Best-in-Class Well Productivity and Low Decline Rate Further Validates Company’s Northern STACK Acreage
TULSA, Okla. and VANCOUVER, British Columbia, Dec. 03, 2018 (GLOBE NEWSWIRE) — Jericho Oil Corporation (“Jericho”) (TSX-V: JCO; OTC PINK: JROOF) is pleased to provide an update regarding its ongoing participation in its Oklahoma STACK Joint Venture (“STACK JV”). The Swordspear 15-23N-10W #1H, the STACK JV’s first Osage formation well, has now been on production, since running an electrical submersible pump (capable of handling high fluid volumes), for 160 days and has produced, on average, 330 BOE per day (50% oil). The strength and, more importantly, the longevity of the Swordspear well’s production profile has given the Company great confidence in its northern STACK acreage position.
Well positioned around significant activity from ExxonMobil and Alta Mesa Resources, the STACK JV’s northern STACK acreage, has pushed the boundary for where the Osage formation has been successfully proven with modern horizontal hydraulic stimulation. To achieve a strong well, it takes significant investment in actively drilling new wells in the same oil field, studying the geology where these wells exist and honing in on a repeatable completion technique. The Swordspear well, in addition to our non-operated positions in nearby peer wells, will provide a continual flow of data which will inform and improve our deep inventory of future multi-zone developments and the overall value of our coveted STACK resource.
The Company’s 2018 development plan within the STACK continues to focus on defining and proving up its acreage position for the Meramec and Osage formations through horizontal drilling. Currently, the STACK JV now has an interest in four Osage formation wells and two Meramec formation wells.
Brian Williamson, CEO of Jericho Oil, stated, “The Company, as evidenced by the Swordspear well production, continues to provide operational excellence by delivering best-in-class well productivity in this world-class play. Our current well results, 2019 planned development, coupled with surrounding marque peer wells planned for Q4-2018 and Q1-2019 will provide a springboard of net asset value for our STACK JV. While extremely satisfied with the result of this first Osage formation well, we will look to improve even further upon our future development as we continuously integrate real-time drilling, completion and production data into our geology and engineering models.”
About Jericho Oil Corporation
Jericho Oil (www.jerichooil.com) is focused on domestic, liquids-rich unconventional resource plays, located primarily in the Anadarko basin STACK Play of Oklahoma. Jericho’s primary business objective is driving long-term shareholder value through the growth of oil and gas production, cash flow and reserves. Jericho has assembled an interest in 55,000 net acres across Oklahoma, including an interest in ~16,000 net acres in the STACK Play. Jericho owns a 26.5% interest in STACK JV.
Jericho’s current operations are focused on the oil-prone Meramec and Osage formations in the STACK. The Jericho team applies advanced engineering analyses and enhanced geological techniques to under-developed resource areas.
Based in Vancouver, British Columbia, with operational headquarters in Tulsa, Oklahoma, Jericho trades publicly on the TSX-Venture (JCO) and OTC (JROOF). Jericho owns its net acre position in Oklahoma through, and participates in the STACK JV through, one or more wholly owned subsidiaries.
Cautionary Note Regarding Forward-Looking Statements: This news release includes certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual events and results to differ materially from Jericho’s expectations include risks related to the exploration stage of Jericho’s project; market fluctuations in prices for securities of exploration stage companies; and uncertainties about the availability of additional financing.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
To state that Oil has been through some tough sledding in recent sessions would be a colossal understatement. After recently hitting the skids for an unprecedented twelve consecutive sessions, this decline represents a rout never before witnessed.
chart courtesy of Stockcharts
Looking at this chart, you’d think global demand had fallen off a cliff.
Aside from Trump telegraphing warnings to OPEC not to cut production, there seems to be a perception out there that oil is fast becoming obsolete, that it’s going away, that the global shift toward a greater reliance on EV’s (electric vehicles) will render it a useless commodity overnight.
Not true. Not by a highway mile. The Big Three automakers continue to crank out traditional gas-powered vehicles, producing more in a single day than Tesla will in an entire year. Global oil consumption could top 100 million barrels per day going into 2019.
This next oil chart depicts the last five years of trading. The $50 level looks as if it could represent a fairly decent support zone. It’s also a big round number.
The market often succumbs to these big round numbers as if by some powerful gravitational pull.
