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New US Listed Oil and Gas Play Has Exciting Upside
By David J. DesLauriers
16 March 2006
Toronto (ResourceInvestor.com) – Your correspondent usually profiles companies that trade on Canadian stock exchanges, but an exception is warranted in this case for a very compelling situation, Eternal Energy (OTCBB:EERG).
Eternal has put together an attractive suite of high-impact assets, all of which could be company makers if upcoming drill programs meet with success. The company is in the process of finalizing a private placement, which will give it more than enough cash, and allow it to test its projects in the North Sea and Nevada in the second half of this year - a hit on any of these would send net asset value per share into the stratosphere.
North Sea Projects
In the North Sea, Eternal is earning a 10% interest in two projects, and it should be pointed out that the company’s strong relationships on that side of the pond mean that rig availability should not be an issue, as it has been for some other companies operating there.
1. The company is participating in the drill testing in Q2-Q3 of this year of a massive target within its 63,000-acre block located within Quad-14 in the North Sea. 3-D seismic indicates that Eternal is firing at a potential 600 million barrels of recoverable oil here.
2. At Quad-41-42, a well is planned for Q4 of this year, and the target is 1 TCF of recoverable gas. One should keep in mind that only 20% of this 240,000-acre concession has been shot with 3-D seismic, and there is thus multi-TCF potential.
Nevada Shale Play
Eternal has a 50% interest in 100,000 acres of Nevada’s Great Basin, and is on the cusp of dotting the I’s and crossing the T’s on another 75,000 acres. This is a commanding position in a basin which is home to Mississippian-aged fractured shale, and by all appearances could rival the famed Barnett Shale, but which has been severely overlooked to date.
Investors should note that as compared to a gross thickness of 200-300 ft of shale gas in the pay zone at Barnett, the Great Basin boasts 1,000 ft of average thickness. Also, the Total Organic Content, a measure of carbon content of dissolved and particulate organic matter (read energy bearing) is 5-8% in the Great Basin, as compared to 4.5% at Barnett.
Eternal is planning to shoot seismic over approximately 30 miles of prospective land in Q2 in order to define initial well locations and follow up with 2 wells in Q3-Q4.
This overlooked, little known shale basin could be a company maker in the extreme, and it will be with great anticipation that the market awaits the results of the seismic. Indeed, just one well drilled in the Basin in 1983 flowed at 4,000 barrels a day for ten years, and has now produced more than 15,000,000 barrels of oil since its discovery in 1983 – and this didn’t even test the actual source of the reservoir located in the Mississippian-aged rock at great depth. Eternal will do just that.
Conclusion
The company is cashed up, has aggressive, seasoned management, and continues to look for exciting new projects on top of the portfolio of company makers they have already put together.
Over the course of 2006, Eternal will test 2 major targets in the North Sea, and the Nevada Shale play, which I believe will begin to attract much more investor and market attention over the coming months.
At these levels the risk/reward ratio is extremely attractive, and success on any one of the company’s high-impact projects will result in multi-bagger share price appreciation, for investors that have some risk tolerance, but are looking for a major discovery.