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The Oil and Oil Shale Assets of the USA and Canada: Boom or Bust?

Updated on May 23, 2012

Think OREO, OXY, LOGL, PTR, ORYN, CVX and more. These are some of the key players mainly searching or pumping crude or squeezing it out shale. Judging from some of the paid investment letters I get (the key word is "paid") everyone interested in making a killing in short order should be investing in either the Canadian Bakken, North Dakota Bakken, Woodson, Kansas, and\or Nevada in the Kibby or Gabbs oil fields.

The main company in Nevada searching for oil claims that under the Gabbs area exists 4+ billion barrels of oil at depths of 3-4000 ft. They claim their geologists also confirm that over 600 million barrels exist under the Kibby area. Yet, American Liberty Petroleum (OREO), has been drilling and coming up with very little. Their penny stock is at only 70 cents a share and its highest amount in the past year was $2. Their brochure, in which OREO paid $150K to have a recognized stock forecaster endorse, makes it seem like a sure winner. However, independent researchers basically will tell you that most companies with penny stocks are exploration companies searching with limited funds or profit and usually have losses until they "hit" pay dirt. OREO is one and LOGL is another. Drilling is very expensive, for instance, in the Bakken oil zone (North Dakota and Canada) the average well runs between $4-8 million. Currently, the break even point for oil companies is $65 a barrel, so, they are currently making money. Producing oil from shale is a costly adventure one that many refrain from and because of the costs, much more respected companies there, such as , OXY (Occidental Petroleum) have curtailed their drilling and moved from Bakken to more lucrative sites, like the recent 200 million barrel oil field in Kern, County, CA., discovered in 2009. OXY is one of the biggest in the North Dakota area and for them to curtail there is a signal that it may be too expensive.

In Alberta, Canada, LOGL (Legend Oil and Gas) brochures for investors make you think it is virtual gold mine, pumping 300 barrels daily. They talk of oil booms. LOGL's stock is as bad as OREO's and the SEC is already looking into the misleading and fraud surrounding the company. Both of these firms are "pump and dump", meaning the company pumps up the stock price to entice investors. The success of a few companies in the Bakken shale regions of North Dakota has spawned many imitators and makes for a saleable investment to those hoping to get rich quick, buy their stocks and the company folds. The company has never had enough cash on the books to even actually even drill a single horizontal well, the type of which is needed to extract any significant amounts of shale oil. Wells like this typically require $6+ million per well and Legend admits to this.

Basically, both companies spend more hiring PR firms and stock market experts than they actually to in exploration of oil, which is what they do. They pay these PR firms millions and sell the potential from your investment, but you have to buy the stock. LOGL does not have one well being drilled in Canada, yet. Although, they plan to have one. The same for their Kansas tract, where they claim they have permits to drill 20 wells. LOGL stock is .25 cents a share.

I guess the bottom line is: buyer beware. If you have money to blow, invest in either OREO or LOGL, it will be like winning the lottery should crude be hit.

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    • kschang profile image

      kschang 

      6 years ago from San Francisco, CA, USA

      There's different meanings to "discover". Most people think of oil fields as you put in a pipe and oil gushes out. The kind where you have to put in pumps and whatnot to pull the oil out, or horizontal drilling and such, people aren't that sure about. As cost of oil bucks 100 again, it's suddenly worth it to explore previously "it will cost too much" fields.

      NPR has a whole series on shale mining and the cost it may bring to ground water contamination and such. We may be polluting the grounds for future generations to clean up.

    • mikelong profile image

      mikelong 

      6 years ago from The largest convict colony in the United States

      And in California.

    • perrya profile imageAUTHOR

      perrya 

      6 years ago

      The oil investing in penny stocks is tempting because if a hit is made, the stock will zoom up but the exploration firms are losing more than making any. You would have thought oil would have already been discovered long ago in nevada.

    • mikelong profile image

      mikelong 

      6 years ago from The largest convict colony in the United States

      Good article. One should always be careful before investing. Though not an oil company, Quantum (QTWW) put out a major campaign pumping its Karma electric luxury vehicle. Though a car is now on the road (I saw one over the last weekend), everyone who I know who invested in this company have lost their pants.

      Invest very carefully...

    • kschang profile image

      kschang 

      6 years ago from San Francisco, CA, USA

      Oil exploration is the most booming industry in Nevada now. Some small towns near the mining sites can't build fast enough (nor do they want to). Many are just renting motels long-term until apartments are built. Mining school students are getting jobs six months before they graduate.

      So it's a boom in THAT sense. Whether you'll strike it rich is a different problem. :D

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