The World's Next Great Onshore Oil Discovery Could Be Here
FN Media Group Presents Oilprice.com Market Commentary
LONDON, Jan. 22, 2021 /PRNewswire/ -- A three-well drill campaign has just been launched by a small-cap explorer in a massive Permian basin that could end up being the next major conventional onshore oil discovery in the world. And everyone's watching as many names in the oil industry and resource assessment gather around Reconnaissance Energy (RECO; RECAF). Mentioned in today's commentary includes: Exxon Mobil Corporation (NYSE: XOM), Eni S.p.A. (NYSE: E), Halliburton Company (NYSE: HAL), Pioneer Natural Resources Company (NYSE: PXD), Enterprise Products Partners L.P. (NYSE: EPD).
It's exciting for two reasons. First, there's no more potentially lucrative risk-reward setup than a small-cap sitting on a high-risk exploration play. Plays like this that succeeded have netted some investors 1,000-4,000% gains in the past. And this play is in Africa, where we've seen it happen before:
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- Africa Oil netted well timed investors over 1,000% gains
- Tanganyaika Oil netted investors up to 4,000% gains
- Centurion Energy International netted investors over 1,200% gains.
And those gains were for plays that might in the end pale in comparison to the potential of RECO's 8.5-million-acre Kavango basin in Namibia and Botswana. RECO's land package is far bigger and far more consequential, with well-known geoscientists in the industry backing what they think could end up being 120 billion barrels of oil in place.
Haywood, which initiated coverage of RECO in November at a $2.50 price target, has now bumped that up to $7.00 in the short term precisely because it knows potential upside when it sees it.
Big Money Is Looking to Conventional & Loves the Permian
Saudi Arabia's conventional oil wells are extremely cheap to operate. In fact, the Saudis can produce oil for as low as $3 a barrel. American shale costs many times more to extract, and in some cases up to $73 per barrel. It's not as simple as drilling a hole in the ground and watching the oil gush out. And while U.S. shale or "unconventional" oil was all the rage behind the boom that ended up making the United States a top producer to challenge even the Saudis, the new rationale is that the next big discovery will have to be conventional--and huge--in order to make economic sense.
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