My take of this support zone (horizontal line drawn in blue): a decent bounce from here, if not a bottom, could be in the cards short term.
chart courtesy of Stockcharts
For sure, the rumblings coming out of the Whitehouse and OPEC will continue in the weeks and months to come. For sure, the volatility we’ve witnessed recently will have made its masterpiece by year-end (Bill Shakespeare voice). But this current situation could represent a rare opportunity to back up the truck on asset rich companies at deeply discounted prices.
The evolution of an aggressive small-cap oil company…
Jericho Oil Corp (JCO.V), a micro-cap in the oil space, is one of those rare company’s that had the foresight to stoke up its treasury while the going was good, before the market imploded several years back. With roughly $13M in the company coffers, it went looking for the right opportunity.
That opportunity came along in the mid-continent of the US – Oklahoma. Today, the company boasts an enviable land position of some 55,000 acres, including 16,000 acres in the Anadarko basin STACK play of Oklahoma.
If you are small – relative to the size of the true giants in the industry – you need to be focused. You need to appreciate the opportunity-set in front of you. And you need to know the marketplace you plan to execute in.
By focusing on Oklahoma, they’ve completely mitigated the risk of any sudden systemic governmental shift that could take away their business. Local and state governments are more apt to move Heaven and Earth to see that wells get drilled, and assets get developed.
Nearby communities are tied to oil production. They’re immersed in the culture and fully appreciate the many dividends oil production can generate.
Jericho acquired their position in the STACK for an average of $2,300 per acre. Today, those acres are fetching better than $15k per.
All of the these acquisitions have been drilled in the past. Jericho know there’s a significant resource there. They know the field is productive. They know the oil is extractable.
While the company was in the process of picking off properties on the cheap, they gained the support of three significant shareholders, each taking down a > 10% interest in the company. The names include the likes of…
The Breen Family Trust, with patriarch Ed Breen, former president of Motorola, ex-Chairman, CEO and liberator of Tyco International, current CEO DuPont… you get the idea.
Make no doubt about it, this 10% plus club represents solid votes of confidence in Jericho’s underlying fundamentals. They represent long-term shareholders, smart money, and strong hands.
Another benefit of engaging these strategic shareholders: No investment banks. No finders fees. With this management team, every penny is a prisoner.
The STACK…
Named after the counties of Sooner, Trend, Anadarko, Canadian, and Kingfisher, the STACK has evolved into a premier North American horizontal development play.
The acronym also represents the multiple, stacked productive formations present in the area:Chestermanning, Meramec, Osage, and Woodford.
This a prolific hydrocarbon system. The STACK’s hallmark: high oil and liquids-rich natural gas content, multiple horizontal target horizons, extensive production history, and historically high drilling success rates.
It’s important to understand that the area is dominated by a handful of large producers – Continental Resources, Devon Energy, Marathon Oil, Alta Mesa Resources, Newfield Exploration, and Chesapeake Energy. These companies have poured billions of dollars into developing their STACK assets. Jericho has positioned itself in the land of giants.
The recent takeover involving Newfield’s assets pound home the intrinsic value here – the price producers are willing to pay for these STACK assets.
The chart below helps demonstrate why these assets are so damn desirable…
The STACK is among the lowest cost basins on the entire continent. The region is flush with infrastructure. The area has good takeaway capacity – there are good pipes in the ground. Good takeaway capacity means exacting the best possible price for extracted oil.
Another factor driving investment in the region: your typical 1-mile horizontal well produces approximately 500,000 to 1,000,000 barrels of oil equivalent with rates of return greater than 75%. These are serious numbers.
The shift…
The pennies-on-the-dollar bargains Jericho scooped up in 2015 thru 2017 are not there today. As the market for acres shifted from dirt cheap to overpriced, so has the company’s focus. There have been no acquisitions since September of last year. The company’s focus is now on development. And they have heaps of development runway.
Developing a well is not an overnight process. From a scientific POV, a lot of thought and methodical planning need to go into it. Be that as it may, the company has two wells in the bag and two more coming on.
The wells…
Producing Operations:
Wardroom (Meramec formation):
Jericho holds a 47.5% Working Interest.
currently producing at 220 Gross BOE per day (40% oil; 227 days since first oil production)
Swordspear (Osage formation):
Jericho holds a 47.5% Working Interest.
currently producing at 351 Gross BOE per day (50% oil; 128 days since first oil production)
Drilling operations:
Trebuchet (Operator: Armor Energy; Major County – Osage formation)
Jericho holds a 48.0% Working Interest.
