil stocks will be The Top Investment in Energy if oil keeps gaining past the $45/barrel mark.

The secret is in the numbers.  Let me show you how and why using Baytex Energy (BTE-NYSE/TSX) as a perfect example—because they have both light shale oil in the Eagle Ford and heavy oil up in Canada.

The stocks of light oil producers soared as global oil prices rose from $26-$46 in February and March.  But for investors, the leverage in the next $20 upward move in oil belongs to heavy oil stocks.

That’s because heavy oil has higher fixed costs, but lower variable costs than light oil.  Don’t worry, I’ll keep this simple:

High Operating Costs And A Pricing Differential

 

Below is a table from Baytex’s most recent corporate presentation.  It depicts the company’s operating netbacks in Q4 2015.

The left column is Canadian heavy oil.  The right column is the Eagle Ford.

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“Netback” is the industry term for “profit per barrel”.

The textbook definition would be that an operating netback is net sales revenue generated from selling oil production less the cost of royalties (fee to the mineral rights owner), lifting costs and transportation cost.

It has nothing to do with any of the capital costs of drilling, building pipelines or fracking.  This is the cash flow a company generates from production.

In Q4 2015, Baytex’s heavy oil operation was making a measly $5.73 per barrel of production.   And remember that doesn’t include the expenses related to running the office, paying salaries or making interest payments.

The Eagle Ford did considerably better as it was able to generate netbacks of $18.77–more than three times what the heavy oil business made.

(That’s still not great, but a lot better than heavy oil.)

You’ll notice in the above chart that heavy oil sells for a much lower price than light crude, because it costs more to get the ‘heavy’ stuff out, like the asphalt.

That heavy oil price is called Western Canadian Select (WCS), and its price is often quoted as a discount to the light oil benchmark price, West Texas Intermediate (WTI).

In Q4 2015 the chart shows that difference (or differential) was roughly $13 per barrel.

Secondly, look at the royalty expenses in the chart above.  Notice how the royalty expense in the Eagle Ford is much higher on both a dollar basis and a percentage of revenue basis than it is on the heavy oil in Canada.

These royalty expenses are variable costs.  As oil sales revenue increases these royalty expenses increase on nearly directly proportional basis.

For the Eagle Ford this means that nearly 60% of the operating costs in Q4 2015 are royalties and thus variable.  For Baytex’s heavy oil production only 15% of its Q4 operating costs are royalties/variable.

As revenues rise the majority of Eagle Ford operating expense rises.  But that’s not the case for heavy oil.

The higher fixed operating costs for heavy oil make it uneconomic at low prices. But as oil prices rise, these costs stay constant—the price of oil really has no bearing on the cost of bringing it to the surface.

In Q4 2015 only 40% of the cost for Eagle Ford production are these fixed operating costs while the vast majority (close to 85%) of the operating expense for heavy oil are fixed in nature.

That’s why you see the IRR of heavy oil surpass that of the light Eagle Ford oil as oil prices rise.  Baytex’s corporate presentation shows how the full cycle economics (which DOES include drilling cost) are actually better at $65 and $70 oil for heavy oil than they are for the Eagle Ford.

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Having a high percentage of your costs fixed is a real stinker when your revenues are dropping.  It creates an ever-tightening margin squeeze until there are no margins at all.

When the majority of your costs are variable you will make less money as revenue declines—but at least your costs will decline in a manner that allows you to maintain profitability.

If You Are An Oil Bull – You Should Get Heavy

 

When oil prices are absurdly low like in Q1 2016, heavy oil production just isn’t profitable; this oil should stay in the ground at those prices.  Baytex actually did shut in 7500 bopd of heavy oil production.

The earlier table above showed that Baytex was making only $5.73 for every barrel of production the fourth quarter of last year.  In Q1 2016 Baytex likely won’t even have a positive netback from its heavy oil operations.

That is pretty ugly, and as long as oil prices remain sub $50 it is going to remain ugly.

