Right now I believe you have the opportunity to make multiples
on your original investment by buying micro-cap oil and gas
Given the market's recent strength I realize I may sound like a
market cheerleader - but I'm not. I believe there are huge
opportunities in emerging markets for companies, and investors,
that have the chutzspah to go after remote oil and gas
The sky is the limit for exploration companies active in
developing markets - if they strike oil and natural gas
In the developing world, the risks are greater. Political unrest
and corruption make discovery and drilling an uncertainty at best.
Unclear claims and drilling rights on tracts of land can lead to
legal disputes, and lack of modern technologies mean progress can
be slow when drilling finally begins.
But the rewards can be great, and the strikes can be huge. Untapped
Spindletop-type reserves do exist, and shareholders of companies
that find them have the potential for hundreds, and even thousands
of percentage point gains.
If you've never heard of Spindletop it's time you learn the
story. In 1901 the Texas oil strike changed America forever.
Spindletop would become the most productive oil field the world had
ever seen, producing over 150 million barrels to date, and would
give rise to the Texas Oil Boom.
The oilfield gave the country a stable supply of energy.
Household names like Gulf Oil, Texaco,
Exxon Mobil (
, all got their start at Spindletop.
The well pictured to the right, known as the Lucas geyser, was
the first big hit of the Spindletop oilfield and shot over 100,000
barrels of oil a day into the Texas sky for 9 straight days before
***Early oil and gas explores, like those that tapped the
Spindletop oil fields, didn't sit on their hands when their native
country was planning for the next stages of growth - or positioning
to endure the potential for hardship. They went out and did
something to ensure that there would be opportunities to pursue, no
matter what sequence of events came to pass.
Right now you need to think like these explorers when deciding
how next to invest. Shrug off fears of what could, or might,
happen. Instead focus on creating opportunities for growth and
profit. Then act accordingly and protect yourself from the downside
risks that you see on the horizon.
***Right now, oil prices are zeroing in on the $100 a barrel
mark after rising steadily for two years. The current price of
around $90 a barrel should be an indication that global growth has
resumed, and that the true picture of energy demand is becoming
clearer once again.
The ten year chart of oil prices below indicates to me that in
the near-term oil could trade in the $100 to $120 range and still
be well within a 'reasonable' technical range. Erase the massive
spike and decline between 2007 and 2009 and you'll see that prices
are simply resuming their steady upward climb that began in
In other words, the clouds of the recession are beginning to
part. The thing about these pesky clouds is that they made most
people focus only on what they could see right in front of them.
They forget about what lies just out of sight - the inevitability
of higher oil prices.
Not so for explorers. Even though they couldn't see past the
clouds, they knew that $40, $50, or $60 oil didn't accurately
represent what the world was willing to pay for the greatest energy
producing commodity in history.
They sensed that there was opportunity out there, and they kept
exploring. But nobody was buying shares in their companies.
Now, their shares are being snapped up. Many that I monitor are
up 20 percent or more in the last month. That might sound like a
lot, but in this segment of the market it's not. These stocks can
swing 20 percent or more in a single day. But right now I see a lot
more buying than selling, and I believe the upward potential is
huge for the right oil and gas exploration investments.
Right now, you can invest alongside these explorers and position
yourself to take advantage of the inevitability of higher oil
However you, unlike the explorers, don't have to upend your
life, take on undue risk, or otherwise change the happenings of
your everyday existence. As a small cap stock explorer you just
need to do your research, put in a stock order, and monitor your
positions from the comfort from your home or office.
In other words, the hard work is being done for you, and you
just get to participate in the upside while keeping close tabs on
Regions with the biggest opportunity include onshore targets in
Columbia, Africa, Poland, and Romania. Offshore targets in Israel
also are garnering attention from the majors.
Small Cap Investor PRO
lead research analyst Tyler Laundon and I just published a research
report featuring two emerging market oil and gas exploration
companies. Both are on the path to firming up their resource
estimates, and have near term catalysts that should keep shares
The report is only for paying subscribers, so
you'll want to sign up here.
Like all exploration efforts, you'll want to target companies
with the highest chances of success, and get on board when momentum
is building - not falling. So while I think there is huge
opportunity in oil and gas exploration stocks, you need to keep
your head on straight and make sure you've done your research.
If you do, I'm confident you'll have the opportunity to earn
multiples on your initial investment over the next year. The
world's thirst for oil and gas hasn't disappeared since the
beginning of the recession, and I don't believe it ever will.