Drilling ahead and building the curve from vertical to lateral section.
Valkyrie (Operator: Staghorn Petroleum; Blaine County – Meramec formation)
Jericho holds a 23.5% Working Interest.
Drilling ahead and nearing total measured depth of approximately 13,500 feet
The company also has a small working interest in two additional Osage formation wells, Ula and Hilltop, operated by ExxonMobil and Alta Mesa Resources respectively. Jericho’s participation in these wells is primarily to gain a greater understanding of the underlying subsurface geology.
Here, the company reported progress on the drilling, completion, and flowback of their most recent Osage and Meramec wells:
The highlights from this news release are as follows…
Drilling Operations:
Trebuchet (Operator: Armor Energy; Major County – Osage formation):
Jericho holds a 48.0% Working Interest.
Drilling ahead in the lateral section – ~90% of the planned total measured depth.
To date, the company has seen tremendous strides in the rate-of-penetration (“ROP”) on the Trebuchet relative to their first Osage formation well (the Swordpear) attributable primarily to an improved drilling-bit set-up and specific lateral geo-steering.
The ROP in the lateral on the Trebuchet is approximately 1.6x-1.8x the Swordspear at the same measured depth putting downward pressure on total rig days for the well.
The fracture stimulation of the well is expected to begin in late-November / early December.
Flowback Operations:
Valkyrie (Operator: Staghorn Petroleum; Blaine County – Meramec formation):
Jericho holds a 23.5% Working Interest.
35 fracture stimulation stages successfully performed and currently in flowback.
After only a few days onflowback, the company is extremely pleased with the resulting downhole pressures and total fluid flowback.
Brian Williamson, CEO of Jericho Oil, had this to say regarding these recent developments:
“The Company continues to deliver on its two-pronged strategy of delineating and de-risking our STACK acreage for the Meramec and Osage formations,” adding, “our second Meramec and Osage formation wells have given our team the added knowledge and confidence in our world-class acreage position. We continue to learn from each well and have put forth best practices on our Trebuchet well to decrease drilling costs in the lateral section. We are excited to provide further updates on the production of these wells by year-end.”
Though Jericho’s current focus is in de-risking and proving-up its 16,000 acres in the STACK, significant upside also exists within the company’s asset portfolio – some 40,000 acres – outside of the STACK. Their drill ready Osage Extension play in northeast Oklahoma is the only one example of a project with significant upside potential.
Equity Guru’s Chris Parry, during a recent conference call with the company, offered this take on the company, its assets, and development strategy. To paraphrase Chris…
‘Jericho has taken a MONEYBALL approach. They got in when everyone else was getting out. They got some nice assets on the cheap. They saved themselves the trouble and expense by purchasing assets that had already been explored and tapped into. They have competitors coming into the area and purchasing assets next door at significantly higher valuations to the prices they paid. They’re treating their money like it’s valuable. All of the above lowers the risk and sets up a nice growth play, even if the price of oil doesn’t cooperate.’
Nice summary. Accurate too.
With 128.7 million shares outstanding and a sub-fifty cent share price, Jericho has an extremely modest market-cap of $61M. This price weakness is unlikely to last.
The company could be on the verge of dramatic production growth. Newsflow should be strong going forward.
Ultimately, Jericho’s goal, via a systematic and methodical approach to development, is to build a world-class blue-chip energy company.
We stand to watch.
END
~ ~ Dirk Diggler
Full disclosure: Jericho Oil is an Equity Guru client.
Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.
TULSA, Okla. and VANCOUVER, British Columbia, Nov. 12, 2018 (GLOBE NEWSWIRE) — Jericho Oil Corporation (“Jericho”) (TSX-V: JCO; OTC PINK: JROOF) is pleased to provide an update regarding its ongoing participation in its Oklahoma STACK Joint Venture (“STACK JV”). The Company’s 2018 development plan within the STACK continues to focus on the delineation and de-risking of its acreage position for the Meramec and Osage formations. Currently, the STACK JV now has an interest in four Osage formation wells and two Meramec formation wells. An update is provided below on the drilling, completion and flowback of our most recent Osage and Meramec wells:
Drilling Operations:
Trebuchet 21-23N-10W #1H (Operator: Armor Energy; Major County – Osage)
— 48.0% Working Interest
— Drilling ahead in the lateral section – ~90% of the planned total measured depth
— To-date, we have seen tremendous strides in the rate-of-penetration (“ROP”) on the Trebuchet relative to our first Osage formation well (the Swordpear 15-23N-10W #1H) attributable primarily to an improved drilling-bit set-up and specific lateral geo-steering.