On the other hand, things get a lot better for heavy oil producers very quickly when oil prices rebound.  You might be surprised just how much better and at what price.

In 2015 WCS averaged roughly a $15 discount to WTI.  If WTI were to get to $75 per barrel and that discount remained at $15, Baytex’s heavy oil netback would look something like this:

3

These are Baytex’s actual netbacks from 2012/2013 when the company was pretty much a pure-play on heavy oil (before the Eagle Ford acreage was acquired in 2014).

With a sales price of $60 per barrel Baytex’s netbacks were $30 per barrel.  That is a lot better than the $5.73 of Q4 2015 or the negative number Q1 2016 is going to generate.

THE INVESTORS’ LEVERAGE

 

Think back to my lead for this story—investors’ leverage is with the heavy oil producers if/when oil goes from $45-$65.  That prices heavy oil—at a constant $13/barrel discount—moving from $32-$52.  And that moves the netback for Baytex’ heavy oil from $14 – $34—that’s almost a 250% move, when the light oil price has only moved 45%!

Everything about heavy oil production makes it leveraged to oil prices.  The low variable costs, the high fixed operating costs and the discount to WTI all mean that more of every incremental dollar of revenue turns into cash flow.

At really low oil prices these heavy oil wells don’t look to good.  At higher oil prices (and $70 per barrel wasn’t considered high all that long ago) these wells look really good.

Throw in the fact that heavy oil production declines at less than half the rate that young shale production does and you can really see why an oil bull should be taking a hard look at heavy oil producers.

Heavy oil is an awful business at depressed oil prices.  But it’s highly levered to oil prices between $45-$65/barrel WTI.

 

 

EDITORS NOTE—Hey, I hope the oil price goes up and investors make bundles of money.  But what if it doesn’t?  Then you’ve got to know THIS STOCK—with the lowest costs, it can still grow—A LOT—at $45 oil.  CLICK HERE to get this best-of-breed company name and symbol.

 

How To Beat The Saudis At Their Own Game

By
Keith Schaefer
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0

We are now into Round 2 of the Global Oil War—where the Saudis maximize their revenue, and keep US shale producers—and their lenders—under the Saudi thumb.

But there are a few very smart men—and I’ll tell you about a few of them in a minute—who think the price war will be over within weeks.

They think global oil prices are on the verge of a huge run up.

If that happens, my #1 Oil Stock will make me rich…in a hurry.  But I’m not counting on any big rise in oil prices because this company beat the Saudis at their own game!

How can anyone do that—beat the Saudis? 

1. By drilling the same kind of reservoir the Saudis have.
2. By having the lowest cost production—possibly in the entire world.  Yes, they may even have lower cost production than Saudi Arabia.  I can prove it to you.  It’s not just me saying this—it’s independent reservoir engineers.
3. And by having no debt.  In fact, this company has a mountain of cash.

They don’t have to slow down production at all if they don’t want to.  With no debt, every dollar of cash flow can grow the company.

No debt repayments.  No interest payments.  Just keep making more money.

It’s my #1 Oil Stock, and now that the global oil price has bottomed and is moving up, the profits are rolling in.  Get the name and symbol—RISK-FREE—right HERE.

Big Profits Can Come in This (Very) Small Package

By
Keith Schaefer
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0

How do you get a golf ball out of a Coke bottle?

It’s a puzzle that Ken Gerbino and his team at Titan Oil Recovery solved years ago, but have yet to commercialize on a grand scale.

He’s hoping a new business model will find some entrepreneurs willing to fund this proven technology.  Titan has had several producers use the technology on field-wide basis.

Titan breaks down oil droplets into smaller ones, so they can escape out of the “Coke bottle”—the analogy of the microscopic pore spaces where the oil is in a conventional oil field.

“The Titan process makes that golf ball into little BB’s and so it can flow through the reservoir a lot easier,” Gerbino said in an interview recently.

Titan’s process uses naturally occurring microbes in the reservoir to break down the oil so it will flow through the pores in the reservoir rock.  This process is what’s called “tertiary recovery”.

