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Oil Recovery Technologies Giving Junior Energy Company Shares a Rise
By: AllPennyStocks.com News
December 14, 2011
Oil and gas prices are slowly depreciating in value again this week as global economic uncertainty continues to wage war on the bulls and the idea of QE3 has been extinguished for the time being in the States. Long-term investors in the industry typically do not look at retraces as a negative, but rather as an opportunity. The depressed economic atmosphere has opened the way for acquisitions of companies for many larger firms and portfolio additions for burgeoning firms in the oil and gas space.
Texas-based Paradigm Oil and Gas Inc. (OTCQB:PDGO) is a junior oil and gas play that is focused on identifying and acquiring energy properties with previously discovered known oil and gas reserves that have not either been fully produced from, or fully developed and defined. Paradigm utilizes new technologies, such as the Transportable Enhanced Oil Recovery Platform (T-EOR), with the goal of generating profit from previously producing wells. This new technology approach is similar to companies such as Gryphon Gold Corp. (OTCBB:GYPH) and their heap leaching technologies to extract gold that is left behind by previous miners in leach pads. Simply put, the resource is there, everyone knows that it is; it is just a matter of having the ability to extract it, which can save a great deal of time, effort and money. Paradigm has identified over 6,000 orphaned wells in the State of Texas alone that are potential oil producing candidates for the T-EOR Platform.
As part of its business strategy, Paradigm has stayed focused in the oil-rich state of Texas and accumulated properties covering 1,148. Its current holdings contain 23 existing previously producing wells and available spacing to support the drilling of approximately 30 new wells in the 3,800' to 9,000' range and approximately 100 new wells in the 800' to 1,800' range.
Today, the company disclosed entering into a purchase agreement to acquire more oil interests to the tune of 2,200 acres in East Texas with 40 wells producing 3,000 barrels of oil per month. At current prices, this equates to roughly $150,000 a month in net cash flow. In addition to the producing wells, 200 previously producing wells are part of the acquisition with provisions for another 100 wells allowable to be drilled. The seller is to provide a current Engineering and Geological reserve report as part of the deal. The purchase price - which is set to close (subject to due diligence and approvals) on or before January 28, 2012 - is set at $8.5 million and is to be settled by way of cash or at the buyers discretion, 60% in cash and 40% financed by the seller.
Shares of PDGO have seen some substantial fluctuations in value over the last month, including a rise from just over a penny to breach 2.5 cents this week, and could be worthy of a closer look as the company continues to execute its oil recovery program business model. Proper due diligence is always encouraged.
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