copied from another board
AMEP DD Oil and Gas for new eyes...
Devon is by far my favorite energy company. It is a solid energy company, with great Barnett Shale natural gas(NG) production and reserves. The problem for me is that Devon (DVN) is $57.68 per share. A bit pricy for me, and the company is already a mature company. I had been looking for a high risk/reward speculative Oil and Natural Gas investment with high reserves in the Barnett Shale, like AMEP, that has much room to grow, and grow the SP, currently at .0145. The reason I like Devon so much is that it is the biggest player in the Barnett Shale formation, they bought out Mitchell Energy, which pioneered the slick water frac technique that was able to make the tight Barnett Shale produce in volume.
The Barnett Shale was just recently declared the largest on shore hydrocarbon source and reserves of NG in the US by the independent USGS, a federal agency; and the formation is mostly all in Texas(domestic, and therefore safe). Since that USGS report, the lease price has exploded all over the Barnett. They are now drilling inside the city limits of Ft Worth, because the formation is so prolific in NG, and produce for decades. It is the hottest formation in the US, on shore.
I am invested in AMEP, and AMEP is a high risk/reward investment with 7,000 acres over the Barnett Formation. I have been accumulating shares for over a year now. Like BIPH, ABEW, and HISC, I still have every share of AMEP I have bought so far. I trade other stocks to pay the bills, ...but not these four. I have a multi-bagger going on all these but AMEP, I believe AMEP will be the next to run.
AMEP technically made the Golden 50/200 MA Cross recently. and has bounced off the 200MA four times since. I think it is now ready to move up. Last time AMEP made the 50/200 MA crossing it was a 9 bagger while buying leases, since has retreated,...but now has Oil and Natural Gas revenues that are increasing.
AMEP is a Business Development Company (BDC), and has 4 wholly owned investess in the energy business. One of AMEP's wholly owned investees, Bend Arch inc, has 7,000 acres that are a 100% blanket coverage over the Barnett, that is well over a 300 foot thick formation throughout the leases. The beauty of AMEP's Barnett leases, is that they were acquired before the land rush, and were obtained relatively cheap. They own miles of NG sales and collection pipelines. Another important advantage to these leases is that they produce Oil with the NG, while most Barnett Shale gas wells only produce NG. Unlike most formations which have a relative short production life, the Barnett Shale wells are expected to produce 20 to 30 years, or more, per the independent DD, USGS, and including Devon's statements, because the formation is so vast in size and thickness, and it is THE source rock for the hydrocarbons. They return to near original production when re-fraced, per the DD.
Below is the recent announcement by AMEP on the results of a vertical well drilled down into the Barnett, AMEP is following this well up with 2 100% NWI horizontal wells, that will be cheaply done because the wells are re-entries and will be deepened into the Barnett formation and go horizontal from there; horizontal wells typically produce a multiple of a vertical in the same formation:
MINERAL WELLS, Texas--(BUSINESS WIRE)--Aug. 2, 2005--American Energy Production Inc. (OTCBB:AMEP - News) announced today its wholly owned investee Bend Arch Petroleum Inc. began re-start operations of a uni-draulics jet pump on the Nash 1-C Barnett Shale well.
Charles Bitters, President of American Energy Production Inc. stated, "Bend Arch Petroleum Inc. began successfully producing the Barnett Shale well on Friday, July 29, after exchanging the complete down hole jet assembly and production tubing. The Nash 1-C is still not stabilized but on Monday August 1, the well produced in excess of 20 barrels of high gravity oil and 100,000/cubic feet of natural gas. At today's market price of $60.00/barrel for oil and $8.00/mcf of natural gas this would be approximately $1600.00/day or $48,000.00/month or $570,000.00/year gross revenue[NOTE, NG is now over $10 for NOV, DEC, JAN, FEB, MAR, ...and rising; apply that figure to this announcement]. This will add a very nice piece to the Bend Arch Production Inc. income. The company will post more results once the well has a chance to stabilize therefore giving a clearer picture as to the future of the Nash 1-C well."
The installation of the uni-draulics jet pump on the Nash 1-C well instead of a conventional pumping unit will move more oil and produced water from the well bore faster and more efficiently than the conventional pumping unit.
Charles Bitters also stated, "Bend Arch Petroleum Inc. has accumulated over 7,000 acres of leases that have potential Barnett Shale production. Oil America Group Inc. of Dallas, Texas another 100% owned investee of AMEP plan to offer drilling partnerships to potential investors to drill Barnett Shale wells on the above mentioned properties in the near future. Oil America Group Inc. will begin offering these partnerships in the next two weeks. For more information contact Joe Christopher at Oil America Group Inc."