The industry calls whatever oil comes out of a well naturally “primary recovery”.  Secondary recovery would be processes like a water-flood or gas flood.  Titan’s microbial technology works with a waterflood, and is considered a tertiary process.  The all-encompassing name for all these secondary and tertiary processes is called Enhanced Oil Recovery, or EOR.

EOR is a $100 billion industry, because it is estimated that 65% of the oil in already discovered fields is left behind.  That’s right—when an oil field finally goes dry, there is still WAY more than half the oil in the reservoir.  The Recovery Factor (RF) is rarely more than 35%, and in tight/shale oil it’s often only 5-10%.

The Titan Process is designed to increase the RF—at a very low cost per barrel.

The process involves feeding microbes, which are single cell organisms so tiny that you could fit millions of them through the eye of a needle.

Titan analyzes a sample of the reservoir for the microbes, and then injects a custom food for them down the wellbore, usually in one day.

These nutrients create a dramatic response in the microbes that are already in the reservoir.

The microbes multiply by 100 million to a billion times, grow larger and then shrink dramatically.  The microbes also have a change in the skin structure which results in them seeking to move away from water and rock and attach themselves to droplets of oil left in the reservoir.

The oil price is rising again, and the lowest cost producer in the world is ready to open the taps.
Low costs = high profit margins, and this company’s stock will reap the rewards.
And with no debt—every dollar goes right to the bottom line!

Click HERE for the ticker symbol of my #1 Oil Stock

With billions of microbes pushing themselves up against the oil droplets—they, deform and break apart, making them into smaller micro-droplets. The microbes also create a more slippery surface for the oil droplets to squeeze through the pore spaces in the rocks as they now are between the rock grains, water and oil interface.

Imagine a golf ball being stuck inside a Coke bottle.  The oil droplet is the golf ball and microbes break it into smaller pieces that fit through the neck of the bottle.

 
 

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The feedings should take place every 4-6 months.

The process works best on conventional fields where a waterflood program has been applied.  Gerbino and Titan believes that up to 25% of the oilfields in the United States and 17,000 to 20,000 fields in total around the world would be suitable for the Titan Process.

Now, everybody does waterfloods—even in tight oil.  But only one producer in the world–Pertamina, Indonesia’s National Oil Company (NOC)–is now using The Titan Process—even though Titan has had some success convincing companies to give the process a try.  Three of them (Husky Energy, Venoco and Atinum) each published SPE (Society of Petroleum Engineers) papers detailing their results.

All of which were very positive.  But even after positive results those same companies have not adopted the Titan Process in any sweeping manner.

In total the Titan Process has been applied over 300 times to over 100 different wells in almost 50 fields—and the average result has been a 92% increase in production.

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The company says their process costs only $6-$10 per barrel of incremental oil recovered and I verified that figure last week when I spoke with a field manager who used the process successfully when they worked at a major oil producer.

I asked them—and they wished to remain anonymous—why they chose the process:

“It’s low startup capital for mature water flooded areas, and you don’t need a lot of surface equipment like with a polymer flood where you need something to carry a base (like water or alkaline) and it’s a lot of facility upgrades and pipeline work required beforehand; whereas with a Titan process it’s just the nutrients…… its lower risk with higher reward.”

Gerbino says there are obvious financial rewards for producers, even at today’s low prices.

“Our numbers we have are, if:

1) an oil field is declining at 10%
2) and the oil price is $40
3) and the Titan process can increase production by 30% for the first 2 years only
4) and with feeding the microbes every 6 months
and then you go back down to that decline slowly and it’s a $20 per barrel lifting cost, the NPV of that field doubles after 2 years. It’s pretty cool. This would be at current rates.”

But the producer mentioned above did not continue using the process. Now PERTAMINA the world’s 23rd largest oil company is using the process.  I asked Gerbino why the slow adoption rates from oil customers.

“It was our fault. We didn’t have advertising or a marketing budget or any salesmen.