— The ROP in the lateral on the Trebuchet is approximately 1.6x-1.8x the Swordspear at the same measured depth putting downward pressure on total rig days for the well
— The fracture stimulation of the well is expected to begin in late-November / early December
Flowback Operations:
Valkyrie 6-19N-12W #1H (Operator: Staghorn Petroleum; Blaine County – Meramec)
— 23.5% Working Interest
— 35 fracture stimulation stages successfully performed and currently in flowback
— After only a few days on flowback, we are extremely pleased with the resulting downhole pressures and total fluid flowback
The STACK JV’s operations on its second Meramec formation well (the Valkyrie) on its western flank and a second Osage formation well (the Trebuchet) on its northern most STACK acreage is a continuation of the Company’s delineation plan for the STACK.
Brian Williamson, CEO of Jericho Oil, stated, “The Company continues to deliver on its two-pronged strategy of delineating and de-risking our STACK acreage for the Meramec and Osage formations,” adding, “our second Meramec and Osage formation wells have given our team the added knowledge and confidence in our world-class acreage position. We continue to learn from each well and have put forth best practices on our Trebuchet well to decrease drilling costs in the lateral section. We are excited to provide further updates on the production of these wells by year-end.”
Jericho also reports that it has retained Equity Guru Media Inc. for a 6-month editorial marketing contract. Chris Parry owns www.equity.guru and is a two-time Webster Award winning journalist who has been featured in the pages of The Vancouver Sun, The Province, National Post, Spin, Hollywood Reporter, FHM, Stuff, and Stockhouse. He was the first business journalist to identify and focus on the move to marijuana as an investment opportunity, and started Equity.Guru as a venue for honest, no punches pulled coverage of the North American public markets. The terms of the contract are for C$8,333.33 per month for 6 months of coverage commencing November 1, 2018. About Jericho Oil Corporation
Jericho Oil (www.jerichooil.com) is focused on domestic, liquids-rich unconventional resource plays, located primarily in the Anadarko basin STACK Play of Oklahoma. Jericho’s primary business objective is driving long-term shareholder value through the growth of oil and gas production, cash flow and reserves. Jericho has assembled an interest in 55,000 net acres across Oklahoma, including an interest in ~16,000 net acres in the STACK Play. Jericho owns a 26.5% interest in STACK JV.
Jericho’s current operations are focused on the oil-prone Meramec and Osage formations in the STACK. The Jericho team applies advanced engineering analyses and enhanced geological techniques to under-developed resource areas.
Based in Vancouver, British Columbia, with operational headquarters in Tulsa, Oklahoma, Jericho trades publicly on the TSX-Venture (JCO) and OTC (JROOF). Jericho owns its net acre position in Oklahoma through, and participates in the STACK JV through, one or more wholly owned subsidiaries.
Cautionary Note Regarding Forward-Looking Statements: This news release includes certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual events and results to differ materially from Jericho’s expectations include risks related to the exploration stage of Jericho’s project; market fluctuations in prices for securities of exploration stage companies; and uncertainties about the availability of additional financing.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Nov 08, 2018 12:28 pm
By Tekoa Da Silva
I had the chance to sit down once again with Rick Rule, the president and CEO of Sprott U.S. Holdings, Inc. The topics of discussion covered what can often “go wrong” with general and administrative expenses, change of control provisions, changes in corporate strategy (referred to as “mission drift” in this context), and uniquely structured insider private placements.
“Many junior mining companies don’t regard shareholders as partners, they regard them as unsecured creditors,” explained Rule. “[So] anticipating outcomes based on the self-interest of the executives is the best way to understand [how] things are going to unfold.”
Commenting on general and administrative expense items, Rule noted that, “I have seen several circumstances where $10 million market cap companies with $800 thousand in the treasury were paying the CEO $450 thousand a year. In other words, the CEO’s salary alone was taking up 5% of market cap — on an annual basis. That means the CEO, him- or herself (if you assume they have $800 thousand left in the company), will bankrupt the company in [less than two years].”
Speaking toward change of control provisions, Rule recounted that, “Many people raise money from private parties with the view that they’re going to make a discovery and sell the discovery. And what you learn is that many management teams get paid twice. I have seen, in a number of circumstances, management teams [install] change of control provisions … where if the company is sold (which was their stated intention), they get compensation on sale equal to five years of their average salary and bonus expense, and five years of ancillary expenses — things such as rent and health benefits.”
