Stripper Wells: Fire in the Hole James Boric recounts a trip he took to Titusville, PA, to see a Stripper Well in operation and springboards from there into an examination of which oil services companies may be worth looking into. "In the old days, we'd be picking your body parts off the road." -- Byron King Turns out, it was not a waste of my time at all. The stripper oil wells in Titusville produce an average of four barrels of oil a month. That's nothing compared to a large oil producer like ExxonMobil -- which cranks out 2.5 million barrels a day. But when you add up the production of all the tiny stripper oil wells in the United States, they spit out 15% of all the oil the United States consumes. In other words... *************** That's a winning percentage of 86.7%. Now Kevin guarantees he can triple your money over the next six months. Find out how... http://www.agora-inc.com/reports/RTA/ERTAFB50 These little wells play a massive role in the entire U.S. economy. And the guys who run them -- breaking their backs for a few liters of oil a day -- can teach any investor a thing or two about making money. Every day, they have to find ways to literally siphon drops of oil -- just to make a dime in profits. And any service company that can help these oil guys make a profit is invaluable in today's world of $60 oil. Heck, I saw that firsthand. Rick, who invited us up to Titusville, is an oil service provider himself. His tiny business, Otto Cupler Torpedo Co., makes propellant explosives -- the kind that you lower deep beneath the earth's surface to ignite cracks in the rock and sandstone to release oil. He not only supplies the explosives, but he also comes out to the oil site and makes sure the blast goes off as planned. And that's exactly what he did on Saturday. Rick brought 70 pounds of propellant explosives encased in a blue PVC pipe to a small stripper oil well in Titusville. He attached 880 feet of wire to this bad boy and helped the crew lower it into an oil well that was over 900 feet deep. (They only lowered it to about 869 feet underground). When everything was set, Rick yelled at the top of his lungs... Stripper Wells: Press the Button "Fire in the hole. Fire in the hole. Max, press the button." When Max pressed that red button, Greg, Byron, Joel and I were prepared to dive into a wooden shack. We were warned that invisible sandstone could come whirling out of the well. We were told a geyser of oil, water and debris could rise into the sky -- drenching us with expensive goop. And we were told that every molecule in our bodies would likely vibrate. YEAH!! The four of us were giddy with excitement.
What the heck? Was he smoking something? Turns out the explosion went as planned. Since it was so far underground, we didn't feel or hear a thing. And because there was a bit of water in the well, there wasn't enough pressure from the blast to send oil shooting out of the well. But all was a success nonetheless... As we got closer to the well, we could see natural gas fumes pouring out of the 7-inch opening in the ground. (Turns out that natural gas is used to provide electricity for the oil well we were at). And after the water and debris were extracted out of the well, we saw what we came for...green Pennsylvania crude. Several gallons of the sweetest crude on earth were pulled out of the ground using a rusted drill rig that towered above the trees. This oil is worth more than any oil you'll find in Texas, Canada and even the Middle East. This is the best stuff on Earth, no question. In fact, Byron told me you could practically take this green oil and put it into your car -- if you were in a jam. That's how sweet this oil is. As you can imagine, Rick was happy. His explosives did their job, and he got paid. The oil well owner was happy. He got oil. And we were happy -- despite no geyser. Two Stocks That Are Set to SOAR as Much as 668%! On July 2, 2006 , a SEISMIC energy "event" will END the age of cheap oil forever ...ERASING over 150 years of American prosperity...and OBLITERATING the wealth of millions of investors... As an investor, you have two choices... You can do nothing and lose everything. Or you can make as much as 668% on the two stocks that are set to SOAR as the chaos unfolds... http://www.agora-inc.com/reports/OST/EOSTFB14 *************** Stripper Wells: Four Companies on the List So how can you get paid from all of this? Well, you can't invest in Rick's company. He is a tiny private business owner. But there are 52 oil service providers on the Amex, Nasdaq and NYSE right now. Thirty of them have market cap under $1.5 billion. But most are highly leveraged -- meaning they have large debt loads. And believe it or not, two of them have negative growth rates. I ran a simple screen for you this morning -- to separate the companies you might want to look at from those that you probably should avoid. I looked for companies with a debt-to-equity ratio of 0.5 or less -- meaning they aren't heavily leveraged relative to their peers. I insisted on 25% sales and earnings growth -- which you should expect in such a boom period for anything oil related. And on a value basis, I looked for companies with a price-to-book ratio under the industry average. Here are the four companies that made the list... -- Bolt Technology Corp. (BTJ:AMEX) If you are interested in investing in a few oil services companies, start by looking at these four. With oil prices as high as they are now, every mom-and-pop oil well company will need explosives, wires, holding tanks, tankers, etc. That's why the services companies are a better bet than owning the oil companies themselves. If a small oil exploration company takes a risk, drills a hole in the ground and comes up with nothing -- you can bet its stock price will fall. And if you happen to own that stock, you will lose money. Pure and simple. But boom or bust, the oil companies will need services. They will need explosives, drills, wires, tools, etc. In other words, these companies will provide "things and services" to oil companies that find oil...and those that strike out. That seems like a much better business to be in, if you ask me! Cheers, James Boric P.S. Bryon King and Greg Grillot are the two oil bugs who set this trip up. They are two of the smartest guys you will ever meet -- or read. I mean that. If you are interested in learning a ton more about oil (and commodities in general), you can read Whiskey & Gunpowder nearly every day -- for free . In fact, you can sign up right now... http://www.whiskeyandgunpowder.com/Sub/SleuthI.html
I begin every day by reading Joel's The Rude Awakening. I suggest you do as well. And again, it's free!: http://www.the-rude-awakening.com/Sub/SleuthI.html P.P.S. I took some pictures of our Titusville adventure. Take a look at what I saw...
Above is a look at the drill that dug the 900-foot hole into the ground...
This is good old, PA sandstone. The rock on the left came out of the well. As you can see, it is saturated with oil.
Here you can see the water that was siphoned out of the well -- post explosion.
And finally, what we came to see -- PA CRUDE OIL!! P.P.P.S. I just returned from New York City. I attended the first ever Value Investing Congress -- led by Whitney Tilson of T2 Partners LLC. It was incredible! I got to listen to THE best money managers in the world talk about the opportunities in today's market. I'll share those opportunities with you over the next several weeks. But I have to tell you... The highlight of my three days was hearing Joel Greenblatt speak. Wow! This guy made 40% a year for his investors for over 20 years...and I got to meet him. What a thrill! To put into perspective how good this guy is... If you started with a mere $1,000 and grew it 40% a year for 20 years (like he did), you would be sitting on $836,682. And that's assuming you never added a dime to your original investment. More to come on how you might do the same. Stay tuned to Sleuth! |
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