“And a lot (of engineers) were trying this on 1-2 barrels a day wells to see if they could get a miracle out of it. When they didn’t they didn’t want to go any further.”

Another issue for Gerbino is that it’s mostly large, conservative, staid producers who own the big conventional fields are very slow to adopt any form of new technology.

That has caused Gerbino to now set his sights on Titan acquiring its own oil fields and getting all the upside themselves.  Their balance sheet doesn’t allow them to go bid on assets immediately, so the company is now in the process of arranging  external capital to help finance this plan.

Gerbino says this way Titan can make sure that the process is directed at exactly the right types of oilfields applied correctly.  With the oil industry in disarray he believes there is great potential to pick up unwanted, high cost oil fields for very reasonable prices.

Then Gerbino and his team can start turning golf balls into bbs and get the oil flowing—for $10/barrel or less.

www.titanoilrecovery.com

Keith Schaefer

You’ll Never Guess Who is the Lowest Cost Producer in the World

By
Keith Schaefer
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0

The Saudis want control of the oil market back, and they are lowering prices to weed out the high cost producers.

But I found a western producer with even lower costs per barrel than the Saudis.

That’s right—someone who beat them at their own game.  Just like the Saudis, this company can turn on the taps and start raking in big profits whenever they want.

I’ll prove it to you in these two charts.  The first one, from the Wall Street Journal, estimates the cost of production of major oil producing countries:

1

Here’s a chart from the financials of my #1 Oil Stock—these numbers are verified by independent reservoir engineers:

2

You are reading that right—for their proven (IP) reserves, they can get those out of the ground for TWO dollars a barrel.

That’s less than half what the WSJ says it costs the Saudis.

This Company Beat The Saudis at their own game.

And as the global oil market rebalances now, prices are going higher.  With the lowest cost production, this company will have the fattest profit margins of any producer in the world.

I just bought more stock this week.  This is a stunning play, and the profits are just starting to roll in.

If I could only buy ONE oil stock, this is it.  Get the name and symbol—RISK-FREE—right HERE.

Is There A Perfect Storm Coming for Natural Gas Prices?

By
Keith Schaefer
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0

Even before Tuesday’s big jump in natural gas prices, I was intrigued to see some of the leading natgas stocks in the US hold up or go up on days natgas was down this week, like EQT, Southwestern, and Rice Energy, (which my colleague Bill Powers profiled at $9.47/share on Feb. 9 and is now up 80% in two months)…I thought traded quite bullishly last week week.

Fundamentally, there is a very bearish 1 Tcf (TRILLION cubic feet) YoY surplus of natgas inventories in the US.  But investors have to remember that bloated inventories are today’s news, and the Market tries to price in what it thinks will happen in the future, 6-9 months from now.

The Street is seeing natgas production almost flatten in the US so far in 2016, after jumping 4-5 bcf/d each of the last two years.  That is somewhat bullish, though production flattened in 2013 as well before making those big jumps in ’14 and ’15.

Overall natgas demand has steadily kept up (mostly) with production, and is really the untold story of this market over the last few years.

And now the Weather Gods could co-operate with the bulls.  This summer is expected to be hot–like 2012 hot–which saw corn yields shrivel and corn prices soar.   Natgas prices also doubled off the lows from April 2012 to December 2012.

A hot summer isn’t near as bullish as a cold winter (3-4 bcf/d more demand for hot summer but up to 10 bcf/d for a cold winter), but we may get a cold winter coming (2016/2017) as the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Centre came out on April 14 saying there was a good chance of a La Nina weather system for next winter.

La Nina is kind of the opposite of El Nino (not 100% different), especially along the heavily populated and high natgas-consuming region of Chicago to the NE US coast.

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A colder winter can mean up to 10 bcf/d difference in overall natgas usage from Nov-Mar, which is what the natgas analysts mean when they say “winter”.  That’s a lot; over a 10% swing at 90 bcf/d.

2

La Nina means the Pacific Ocean is getting warmer.  El Nino means eastern Pacific waters are colder (just off Mexico).

