Don’t look now… the Federal Government does have an energy plan.
For the past few weeks, years, decades, I’ve been wondering what the United States’ energy plan was and how it would move forward.
Every time you turn around, a major Chinese oil company like CNOOC is buying up resources or building a pipeline to the Middle Kingdom…
But in the U.S. of A., we give billions to corn farmers for ethanol — despite the fact it takes more energy to produce than it creates. We put solar panels on the White House, then we take them down.
We pass restrictive speed limits and, at the same time, require cars to achieve MPG standards… which in turn drive gas-hogging, unrestricted truck and SUV sales through the roof.
And then we destroy the nuclear industry.
For good measure, we waste vast amounts of troops, treasure, and prestige in the political quagmire of the Middle East — all in vain effort to secure the love of the Saudis.
It has seemed to me that America’s energy plan is to muddle about while giving away tax payer money to the politically connected.
But let me be the first to acknowledge I was wrong.
(I know it’s a shock.)
It turns out, someone over at the Department of State is doing their job and not talking about it to the press…
There is something called the Energy Governance and Capacity Initiative (EGCI) — a “multi-agency effort to provide a range of technical and capacity building assistance to the host governments of countries on the verge of becoming major oil and gas producers. The countries selected have significant hydrocarbon resource potential, expect to receive sizable near term financial benefits from the development of oil and gas resources, and have demonstrated political commitment to improving transparency and governance in this sector.”
Maybe they are talking to the press, but people are still having a hard time interpreting bureaucrat speak…
But from what I could gather, this project goes into smaller developing countries like Suriname, Guyana, Mongolia, and East Timor, and helps them manage their resource revenues before the money starts pumping in.
The hope is that this will maximize value, efficiency, and transparency. It will help insure the dictators don’t rob the place blind and revenues are used for national development.
In doing so, the EGCI adds to U.S. energy security. This is why you read about the U.S. Geological Survey (USGS) writing reports on how much oil is off the coasts of Israel, Papua New Guinea, and Suriname.
According to Foreign Policy, “The program clearly is Washington’s answer to Beijing: to get in tight with these countries before China does.”
My readers have made a lot of money over the past decade by investing in small oil companies that are wildcatting in unlikely spots.
Like jackals, they seek out the scraps the oil majors have decided were too risky.
But in risk, there is reward…
The list of ten-baggers is large: Hurricane Hydro Carbons; Tullow Oil; Dragon Oil (not quite a ten-bagger); PetroKazakhstan; and my current Mongolia oil play is up 760% — heading quickly to ten-bagger status.
The trick is to find the companies that got there first and started exploring before the big boys show up.
You may never have heard of Suriname or Guyana, which share a border and a coastline north of Brazil and south of Venezuela…
Oil hot spot
But I’m sure you know that Venezuela is the United States’ fourth leading supplier of oil…
And you’re aware that Brazil found the mother lode just offshore — a discovery which made a ten-bagger out of Petrobras (PBR).
So, it might be logical to think that there is oil off the coast of Suriname and/or Guyana.
In 2000, the USGS had ranked the Suriname/Guyana Basin second on the globe for unexplored oil reserves, estimating the Basin had 15 billion barrels of oil.
But a border dispute and mutual distrust stopped these poor countries from cashing in on this untapped wealth — despite the fact that over that period, oil climbed from $10 a barrel to $147.5 a barrel…
In late 2007, with the help of the United Nations, the countries settled the border and started calling in the big boys like Shell, ExxonMobil, and BP…
This was around the time the commodity bubble popped, hedge funds got hit with massive margin calls, and the major banks got bailed out by the rest of us.
The price of oil fell to $33 a barrel. The economy hit the brakes. And no one was lending to tin-pot wildcatters off the north coast of South America.
This company lost 80% of its value.
Ah, but times change…
Oil has been steady at $75 for over a year now. At that price, almost anyone can make money.
Suddenly, small $110 million dollar companies no one has ever heard of — that are sitting on 2.8 billion barrels of oil, in a country people may have only just heard of during the World Cup — start to get a little attention.
You might call it “a crisis followed by an opportunity.”
I’m doing my due diligence as I write this…
Look for an update on this oil opportunity in the coming weeks.
Have a great weekend,
Energy & Capital
P.S. There is still time to get in on Mongolia. The Mongolian Stock Market is up more than 100% this year. My favorite stock of the year is up more than 760% and just got funding to expand drilling.
A coal stock is pushing 300% in two months — and will IPO in Hong Kong. And there is still time to get in on the country’s largest broker…
I’m fortunate enough to have been invited to attend a meeting with the Prime Minister of Mongolia next Wednesday in New York. I will keep you updated. Click here, and be the first to profit.