“That’s one of the reasons why some management teams are willing to entertain merger and acquisition,” Rule added, “where their only participation in the company is as option holders. I’ve had a lot of bad experience, frankly, with change of control provisions, which is one of the reasons I study them.”
On the subject of oddly structured insider private placements, Rule explained that, “Private placements, where the company loans the executives the money to [buy] the private placement, … [are] the private placements … I really dislike. In other words … the private placement is just a recycle that allows the management team to sell the stock and strip the warrant — which is an artificial way of increasing their [own] options position. And that’s fairly common.”
When asked how one can protect themselves from the aforementioned (and more), Rule explained that, “One of the ways you can defend yourself … is by limiting your speculations (irrespective of apparent prospectivity or promotion) to companies that are headed by people who have been serially successful in the past … With a class-1 team at the helm [you’re] more likely to be successful.”
“As a speculator,” Rule concluded, “your gains are [usually] hard won. I’m reminded of the scientists’ observation that the harder they work, the luckier they get.”
To watch the full video interview with Rick Rule, the president and CEO of Sprott U.S. Holdings, Inc. click here. Read in browser »
Sprott U.S. Media, Inc. is a wholly owned subsidiary of Sprott Inc., which is a public company listed on the Toronto Stock Exchange and operates through its wholly-owned direct and indirect subsidiaries: Sprott Asset Management LP, an adviser registered with the Ontario Securities Commission; Sprott Private Wealth LP, an investment dealer and member of the Investment Industry Regulatory Organization of Canada; Sprott Global Resource Investments Ltd., a US full service broker-dealer and member FINRA/SIPC; Sprott Asset Management USA Inc., an SEC Registered Investment Advisor; and Resource Capital Investment Corp., also an SEC Registered Investment Advisor. We refer to the above entities collectively as “Sprott”.
The information contained herein does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
Forward-Looking Statement
This report contains forward-looking statements which reflect the current expectations of management regarding future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, and similar expressions have been used to identify these forward-looking statements. These statements reflect management’s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this document. These factors should be considered carefully and undue reliance should not be placed on these forward-looking statements. Although the forward-looking statements contained in this document are based upon what management currently believes to be reasonable assumptions, there is no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation and Sprott does not assume any obligation to update or revise.
Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any fund or account managed by Sprott. Any reference to a particular company is for illustrative purposes only and should not to be considered as investment advice or a recommendation to buy or sell nor should it be considered as an indication of how the portfolio of any fund or account managed by Sprott will be invested.
Past performance does not guarantee future results. The views and opinions expressed herein are those of the author’s as of the date of this commentary, and are subject to change without notice. This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.
Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.
Rich Dad , Robert T.Kiyosaki latest video about why we should invest commodities such as oil, gold, silver and other precious resources. Here in this video, Robert talks more on the reason why invest in oil as a long term financial success and how you can do it too in support with Rich Dad advisor , Tom Wheelright. Feel free to share the information worldwide and let them be educate by the financial education from Rich Dad.
Click here for the complete press release. Stefan Axell
Director, Corporate Affairs
416-306-6328 info@franco-nevada.com Sandip Rana
Chief Financial Officer
416-306-6303
JERICHO OIL
The Rodney Dangerfield of the Junior Oil & Gas Sector
In my humble opinion… Jericho Oil (JCO) is one of the least respected and most misunderstood companies in the Junior Oil & Gas Sector. Let’s learn and have a few laughs along the way.
I asked my old man if I could go ice skating on the lake. He told me wait till it gets warmer.
A barrel of Crude Oil a few years ago was cheaper than a bucket of Kentucky Fried Chicken. I kid you not!!! Those days are over. Oil has more than doubled and is hovering around $65. This means ever increasing profits in upcoming quarters, which should significantly boost share price.
I TELL YA THEY GET NO RESPECT!!!
I told my doctor I swallowed a bottle of sleeping pills. He told me to have a few drinks and get some rest.
Jericho Oil’s share price is CAD 52 cents, almost at its 52-week low and off over 60% from its yearly high. With oil prices rising significantly this year… something is definitely wrong with this picture.
I TELL YA THEY GET NO RESPECT!!
This morning when I put on my underwear, I could hear the Fruit of the Loom guys laughing at me.
