NEWS Lights The Fire On This Texas Oil Play


Drill, Baby, Drill! Texas Oil Is BACK,
This Play Is Finally Flowing . . .
Like It’s 1910 Again!


Rally On, Traders!


Petroleum prices are at the highest level in over 3 years as global demand finally absorbs every barrel from U.S. shale storm clouds hover around Venezuela and Iran. Exxon shareholders should be cheering, right?


Wrong! Big Oil hasn’t been the way to play this boom at all. I was just reading on Bloomberg that mighty Exxon has lost $47 BILLION in market cap over the last 3 months.


The logic is real. The big players are facing depleting reserves and stagnant production at a moment when the market price of every barrel is finally soaring double digits again. Their once-massive fields are rattling close to “empty.”


But with crude up 36% over the past 12 months, somebody’s got to be making money, right? That’s why I’m focused on the aggressive little wildcats chasing the barrels Big Oil overlooked or was too clumsy to exploit.


Look at Molori Energy Inc. (MOLOF), for example. Tiny company right now, pink sheets, barely $8 million market cap. The amount of wealth Exxon has LOST in the past 3 months could buy little MOLOF close to 60 times over.


And unlike mighty Exxon, MOLOF has some mighty GOOD news to report. Just this morning they QUADRUPLED their acreage in the Texas Panhandle, a giant field that’s made a lot of Texans rich over the past century. It’s produced 1.5 BILLION barrels of crude and an extra 8.4 TRILLION feet of gas over its lifetime, almost completely from deep rock.


How’d MOLOF get into that action, just 30 miles from Amarillo? Two answers to that question. First, most of that deep oil has already been pumped and sold over the years. Big Oil came and went.


And yet . . . there was a whole layer of that acreage that Big Oil never figured out how to drill right. They could smell the oil locked up in that tight sand. They just didn’t have the science or the know-how to get it out.


They tried everything. Little fracking, weird well configurations, every technique around going back to the 1960s, when conventional crude was cheap and the science wasn’t where it is today. No luck. The sand was too tight.


Fast forward to 2016, a genius ran a massive fracking test, injecting more than 250,000 pounds of hot fluid down there — he was inspired by what’s been going on in the Permian, where fracking is so hot some guys are making out like bandits just mining the sand.


It worked. Suddenly this layer of dirt in the drilled-out field was worth money again. And that’s the dirt MOLOF is sitting on now.  


The timeline there gives you a sense of how excited MOLOF management got when they realized this sand . . . the “Red Cave” layer . . . could finally be exploited for the first time in over a century of research.


Almost exactly a year ago, they started paying experts to take a fresh look at the Red Cave. Where were the best parts? Was it really possible to get oil out of that sand? The more they studied the angles, the more exciting the play looked.


When they’d spent $400,000 to be absolutely sure, they made their first strike. Bang, operational control of 11,000 acres with the right to drill at least one prototype well to test their research.



Three months later (this is January now), that well was drilled and fracked. Big frack — 400,000 gallons of water, 125 TONS of sand. It wasn’t an immediate gusher, but as of a few weeks ago, it was dripping 28 barrels of crude every day.


Do the math: 28 barrels times $68. That’s the daily payout, as long as the pay zone holds out. Nearly $2,000 a day, up to $720,000 a year. One well. A “test.”


MOLOF wants to drill another 7 wells in that zone to confirm that the system works. These aren’t hugely expensive drill jobs . . . at the deepest, the Red Cave is 2,500 feet down. Management puts the cost at around $250,000 per well, “paybacks average as little as 6-12 months from completion.”


Drill a well, hang around 6 months to a year and book the profit. That’s the kind of story that built giants like Exxon in the first place. What does MOLOF do? First, they buy out their partner to get 100% interest on this project.


No sense in sharing when you’ve got HIGH CONVICTION. Apparently that test well had “virgin pressure.” It’s like they went back in time to tap the Panhandle back in 1910!



Then this morning, MOLOF pushes the button on another 30,000 acres of similar geology. Again, the logic is clear: when you’ve got a good thing going, make sure you have room to keep doing it. And you don’t want to share.


Now the giants might be watching this story with a little envy in their eyes. They had a century to pick over this territory and never got Red Cave to pay out. Here comes a tiny company with a little money to spend and a lot of expertise, and suddenly that “worthless” sand is worth something.


But that’s just what MOLOF does. They’re experts in these kinds of workover projects, going back to “brown fields” with modern science in order to squeeze a few drops more “black gold” out of every acre.


Over the years we’ve watched them roll that strategy into projects with $30 million of recoverable oil in the ground, proved and possible. That was a quiet business, little wells trickling for months before slowing down again. But even in its own right, it made this little company worth watching.


Then, suddenly, it looked like MOLOF was throwing that away in order to focus on this new project, this “Red Cave.” Apparently everything they’d built up to that point was worth trading in order to get this entire play to themselves.


That’s a huge bet. But look at the math again: $250,000 to start a well, a typical well might unlock 40,000 barrels of $68 oil and pay out within the first year. Massive internal rates of return . . . I saw one estimate above 50%.



A year ago, private investors were happy to pay MILLIONS to get their piece of that story at $0.30 per MOLOF share. Since then, Exxon’s woes cast a big shadow, but don’t be fooled.


Big Oil’s problems are theirs alone. Little Oil, smart oil, nimble oil like MOLOF can still write its own ticket and give investors a thrill. After all, production is GROWING here. And the economics speak for themselves.


Besides, it’s still black gold no matter who drills it. The edge here is that MOLOF found a way to drill this resource while Big Oil was still shuffling its cards. They got here first and now they get to reap the rewards.


Will Big Oil strike back? Buying MOLOF out at this stage wouldn’t even make Exxon blink, but it would sure feel good for MOLOF shareholders to get what this play is worth.


After all, 1.5 BILLION barrels came out of the rock right below the Red Cave layer. Who knows how much is sleeping in the sand above it now?


We’ll find out. Either way, if you’ve been thirsty for a way to play oil, go small. Take a page from the MOLOF book. Who’s got the BUZZ?


Happy, Happy, Happy Trading!






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