Recent Developments

The price of oil has dropped dramatically in the last few weeks.

Contrary to popular belief this presents a great opportunity for investors in the oil and gas business. 

There is no doubt that the price of oil will climb again. 

The price of oil will be dictated not by the idiosyncrasies of the market, but by fundamental necessity. 

Now is an ideal time to become involved in a business which provides an essential ingredient of industrial development. 

Further, new developments have inspired a concept which if pursued, will result in a dramatic increase in the amount of oil and particularly natural gas to be discovered in South Louisiana. 

The Best of Times

Business is largely a matter of timing.

What would be a great stroke on a certain occasion could become a faux pas on another.

It just so happens that the moment is ripe for a venture into the oil and gas exploration business.

              If one has followed and been engaged in this business for a number of years as has the founder of Oilgastech, it has become apparent that this is an ideal time to be engaged in this area or arena.

              One would think that considering this large amount of prior production that the prospect for future production would be minimal.

              Nothing could be farther from the truth. The reasons are multiple. One reason is that the oil seekers of the past, and this particularly includes the major oil companies have sought in the past to explore the obvious prospects in search of giant fields.

              The result is that there are many prospects of enticing geological structure that have not been delved into.

              Often these prospects are delineated by well control, that is surrounded by wells already drilled whose electrical logs define the areas of interest with clarity. This research is inexpensive and simply requires astuteness which is possessed by true oil finders.

              Of course seismic data adds to the equation although it has become almost a fad to the extent that the cost of the seismic data costs almost a much as it does to drill a well and the prospect can already be clearly defined by wells already drilled.

              Part of this approach has to do the over cautionary approach taken by some companies and particularly the major ones. What is not generally realized that a majority of the oil and gas produced in this country has been produced by independent companies, operators and individuals.

              The major oil companies are not risk takers as evidenced, for example, in their failure to build sufficient refineries for the expected future market for gasoline.

              If a prospect is brought to a major oil company, first it is scrutinized by a low level geologist, who remembering the fact that only one in seven wildcats is a producer, and thinking of the smirch on his record the recommendation of a dry hole well would be, has an incentive to not recommend the drilling of the well which does not appear on his record in any form. This also enters into his requirement for extensive and expensive 3D seismic data.

              One recalls the difficulty one had in arranging the drilling of the Ambassador-     J. Burton LeBlanc well, financed by Alfred Hitchcock, Jimmy Stewart and Marlin Brando and its follow up well which resulted in the discovery of the Mallet’s Bluff Field, although the existence of a salt dome detected by German seismologist and its structure on the Baton Rouge Fault made the likelihood of production very favorable.

              The discovery of oil requires the application of instinctual astuteness that is not often found in the labyrinths of the larger corporations. They concentrate on scientific approaches when often the unraveling of nature’s secrets requires an artistic bent.

              Over the years we have accumulated data on prospects in South Louisiana.

              Concomitantly we have developed relationships with larger landowners who have sought to have their lands developed.

              The last time the price of oil surged there was a rush into South Louisiana of newer operators who brought with them their geologists from Oklahoma and other places. They did not know the geology of the area or the landowners.

              Because they were public stock companies financed by Wall Street they received a splurge of money which they turned over to the landowners with abandon. They discovered very little oil and when the price of oil declined they retreated to their homesites.

              A result of this foray was that the landowners became spoiled and the price of leases became unrealistic. In addition drilling costs spurted and remained at a high level for an extensive period of time.

              Another factor that has entered into the equation, is the furor over alternative fuels.

              Anyone with any sense of perspective, realizes that the drumbeat for alternative fuels in the near or immediate future, is whistling Dixie.

              Ethanol, aside from its inflationary effect on the price of corn, staple diet for much of the world’s poor, consumes almost as much energy to produce it as it generates.

              Wind and solar power are still abstractions in the minds of savants and a long way from economic production.

              It will be many years before there is any significant quantity of productive nuclear power produced in this country. Its advocates have still not solved the problem of where to dispose of the nuclear wastes and how to get it there.

              Coal, of which there is almost an unlimited quantity, probably presents the biggest problem of all, since it is the dirtiest, and no method has been devised or is in sight, to effectively reduce the vast amount of carbons it use would discharge into the atmosphere.

              Any reasonable, informed, and logical person, thus knows that the use of coal will be clearly limited.

              The inevitable conclusion is that oil and gas will be the fundamental producer of energy for years to come.

              This brings us back to the original point.

              The present recession and decline in the price of oil has resulted in potential lessors of lands in Louisiana lowering their sights so that reasonable leases or options to lease can be obtained.

              Drilling costs are declining every day.

              We used to consider fifteen dollars a barrel as the price above which money could be made. If one were to use fifty dollars a barrel as the turning point, that would be a conservative figure. All the really astute oil experts predict a rise in the price of oil, based on the amount of oil available for marketing and the demand for oil that will continue to increase.

              There has been no better time to acquire lease blocks on prospective structures.

Aside from the tax benefits that accrue to drilling investors and participants in production there are no better returns available than are those afforded to participants in oil or gas fields.