Invest with the smart money…Jericho has world-class, patient shareholders (cornerstone investors include the Breen [Ed Breen, CEO, DowDuPont] and Belzberg families…(google them, very savvy investors and business titans). They got in at the company’s inception and provided all important strong equity financing support during the lean years 2015-2017 when others were fleeing the market. Follow the smart money. Money begets money !!!
I TELL YA – HE GETS NO RESPECT!!!
My wife made me join the Bridge Club … I jump off next Tuesday.
The stock is very tightly held…JCO insiders hold ≈ 46% of the 128 Million of the issued and outstanding shares. The top 10 investors own ≈ 70% of the company and are in it to win it !!!
I TELL YA – HE GETS NO RESPECT!!!
I could tell my parents hated me. My bath toys were a toaster and a radio.
Jericho with zero net debt, JCO had the cash and foresight during the downturn to acquire a very high-quality portfolio of assets from distressed sellers… at the bottom of the market. Today JCO owns and operates ≈55,000 net acres in Oklahoma… including an interest in ≈16,000 in the prolific STACK Play, which was acquired well below the current market prices.
I TELL YOU THIS COMPANY GETS NO RESPECT!!!
I looked up my family tree and found 3 dogs using it.
JCO is laser focused. Its assets are all within close radius in Oklahoma Basin and its team of experts are all based locally, which will keep costs down significantly as the company grows.
Last week I told my psychiatrist “I keep thinking about suicide”. He told me from now on you have to pay in advance.
Jericho Oil operates in a very pro-oil, pro-growth jurisdiction—Oklahoma is ranked as one of the top 2 jurisdictions globally for oil and gas investment (source: Fraser Institute). As Texas oil fields dry up the smart money is heading north to Oklahoma.
I TELL YA – WE GET NO RESPECT!!!
What a childhood I had, when I took my first steps my old man tripped me.
Oil is here to stay- Elon Musk and his exploding cars assures that? The World runs on Oil and JCO has it in spades. Oil is the lubricant that keeps the World Economy humming. Problems in Venezuela and many Middle Eastern nations assure the prosperity and popularity of US Crude Oil and any company with land packages in oil rich Mid -America will thrive for years to come.
I TELL YA THIS COMPANY GETS NO RESPECT!!!
My wife and I were happy for 20 years. Then we met!!!
Management is young, experienced and most importantly extremely business savvy as witnessed by the scooping up of tremendous assets at fire sale prices. CEO Brian Williamson sheepishly proclaimed “Never let a good crisis go to waste.” That my friends and fellow investors, is how fortunes are made !!!
In closing … I hope his article made you smile and perhaps laugh out loud. Trust me – I’m serious as a heart attack when I say this investment game is really no laughing matter. We have been through close to 15 years of a bull market in Tech and Fortune-100 stocks. It is high time to position yourself in high quality junior resource stocks which should boom when money flows into this neglected sector. It sure seems the Dow Jones bull is on its last legs and ran its course.
While I am relatively new to the Oil and Gas sector after years investing in Gold and Silver Miners. The same investment principles hold true. Buy Low…Sell High. Sounds simple but 90% of investors can’t seem to embrace that concept. You must be a contrarian investor and seek out the unloved and undervalued companies. The cream always rises to the top… In my humble opinion Jericho Oil fits this to a tee.
Oklahoma is nicknamed the “Sooner State”. I suggest you get into JCO sooner than later ?. Jesse Livermore considered the greatest stock trader of all-time wisely advised “Buy Right & Sit Tight”.
Symbol JCO- Can
JROOF- OTC
Share Price 52 cents Can
Market Cap $ 67 Million
Shares Outstanding 128 M
52 week Low/High .49-$1.38
Encana Corp. has clinched a deal to buy Oklahoma stalwart Newfield Exploration Co. in a stock trade worth an estimated $5.5 billion, as well as assuming $2.2 billion net debt, expanding its four core exploration areas of North America’s onshore to a solid five.
Calgary-based Encana said the deal, announced early Thursday, would add myriad opportunities across Newfield’s 360,000 net acres in two deep regions of the Anadarko Basin better known by their acronyms, the STACK and SCOOP, i.e. the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties, and the South Central Oklahoma Oil Province.
“This strategic combination advances our strategy and is immediately accretive to our five-year plan,” Encana CEO Doug Suttles said. “Our track record of consistent execution gives us confidence to accelerate and increase shareholder returns…When combined with our cube development model, expected synergies and relentless focus on efficiency, we are positioned to deliver highly efficient growth and quality returns.”