And in the Atlantic, a huge mass of cold arctic water the northern part has kept the Gulf Stream quite far south, so there is a build-up of warm—very warm—waters there.

That could mean storms and hurricanes.  Hurricanes used to be a big deal for natgas prices because the Gulf of Mexico (GOM) used to provide a higher percentage of overall US production.  Now it’s just a hair over 4%.

GOM natural gas production is down about 50% since 2000.  That will increase in the coming years as there was a dearth of new production after the Macondo/BP oil spill in April 2010—but several new projects are coming online in the coming two years.

So if there is a really warm summer this year, that could mean 4 bcf/d extra demand, and over 150 days that would more than half the current 1 Tcf YoY storage surplus—and allow low cost producers to lock in some great profits.

Costs for natgas producers have come down a lot—more than people expected.  I see sub $1/mcf all in costs for some producers now.  I saw how Canadian Montney producer Painted Pony (PPY-TSX) hedged like mad at $2/mcf recently because they make good money there.

So between warm Atlantic waters this summer and La Nina this coming winter from the Pacific, natgas investments in the coming 1-3 months could be very lucrative.  Does that create The Perfect Storm for natgas stocks?

As in oil, leading US natgas stocks have had a big jump in the last four weeks.  As an investor I wonder how much of that is the Dow pulling everything up and how much is really natgas related.  But charts of leading stocks in both commodities are surprisingly similar—strong bounce off mid-February lows through the short and mid term moving averages all the way up to the 200 dma.

Now the moving averages are narrowing quickly—and that usually presages a big move of some kind.  If I had to guess now, I would say that it would be up.

But fundamentally, very little if anything has changed recently.  Perhaps the Market is saying that any month that US natgas production is only up 1 bcf/d YoY is bullish.

The stocks of Canadian natgas producers will rise in some sympathy, but Alberta and B.C. are at the back of the pipe so to speak, far from major markets.  That means higher transportation costs, which means lower realized prices for producers to stay competitive.  Lower realized prices=lower stock prices.

And the Pacific Northwest got buckets of rain this winter, about 130-150% of normal, so hydro-electric supply should be a lot more this year, and Canadian natgas filled that demand the last couple years. This is a bit bearish for Canadian natgas.

Despite Canadian producers like Painted Pony doing an excellent job reducing costs down to sub $1/mcf costs, I see the first Big Move in natgas stocks being in the US.  Or has it already happened?

EDITORS NOTE–Who would have thought in January 2016 that Tier 1 oil and gas stocks would double from February to April?  What happens now?  Lucky for me, I know the one western producer that has lower costs than the Saudis.  Nobody else can grow like this company at $45 oil.  And if oil goes to $70, it will have the largest profit margins of any producer I know.  Get Ready.

The 2 Questions You Should Ask About Oil Stocks Now

By
Keith Schaefer
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0

Oil is up.  Consensus has changed from a supply glut to a more balanced market by the end of this year—but the Market is in full swing pricing that in now.

Energy producers across the board have had a good run in the last month, and it could continue—both Brent and WTI prices rose above their 200 day moving average (dma) for the first time since November last year.

So now you want to buy some oil stocks.

But which ones?

To introduce some discipline into this process, here are a couple questions you should ask about any oil stock your broker pitches you, or an idea you come up with yourself:

1. Could this company get a “bought deal” financing done tomorrow? A “bought deal” is where the stock broker firms guarantee the producer/public company their money and then try to sell said financing to their retail and institutional clients.  If the market views the company as undervalued, or having great growth prospects, and the answer is yes, then that means there is good demand for the stock and it’s likely going higher.

2. This second question is more geared to savvy oil investors—Would you take this company private today at its current valuation?  Would you buy the entire company for what it’s trading at today (and don’t forget about the debt!)?

It’s an interesting question because of a couple factors.  One is that many of the high quality names are trading at all-time high multiples of cash flow—because right now there isn’t much cash flow, even after oil has jumped 50% since February.

