Start Scientific is a
development stage oil and gas E&P with a portfolio of projects across
Mississippi, North Dakota, Texas and West Virginia, which is helmed by founder
and CEO, Norris R. Harris, an industry veteran with over five decades of experience
exploring, founding, operating and restructuring oil and gas companies. Current
focus for STSC is on expanding their leasehold footprint in opportunities that
can attract financial partners, JV potential and long-term investment from
sector players who are looking to escape low-return drilling programs with
higher all-in sustaining production costs amid sub $60/bbl prices.
With WTI intermediate for
March delivery dropping below $47/bbl (Brent was just over $48/bbl) in late
January 2015, as the European Central Bank announces they are expanding their
asset purchase program even further (now buying government bonds for the first
time), boosting an already strong U.S. dollar, the EIA’s much-anticipated
report on crude supply indicates stockpiles have risen slightly to just under
400 million barrels. Recently, the IMF report on global growth further
reinforced the oil price trend lines with an 0.3% forecast cut to 3.5%, as
China is reporting a 24-year growth rate low of 7.4% and has subsequently
projected a GDP growth target of 7% for 2015. Iraq also announced record
production figures, even as the Iranian oil minister argued their production
sector could withstand $25/bbl.
At the same time, word out
of the World Economic Forum in Davos from OPEC Secretary-General, Abdalla
El-Badri, indicating that oil prices will likely see a reversal soon to the
downward trend begun in June of 2014, couples well with the latest EIA guidance
on U.S. gasoline demand rising through 2015, with projections of a 60k bbls/day
uptick to 9 million bbls/day (after having projected a modest decrease to 8.8M
bbls/day back in December). El-Badri argued that the oil price would not fall
to the sub $30/bbl range amid the current surplus, noting an underlying
necessity among producers to compensate for falling revenues with more
production leading to greased skids in other areas of the markets governed by
energy costs, and the fact that the sector has seen this all before, including
the sharp drop in price followed by a gradual rebound.
Consumption attitudes may
be working their way into the system already given the EIA forecast for
gasoline consumption and the Bank of Canada’s move to cut their overnight loan
rate, which influences car loans and other lending rates, by a quarter point to
0.75%, surprised many analysts. Given that Canada is the biggest exporter of
oil to the U.S. though, this move to reinforce oil prices should really come as
no surprise, despite Canada’s central bank being the first of the Group of
Seven to take this action in response to falling oil prices. Refinery capacity
is already up markedly this year in the U.S., with the EIA indicating a 1%
growth over last year’s figures for the same interval, to 91% of capacity for
the week ending January 9, with refineries churning out some 9.1 million
bbls/day.
This oil price slump is a
prime opportunity for investors to load up on companies that have the right
mindset and approach to development, making the recent announcement by Start
Scientific about expansion of their footprint in Jefferson County,
Mississippi’s Fayette Field via a farmout agreement with Durban Energy, of
particular interest. This latest announcement by the company is further
evidence of the tight-knight relationships established by STSC’s management
with key industry entities and the extensive base of contacts the company has
access to throughout the oil and gas industry, being one of many projects in
Mississippi STSC has the opportunity to acquire with low front-end costs. A
post-payout 52.5% net revenue for Start Scientific on this project is a good
deal and the company intends to drill a new well on the farmout acreage
targeting the Lower Tuscaloosa Massive Sand in the 2.5k-acre Fayette structure.
Originally discovered back in the 40’s and pioneered with a 2k pound flowing
pressure, 229 BOPD well that eventually did over 630k bbls and 2.3 BCF, there
is considerable potential here for STSC to generate revenues and the company
will be able to treat each well separately for payout calculation.
Superb permeability (up to
460 millidarcies) and an average porosity of 28% translates into solid
development economics and should remind investors of the company’s focus on the
Chalk section of the Selma Gas Rock Formation (Anderson Sand) at the Flora
Field over in Madison County, Mississippi. The company announced in early
January that they signed a farmout agreement with BPS Operating Services for a
post-payout 60% working interest in key Flora Field acreage with multiple,
highly economical drilling opportunities. With some 33 old wells that could be
re-entered and recompleted, and all the logistical accoutrements like
production facilities and salt water disposal systems already in place, the
Flora Field is another example of the kind of choice permeability target
geology and premium operational cost metrics STSC is working on in Mississippi.
The company has also
recently announced an option to purchase some 1.5k acres in Matagorda County,
Texas where they intend to offset previous successful production (Harold Hunt
1well, 1984, 700k BOE total) at round 12k feet down to secure the lease from
the city of Palacios (the Airport Lease), after which they intend to go after
the over-pressured Frio Sand down around 16k feet, where modern drilling
techniques can unlock potentially major gas and condensate returns. Applying
modern recovery techniques to proven targets and developing optimal cost
projects in already high-permeability targets, are the kinds of strategic
objectives required to survive and thrive these days. Investors will want to
take a closer look at Start Scientific’s growth strategy and rapidly developing
project portfolio to get a clearer sense of where this development stage
E&P is heading.
To learn more about Start
Scientific, visit www.startscientificoil.com
About QualityStocks
QualityStocks is committed to connecting subscribers with companies that have huge potential to succeed in the short and long-term future. We offer several ways for investors to find, evaluate, and learn more about investing in these companies.
QualityStocks is committed to connecting subscribers with companies that have huge potential to succeed in the short and long-term future. We offer several ways for investors to find, evaluate, and learn more about investing in these companies.
Sign up for “The QualityStocks Daily Newsletter” at www.QualityStocks.net
The Quality Stocks Daily Blog http://blog.qualitystocks.net
The Quality Stocks Daily Videos http://videocharts.qualitystocks.net
The Quality Stocks “Ones to Watch” http://gotstocks.qualitystocks.net
Please see disclaimer on the QualityStocks website: http://disclaimer.qualitystocks.net
No comments:
Post a Comment