Encana in the past few years has streamlined its efforts to focus on only four areas of Texas and Canada, what it has called the “core four,” within the Permian Basin and Eagle Ford Shale of Texas, and Canada’s Montney and Duvernay formations.
With Newfield, Encana expects oil and condensate production to increase by more than 54%, with proved reserves climbing by around 85%. Newfield’s Oklahoma portfolio also contains more than 6,000 gross risked well locations and about 3 billion boe net of unrisked resources. In addition to the SCOOP/STACK, Newfield has holdings in the Arkoma Basin of Oklahoma, Williston Basin of North Dakota, Uinta Basin of Utah and assets offshore China.
The merger would create North America’s second largest unconventional resources producer, with pro forma 3Q2018 production of 577,000 boe/d, including liquids output of around 300,000 b/d, according to Encana.
“This transaction is the best path forward for our company,” Newfield CEO Lee K. Boothby said. “The combination of the two companies provides our investors with the very attributes that should be differentiated in today’s energy sector — operational scale, proven execution in development of large, liquids-rich onshore resource plays, a peer-leading cost structure and an exceptionally strong balance sheet…
“Throughout our 30-year history, Newfield has worked to create a strong portfolio of assets managed by some of the best and brightest people in the business. The merger will accelerate the development of these assets and as a result, capture full value for our owners.”
Encana estimated annual synergies of $250 million through bigger scale, cube development and overhead savings.
Newfield shareholders would trade each share for 2.6719 Encana common shares, which implies that Encana is paying a 35% premium for Newfield, based on closing stock prices Tuesday.
The deal is expected to be completed by the end of March. Encana shareholders would own about 63.5% of the combined company, with Newfield owning 36.5%. Two Newfield directors also would join the Encana board.
Once completed, Encana plans to raise the dividend by 25% and expand share buybacks to $1.5 billion, funded with free cash flow and cash on hand.
“The Encana-Newfield merger marks another significant transaction in the upstream space, but in our view only represents the tip of the merger and acquisition iceberg that will emerge in 2019,” Tudor, Pickering, Holt & Co. (TPH) analysts said. “Our thesis on this topic is fundamentally grounded in the view that shale has matured and as such companies will look to industry consolidation to gain scalable cost synergies and inventory. All of this is a healthy (and necessary) evolution in the upstream space.”
Analysts said they could “easily think of more than 10 additional deals where there should be a strategic asset rationale or cost synergies that would make sense heading into 2019,” representing more than $38 billion in market cap.
“Newfield is a particularly interesting transaction as the name was trading almost on top of current estimated proved, developed producing (PDP) valuation…From an asset consolidation perspective, the Permian will likely be a hotbed of activity next year,” the TPH team said. “Buckle up, as the upstream merger train has left the station and next year will likely be a wild ride.”
Williams Capital Group LP analyst Gabriele Sorbara estimated the deal is worth $11.26/boe of proved reserves, $37,869/flowing boe/d of production and $7,225/undeveloped acre in the STACK/SCOOP.
Wood Mackenzie senior analyst Roy Martin, who handles corporate upstream, said Encana has made “its boldest move yet,” with the Newfield deal.
“Encana has a long track record of ambitious acquisitions, but the Newfield purchase tops its $7.1 billion Permian purchase of Athlon Energy Inc. in 2014. It also makes Encana one of the top five unconventional producers in North America.”
Under Encana’s “back to winning” strategy that it launched in 2013, the company has been moving away from natural gas and realigning its portfolio toward liquids.
“More than $17 billion in acquisitions, in the Eagle Ford, Permian and now the Midcontinent, have been matched with $11 billion in noncore asset sales since launching this strategy.
“The results have been transformative,” Martin said.
Acquiring one of the Anadarko Basin’s top operators “marks an opportunistic purchase for Encana. It will benefit from acquiring an undervalued company, even based on our conservative modelling view. Encana can also afford it…
“There are significant benefits from becoming a larger North American player with multi-basin exposure,” Martin added. “Against the backdrop of Permian headwinds such as takeaway capacity constraints, cost inflation and geological risks related to parent/child wells, the Midcontinent complements the Eagle Ford as an attractive alternative investment option.”