The share prices of high quality oil stocks didn’t go down much over the last two years, as energy investors high-graded their exposure to the sector.

That means they sold all the Tier 2 and Tier 3 producers—ones with higher debt, or just with management teams that they knew would not be able to raise money if needed in a prolonged downturn (which we got)—and bought more of the high quality, leading oil stocks.

In the US, think of a company like Synergy (SYRG-NYSE).  The stock held up incredibly well through 2015, only falling in early 2016 when new CEO Lynn Peterson (formerly of Kodiak, bought out by Whiting for $3.8 billion at the top in 2014) said he was going to do lots of M&A at the bottom of the market—a smart idea but scared the daylights out of investors.

Two equity raises totaling 30 million shares later, the stock has recovered, and they have no debt, a proven CEO but trade at 18x cash flow.  Great company—but is it worth that?

 

syrg

Another example would be Cabot Oil and Gas (COG-NYSE).  It’s considered one of the top US gas producers—but at 22x cash flow would you buy it here? Twenty-two. Its large production gives it good leverage to rising natgas prices.  Would the Market finance it here?

Equity raises are another thing investors need to be aware of now (besides the oil price ;-)). Many of these leading junior and intermediates have diluted their shareholders with new equity raises—and it could be awhile before that larger share count figures into their per-share production and cash flow. The Market pays for per-share growth; not absolute growth.

The Market could see stagnant to lower per share cash flow in the coming 2-3 months than a year ago because these equity raises have diluted shareholders so much—despite rising commodity prices.

In Canada, look at Spartan Energy (SPE-TSX) or Raging River (RRX-TSX).  In Rick McHardy and Neil Roszell respectively, you have two proven Tier 1 CEOs who have built their companies into the lowest cost oil producers amongst all the junior and intermediate oils in Canada.

But Spartan’s recent 40 million share issue took the company to more than 300 million shares out—for only 9300 boepd production.

spartan
The issue for investors buying The Best is…the share prices of Tier 3 companies have been dramatically outperforming, and will continue to do so as oil prices rise.
But has the Market given them too much credit too soon?This is especially true of large, debt laden producers in both Canada and the US. Natgas producer Chesapeake (CHK-NYSE) and Canadian oil producer Baytex (BTE-TSX/NYSE) has quadrupled off their lows of $1.56.  Oil producer Halcon (HK-NYSE) is up 500% and Encana (ECA-TSX/NYSE) has more than doubled.
chesapeake

But if you could afford to (hey, I get we’re talking tens of billions of dollars), would you take any of them private—along with all their debt—and make them your own at today’s stock prices?

These are companies that are former darlings with tens of thousands—sometimes over 100,000 boepd—and massive debt.  In most instances, it was because of big acquisitions in 2014, mere months before oil started its decline.(This goes to show that senior management of big producers—in all commodities—often have no clue where the underlying price of their production is going.

The same thing happened to copper producers in 2004 and uranium producers in 2007.)

The share prices of these (now) Tier 3 companies have been crushed some 80-95% from their highs just two years ago.But if oil does stay in the $40-$50/barrel range, cash flow will remain very tight, and these companies will give investors massive losses at some point later this year.

Just this week, the Energy Information Agency (EIA) in the US said it expected the oversupply in the global oil market to come down to 500,000 bopd, from what it says is the current 1.5 million bopd.

That will give a lot of the highly levered, debt laden producers a boost.  Investors love them, judging by the charts. But the Market is not rushing out to finance these companies—yet.

But would you bet your net worth on that happening?  Just asking.  And you should ask that too.

EDITORS NOTE–I’m just finishing an updated report on—The Company That Beat OPEC.  It’s an oil producer with as low or lower costs than the Saudis.  They are ready to turn on the taps as well–and with such low costs, theirs is the most profitable production in the western world.  If you want any exposure to oil, this company gives incredible leverage–with NO debt.  It’s my #1 Oil Stock. Stay tuned.

Keith Schaefer

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