AMEP has 100% Net working Interest(NWI) on this vertical well, and 100% NWI the next two horizontals that will follow. OAG, another 100% wholly owned investee, is raising funds to drill 3 more horizontals behind Bend Arch's two horizontals. AMEP gets a no cost free ride on OAG's 3 horizontal wells, and will receive 25% NWI after the drilling costs are paid. Keep in mind that these wells produce for 20-30 years or more, so it is a very good deal for AMEP, IMHO, ...and no risk to AMEP shareholders.
AMEP has a total of 5 potentially high producing horizontal wells scheduled for drilling into the Barnett.
Another 100% wholly owned investee PRI, has 193 heavy oil wells with working pumps, that are being re-worked and treated to increase the heavy oil flow, and brought back into production. These wells and lease were obtained when oil was real cheap, ... and now it is not. Only a few wells have been re-worked so far, a big potential when the entire field has been re-worked, treated, and pumping oil into the tanks for sales. PRI has just announced that they have developed their treatment, and are now ready to expand the operation. At todays prices, these 193 wells will be nice revenue generators:
"American Energy Production Inc. Announces Positive Testing Results with AMEP HOA-800
Wednesday July 6, 8:01 am ET
MINERAL WELLS, Texas--(BUSINESS WIRE)--July 6, 2005--American Energy Production Inc. (OTCBB: AMEP - News) announced today its wholly owned investee, Production Resources Inc. posted positive testing results after 8 months of testing various procedures utilizing AMEP HOA 800. PRI discovered a method of well treatment that combines the utilization of heat along with AMEP HOA-800 in a chemical process that has returned positive results. PRI has increased oil production from the Olmos formation on the four test wells by as much as 300% for the month of June. Management now plans on expanding the testing area to an additional 10 oil wells in the next 30 to 45 days.
Charles Bitters, President of American Energy Production Inc. stated, "PRI has been working extremely hard on achieving the desired results with AMEP HOA-800 and now believe its time to start expanding this treatment program. There is still room for improvement, but I believe PRI can now benefit because of current record high oil prices and increased production rates from the Olmos heavy oil sand field. This oil field is very difficult to produce because of the tight sand and the compaction of the heavy oil in the sand, still these are very exciting results."
Management cannot discuss the details and/or formulations being used with AMEP HOA-800, but PRI believes the heat treatment once perfected can possibly be sold to other oil operators. The Company will keep investors informed of the expanded test results.
Update to investors.
Also on June 28, 2005 AMEP announced that wholly owned investee Bend Arch Petroleum Inc. is in the process of filing permits to re-enter another well in the Barnett Shale formation located on its 12 well Palo Pinto Project. This well could be our most significant to date and a major milestone for the company due to the 1000 to 1500 horizontal lateral line that will be drilled in the Barnett Shale. In most scenarios a horizontal well will produce more oil and natural gas than a vertical well. The Company is extremely excited about the potential for this Barnett Shale well. Bend Arch Petroleum is in a great position to benefit from record high prices for oil and natural gas prices because the Company has accumulated over 7,000 acres of leases that have potential Barnett Shale production."
The CEO has stated in writing, that he expects AMEP to become profitable in less than a year now. It appears that Bend Arch will be able to do that alone if the next two 100% NWI horizontal wells are successful. Since they are over a 100% blanket coverage, and because the vertical NASH 1-c Barnett well was so successful, these horizontals are expected to be high producers. 100% Wholly owned Bend Arch will have to cut AMEP a profit check, for AMEP to show a profit, ...and I believe they will be able to do just that after the next two horizontals are completed and producing.
IT IS IMPORTANT TO NOTE, AMEP wholly owned investees are shareholders of AMEP, they were acquired with AMEP shares, so it is extemely important to the investees to make AMEP profitable, and increase the SP. All wholly owned AMEP investees are working hard to do just that.
Wholly owned PRI, should be able to follow Bend Arch with a profit check sometime in the future, if the re-work program continues to succeed, and expand to all the other wells (note some of the 193 wells will be used to inject the treatment, and therefore will not be producers).
I think energy prices are not going to retreat to the $30 bbl range, and that energy will be an important play in the stock markets for decades to come. IMVHO, Devon (DVN) for a safe investment in the Barnett; and AMEP for a high risk/reward investment in the Barnett. Based on recent AMEP developments, and the CEO's quest to make AMEP profitable in less than a year, I think it is now tilted towards high reward, in the high risk/reward category. AMEP's tiny Market Cap of only 4.3 Million$$, is less value than one of Bend Arch's leases and production, IMVHO.
Good luck in what ever you decide, and if you want to play it safe, buy Devon; but if you have some high risk/reward funds, check out AMEP.
Disclosure, long holds: BIPH(overweight), ABEW, HISC, and AMEP.
I have a multi-bagger going on all these but AMEP, AMEP is next IMVHO.
... %^ greeneyedhawk
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