Encana on Thursday also issued its third quarter results, reporting production across the North American onshore was up 33% from a year ago to 378,300 boe/d. Natural gas volumes climbed 27% to 1.197 Bcf/d, and oil output also increased 27% to 95,500 b/d. Natural gas liquids plant condensate was up 47% to 41,000 b/d, while other liquids output was 73% higher at 42,200 b/d.
Net earnings for 3Q2018 totaled $39 million (4 cents/share), down from year-ago profits of $294 million (30 cents), in part on $241 million in derivatives losses. Total operating expenses were higher from a year ago at $1.14 billion from $865 million, with operating income reversing a year-ago loss to $119 million from minus $4 million. Revenue increased year/year to $1.26 billion from $861 million.
Managing Editor | Houston, TX
Carolyn Davis joined the editorial staff of Intelligence Press Inc. in Houston in May, 2000. Prior to that, she covered regulatory issues for environmental and occupational safety and health publications. She also has worked as a reporter for several daily newspapers in Texas, including the Waco Tribune-Herald, the Temple Daily Telegram and the Killeen Daily Herald. She attended Texas A&M University and received a Bachelor of Arts degree in journalism from the University of Houston. carolyn.davis@naturalgasintel.com
Micro-cap oil explorer/producer Jericho Oil (TSX-V:JCO, OTC: JROOF) has spent the last three years assembling an impressive package of oil producing assets in Oklahoma. Jericho boasts a portfolio consisting of ~55,000 net acres in one of the hottest basins in the United States, including an interest in ~16,000 net acres in the STACK Play, one of the world’s top resource plays for horizontal development. While Jericho’s portfolio churns out nearly 1,000 barrels/day of oil production it’s the potential for growth through exploration where the real upside for Jericho shareholders exists.
In 2018 Jericho has been exploring more aggressively on its properties including drilling 3 STACK wells. Recently Jericho has begun talking about what it calls its “hidden gem”; Jericho’s “Osage Extension” play in northeast Oklahoma has company management very excited about the next few months. The Osage Extension is listed 3rd in Jericho’s “playbook” (its list of assets), however, this hidden gem could deliver substantial upside. Jericho has been studying the Osage Extension from a geological standpoint for many months and they are finally ready to drill it. Because the holes in the Osage Extension are shallower it will be cheaper to drill (sub-$3 million) than the STACK wells that Jericho has already completed this year.
Jericho feels that there is at least as much upside on its Osage Extension play and they will be tapping into this upside for roughly ½ the drilling cost of the STACK. The market has been focusing on Jericho’s STACK property package for much of 2018 and I believe most investors have forgotten about this hidden gem in the Osage Extension – it’s not something that Jericho has talked about a lot (because they were working to get a better understanding of it) and it’s not something which Jericho gives itself much reserve value for. That could change drastically over the next several months after Jericho begins drilling its hidden gem by the end of November.
The way to build a big oil company is through drilling and production growth. After spending 2 ½ years building a valuable portfolio of oil assets in Oklahoma (when oil prices were much lower than today’s US$67/barrel), Jericho is committed to unleashing the potential that these assets hold. JCO has begun to tap into this potential with its STACK wells and now the Osage Extension is next.
Jericho shares have strong support in the C$.50-$.55 area which roughly correlates to a US$50 million market cap (JCO has 128.6 million shares outstanding [~46% held by insiders]):
JCO.V (Daily)
As Jericho progresses with its growth plans I expect to see a move back up to the next area of resistance near C$.75 (almost 50% above current levels) followed by a rally back to all-time highs (C$1.38) reached earlier this year after Jericho announced initial results from its first STACK well.
The market loves exploration news, especially exploration news that indicates production growth. Jericho’s hidden gem might be about to deliver just what the market wants. Shrewd investors have the opportunity to use the recent market weakness which has resulted from a tumultuous broader market environment to pick up Jericho shares at support just before Jericho begins drilling its hidden gem.
Disclaimer
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Jericho Oil Corp. is a high-risk venture stock and not suitable for most investors.. Consult Jericho Oil Corp’s SEDAR profile for important risk disclosures.
EnergyandGold has been compensated to cover Jericho Oil Corp. and so some information may be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
This article contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). Certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “believes”, “aims to”, “plans to” or “intends to” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed by such forward-looking statements or forward-looking information, standard transaction risks; impact of the transaction on the parties; and risks relating to financings; regulatory approvals; foreign country operations and volatile share prices. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. Accordingly, readers should not place undue reliance on forward-looking statements and forward looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.
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