Now Drilling for Oil in Texas
I happen to be a giant fan of energy stocks. I recently read a fascinating book about growth and the limits to growth. The book is called Life after Growth and was written by Tim Morgan. It’s a must read book. In it he points out that the money economy and the energy economy have gone different ways. Debt is a claim on future energy and we have squandered our future by falling down the debt hole.
So anytime someone passes an energy deal by me, I’m interested. We recently picked up a new energy advertiser named Super Nova (C-SNP). They have a tiny market cap of just over $1.5 million and are in the midst of re-entering a hole called the McAfee Project in Frio County, Texas. The prospect has an existing 51-101 reserve of 90,000 barrels probable reserves and 125,000 barrels of possible reserves.
Super Nova is spending 100% of the expenses to earn a 50% interest after project payout. Re-entering the well, Super Nova will continue to a total depth of about 7,000 feet and then punch a horizontal well into the B2 Zone. The company believes there will be a probable plus possible initial flow of 1200 barrels per day before it settles down to a constant flow of 238 barrels per day. That would generate cash flow to Super Nova of about $300,000 per month.
Super Nova plans on using the cash flow from the McAfee Project to fund drilling an additional 2500-foot well in Montana called the Milford Colony Project looking for natural gas. That Milford Colony 13-11 well has been permitted and drilled/cased to 880 feet. The well has a 51-101 resource of best case $368 million and worst case gas of $9 million.
Super Nova is paying 100% of the initial well cost to earn an 80% working interest. SNP has an option to farm into an 80% interest in three exploration blocks by drilling a well on each block. The Milford play has enormous upside. It will only cost an additional $150,000 to complete the gas well to 2500 feet to prove up an entire province of shallow natural gas with a low entry point.
The company is in the process of completing a $600,000 financing. In Canada you no longer have to be an accredited investor to participate in private placements. If anyone is interested, contact the company. I do not receive anything for mentioning them. Any deal is between you and them.
With a $1.6 million dollar market cap, there isn’t much downside. If they don’t hit in Texas, I’d just expect them to do another raise to finish the well in Montana. So there is a lot of upside and near none on the downside.
Super Nova is an advertiser so I am biased. I participated in both the PP and bought a bunch of shares in the open market. If they hit in Texas, they are good for a 100-200% return and if they hit in Texas and Montana, they are good for a 500% return and become self-funding for the most part. Please take some responsibility for your own investment decisions and do your own due diligence.
Super Nova Petroleum Corp.