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High Impact Oil Story Unfolding: EnerGulf About to Complete Final Stage of Pre-Drilling Work |
Click here for a free real time quote of EnerGulf The last time this happened EnerGulf (TSX-V:ENG) shares climbed from 70 cents to more than $4 per share. In late 2007 EnerGulf was one of the hottest stocks in the world. At the time the company, which owns some very high-impact oil targets in Africa, acquired an extensive seismic survey, laid out a drilling plan, and drilled its first exploration hole. In the build-up to the exploration results, shares of EnerGulf climbed 470% in two months. Now, EnerGulf is back at it. And, as you'll soon see, the company is going through the exact same steps as before and, if history rhymes, it could get very exciting for EnerGulf very soon. The High Rewards of High-Impact Oil The reason there's so much excitement surrounding EnerGulf shares is because its oil targets are absolutely massive. EnerGulf is a relatively small oil and gas explorer which has acquired interests in two of the most highly prospective oil claims in Namibia and the Democratic Republic of Congo (DRC). They're some of the largest “high-impact” oil targets in the world. They are called high-impact because they are risky, but if they hit, they can hit something big. DRC: EnerGulf's Lotshi Block project is in the DRC. See map attached. This project consists of 500 square kilometers of territory in the highly prospective salt basin in the western DRC. EnerGulf has a 90% interest in the project and is the operator. The block is surrounded by oil country. The Lotshi Block is on trend with the massive M'Boundi Oil Field in Republic of Congo. The M'Boundi has an estimated 1.4 billion barrels of oil in place and produces more than 50,000 barrels per day. It was recently purchased by ENI, the Italian super major, for over $1.5 billion. Guess what, ENI just bought into the Ndunda block directly south of the Lotshi Block. ENI will be the operator and is reported to earn a 55% interest for drilling 2 wells and paying 55% of the costs to date. Also, two encouraging oil discoveries have recently been drilled next door, on the neighbor's block contiguous to the west, in Cabinda, Angola (South Block). The first well struck oil in the Chela sand formation and tested light oil at 2,275 barrels per day. The second well encountered a 21 meter gross hydrocarbon column and will be tested soon. The Chela is one of the three targeted formations on the Lotshi Block. The Lotshi Block is also in close proximity to Chevron's offshore giant Malongo field offshore Cabinda Angola, that produces 300,000 barrels/day and Perenco's offshore/onshore DRC field that produces 28,000 barrels per/day. The map below shows the Lotshi block relative to all the other big oil discoveries and producing wells in the region:
 Right now EnerGulf is completing the final pre-drilling geological survey. EnerGulf previously acquired extensive seismic and aeromag data covering the block and the company is currently completing its own large seismic program. They will then will update and identify further targets, complete a prospective resource report, and plan to drill 2-3 wells in 2011. EnerGulf hired the same seismic company that performed the seismic operation on the block to the west, which has had the two current discoveries. There are also extensive oil seeps near the eastern boundary of the Lotshi block. Namibia: Namibia has all the elements of hosting big oil and gas discoveries. It has excellent geology, is very underexplored, and has had a big gas discovery offshore in the Kudu field. Marcia Mello, the CEO of Brazil's HRT Petroleum Company, recently said, “The Namibian offshore is analogous to that of Brazil, [however], Namibia is way underexplored. So you can put down a little money for the concessions and get very rich.” This is the exact strategy EnerGulf has employed in Namibia. The company has acquired an interest in a large, 2.2 million acre offshore block (Block 1711) on which seismic testing has already identified at least two potential targets - Kunene and Hartmann. EnerGulf participated in the drilling of the offshore, Kunene #1 well, which encountered hydrocarbons. Netherland Sewell prepared a prospective resource report in 2006 stating that the unrisked “best estimate” potential for oil contained in the Hartmann prospect to be up to 2.7 billion barrels of oil. That's just the Hartmann prospect. EnerGulf's block also includes the Kunene prospect and probably others too. The other stakeholders include South Africa's national oil company PetroSA (10%), the national oil company of Namibia NAMCOR (7%), Nakor Investments of Russia (70%), and the local energy firm Kunene Energy (3%). EnerGulf owns a 10% interest. EnerGulf's operational skills have been recognized, as the Namibia Ministry of Mines and Energy has just appointed EnerGulf as interim Operator of the project. This is very positive for the shareholders because EnerGulf is charged with guiding the current work program and leading it towards the drilling of the next well. Will History Repeat? As you can see, EnerGulf's projects are truly high impact. They're exploring in areas where oil discoveries can be massive. And that's why it's a very interesting time to be looking at EnerGulf because in high impact oil exploration, speculators have a tendency to run in at the last minute before actual exploration results are released. The chart of EnerGulf shares over the last four years shows this:
 Clearly, there was a lot of excitement surrounding EnerGulf in late 2007 and early 2008. The reason is because EnerGulf was completing all the final pre-drilling exploration activities and was about to drill. Now it looks like it's happening almost exactly as it did before. In 2007 EnerGulf completed its seismic testing, completed a financing deal, identified drill targets, and then drilled them. Over that time EnerGulf shares climbed from 70 cents to more than $4 before a hole was even drilled. Right now, EnerGulf is on the verge of completing its final seismic testing, just announced a financing deal, is set to identify targets, and then drill its targets. It's almost the exact same situation as before. Only this time, EnerGulf shares, at a recent price of 40 cents, are even lower. Share Structure:
Shares outstanding: 56,517,890 Management Jeff Greenblum - Chairman, CEO, and President He is formerly a senior executive with Diamond Fields Resources, Inc., which was later acquired by Inco, Ltd. (C$4.3 billion transaction - Voisey's Bay Nickel Discovery). Prior to his association with Diamond Fields, Mr. Greenblum served as a senior Bush administration official under President George H.W. Bush at both the U.S. Department of Energy and the U.S. Department of Commerce. While at the Department of Energy, he served as Senior Executive in the Office of Fossil Energy. Among his responsibilities were the Naval Petroleum Reserve (in charge of Elk Hills Field - 1.719 Billion/Bbls recoverable reserves:AAPG-Giant Field), Strategic Petroleum Reserve, Clean Coal Technology Program and the Enhanced Oil Recovery Technology Program. At the Department of Commerce, Mr. Greenblum served in international trade administration as Director, Office of Africa, responsible for U.S. investment and trade policy with Africa. Previous to his service in the Bush administration, Mr. Greenblum was a senior executive with KP Exploration, Inc., a wholly owned oil and gas subsidiary of Kidder, Peabody and Company. During his tenure with KP Exploration, the company drilled over 200 oil and gas wells, primarily in south Texas and Oklahoma. Tom Fetters - Director - has enjoyed a varied and distinguished career in the oil and gas industry, both in the United States and internationally. Mr. Fetters joined Humble Oil and Refining Co. (Exxon, USA) in 1966 where he served in various capacities including exploration, production and research management, and as Exploration Planning Manager for Exxon USA. Internationally, he held positions as Chief Geologist for Exxon Production Malaysia and Exploration Manager for Esso Australia. In 1983, Mr. Fetters joined Consolidated Natural Gas, now Dominion Resources Inc. (NYSE:D), as President and CEO of its exploration arm, CNG Producing Co. In 1990, he became President of Exploration and Production for the Exploration Company of Louisiana, which was actively involved in the highly successful exploration efforts in Bohai Bay in the Peoples Republic of China. Later, Mr. Fetters served as Senior Vice President of Operations for National Energy Group in Dallas, Texas and in 1997 co-founded Beta Oil and Gas (NASDAQ:BETA) and served as Managing Director Exploration. Recently Mr. Fetters co-founded Delta Resources L.L.C. which was specifically formed to utilize leading edge technology in oil and gas explorations. Mr. Fetters holds both a B.S. and M.S. in geology from the University of Tennessee. Clive Brookes - CFO, Director - holds a Bachelor of Commerce Degree from the University of British Columbia. He has served as a Director, executive and financial consultant to various public companies traded on the TSX Venture Exchange and has had extensive experience in the resource sector. Joseph G. Soliz - Senior Legal Advisor for Oil and Gas Matters, Director - has practiced U.S. and International Oil, Gas and Mineral Law since 1979. He joined Gulf Oil Corporation in 1979, where he was legal advisor to management for petroleum exploration and production matters. In 1981, Mr. Soliz joined the Houston office of the law firm of Chamberlain, Hrdlicka, White, Williams & Martin where he practiced in the firm's Energy, Environmental & Natural Resources Section. He became a partner there in 1985. Mr. Soliz also served as Senior Council in the midstream-downstream petroleum unit at El Paso Corporation (NYSE:EP) from 2001 to 2004. Mr. Soliz holds a J.D. degree from Harvard Law School, is admitted to the State Bar of Texas, and is certified in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization. Honorable Andimba Toivo Ya Toivo - Advisor - Former Minister of Mines and Energy, former Minister of Labour, and former Secretary General of SWAPO, Republic of Namibia. He has been an African leader in the fight for freedom and democracy for over 45 years. His impressive portfolio of service to Namibia includes: Minister of Mines and Energy from 1990 to 1999, Minister of Labour from 1999 to 2002 and Minister of Prisons and Correctional Services from 2002 to 2004. He was a founding member of the South West Africa Peoples Organization, known as SWAPO and served as its Secretary General. SWAPO was the organization that led the struggle for the independence of Namibia and is today's majority political party in Namibia. He was arrested and sentenced for 20 years by the South African government because of his political beliefs demanding freedom and independence for his country, serving 18 years, mostly at Robben Island prison, with his fellow Southern Africa freedom fighter, Nelson Mandela. Despite the 20 year sentence, Mr. Toivo Ya Toivo refused to be released from Robben Island until the rest of his fellow Namibian political prisoners were also freed. After Namibia's independence in 1990, he was elected to Parliament and since then has continued to be a major force in the movement of democracy in Namibia. The Bottom Line The EnerGulf Resources (TSX-V:ENG) story is one that's reaching the final stages of exploration in the DRC and Namibia. The company is completing the final phase of seismic testing on the Lotshi Block. After that it has to assemble the data, identify drill targets, and drill away. Also, EnerGulf recently announced a financing to raise $4 million in additional capital through a financing deal that's likely to close very soon. Most importantly, this is the exact same situation the company went through in late 2007 and well into 2008. During that time, EnerGulf shares soared as speculators piled into shares wanting to get positioned before the drilling results came out. Regardless of the final drilling results, shares still climbed 470% in about two months time. Now the company is making the exact same moves as it did back then. Only time will tell if the results are the same. But if they're even half as good as they were last time, EnerGulf is certainly worth further due diligence. You can follow EnerGulf Resources (TSX-V:ENG) at www.energulf.com. Click here for contact information Sources: Legal Disclaimer/Disclosure: A fee has been paid for the production and distribution of this Report. 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