The Mississippian formation in Oklahoma and Kansas is, “The highest rate of return play in the United States” Tom Ward, CEO SandRidge Energy state on Bloomberg, April 3, 2012.
Majors are already in Kansas with hundreds of thousands of acres and this off-radar junior beat everyone to a stunning 175,000-acre position of their own!
Kansas is booming with:
– Billions of barrels of oil in place
– 90% to 100% of new wells are hitting oil
– Lease prices soaring ten-fold in recent months
– New drill permits now second highest in the nation
Easy oil is history…but big profits are just getting started!
Company: Circle Star Energy
- CRCL recently announced a stunning 175,000-acre position on an enormous Kansas oilfield estimated to hold billions of barrels in high quality crude.
- The company has substantial income from its ongoing Texas oil field operations.
- CRCL shares currently sell at a fraction of potential net asset value!
Top tier companies, such as Cheaspeake Energy (NYSE: CHK $12.01B), SandRidge Energy (NYSE: SD $3.08B), and Shell (NYSE: RDS $218.0B) now control hundreds of thousands of Kansas acres. Land prices are breaking records as companies battle to lock in remaining unclaimed oilfield prospects.
In our analysis, 2012 will be the breakout year for the emerging Kansas oil boom, much like 2006 was for the Bakken and 2010 was for Eagle Ford.
Here’s why you should research CRCL.
With 2012 taking shape as the breakout year for Kansas, ground floor positions are disappearing fast.
The pace of acquisition is so rapid and the land is becoming so scarce that we see few opportunities remaining for juniors to establish large acreage positions in Kansas.
CRCL already has significant oil and gas operations in Texas, so when early rumors of the Kansas oil run began to circulate, CRCL management jumped on the opportunity.
Before the rush for Kansas land become too heated, CRCL landed two significant Kansas positions that now total 175,000 acres.
Why Kansas… Why Now…
The Kansas oil boom has been inevitable for over 90 years. It’s all due to breakthroughs in petroleum exploration and drilling technologies.
In the 1920s, Kansas was among the top oil producers in the nation. Phillips Petroleum (now ConocoPhillips) got its start in Kansas oil fields, but as the oil became increasingly difficult to extract, they along with others moved on to other fields.
What they left behind is now one of the biggest under explored oil fields in the United States. And for the first time in almost a century, producers know how to get that oil out of the ground.
Horizontal drilling, fracking and resource location are bringing Kansas oil fields back to life. Billions of barrels of oil are estimated trapped in three distinct formations of oil and gas layered under central Kansas real estate.
Though both gas and oil are present, the main target is oil and Kansas oil is producing the best rate of return in the United States, especially when compared to the return on natural gas these days.
With gas at the lowest price in years and surpluses overflowing storage, producers are quietly pulling back on dry gas (like the Bakken) and using their drilling expertise to target domestic oil resources that have been ignored for decades.
And unlike natural gas, it’s not likely for oil production in the United States to exceed consumption.
CRCL secured a large-acreage position in Kansas, which is just now being recognized as the biggest new oil play in the United States. For making money as a ground floor investor, Kansas is the place to be and in our opinion, CRCL could potentially be a major breakout play.
In fact, excluding Texas…Kansas has issued more new drilling permits mile than any other state in America, including Alaska and California.
MUST READ!!!! On January 12th this year, the Pratt Tribune reported:
“This [oil] boom starts in south central Kansas courthouses where dozens of title researchers are pouring over property titles to verify the owners of mineral rights for oil and gas companies seeking a lease to drill,” said Derek Williamson, title researcher from Oklahoma City.
“The number of researchers has gotten so big that the Register of Deed’s office has set up tables in the lobby on the second floor outside the office door.
“In 2009 a total of 126 leases were generated, in 2010 the leases numbered 125 but in 2011 the number of new oil and gas leases in Pratt County was around 770, said Pratt County Register of Deeds Sherry Wenrich.”
On March 8, 2012, CRCL announced its intent to begin drilling on approximately 7,500 acres located in southern Kansas. The company reported,
“The area offers significant drilling potential in the oil-rich Mississippian Limestone formation as well as a number of other related drill targets both above and below this exciting play.”
According to company estimates, an initial target of 7,500 acres could carry as much as $300 million in unrecovered oil!
It appears that CRCL is wasting no time getting that revenue flowing.
The immediate plan is to drill six conventional, low-cost vertical wells on the shallow Kansas Lansing formation in Trego County.
With an historical 83% success rate in the area, CRCL pro formas Kansas Lansing to produce an average 450,000 barrels per well.
That’s $36 million in revenue assuming oil at $80 a barrel! With oil today over $100 and climbing, the future revenue from these five wells alone is enormous.
Given a conservative 80-acre development spacing on offset wells… CRCL’s initial 7,500-acre prospect may support 75 more producing wells!
Most geologists with significant expertise in Kansas oil fields conclude that despite decades of conventional vertical drilling, central Kansas oil fields hold hundreds of billions of barrels of petroleum reserves that can be recovered with current drilling technologies.
With 175,000 acres, CRCL’s leases could ultimately support 1,500 wells or more!
The liquids-rich region, considered tapped out by vertical drilling decades ago, has been yielding reservoirs to horizontal operators such as SandRidge, Chesapeake, Devon and Tulsa-based Eagle Energy LLC during the past two years.
These majors are already proving the tremendous production potential in Kansas.
SandRidge Energy recently reported the economics of drilling in the deeper Mississippian oil play. Their calculations show that the average well will pay out what’s equivalent to a whopping 96% rate of return with a net present value of $5.6 million.
The rate of return is huge compared to the same calculation performed on many major plays in the Bakken or Eagle Ford shales.
What’s more, SandRidge reports that the exploration and development (EP) cost per barrel from the Mississippian is among the lowest in the industry. SandRidge expects a cost of $8.47 per barrel (BOE) which can be one-third to one-half what others experience working Bakken Shale.
And because CRCL is targeting the shallower Kansas-Lansing formation, the company expects its exploration and development costs per barrel to be significantly less still.
CRCL is already generating substantial revenue from its Texas operations, over $100,000 in monthly revenue!
Just starting out, CRCL loaded its start up portfolio with top tier acquisitions. On July 6, 2011, CRCL announced:
“The Company has acquired mineral interests, overriding royalty interests and non-operated working interests in a set of producing and non-producing oil and gas assets throughout Texas comprised of over 30,000 gross acres.
“The acquisition includes production from the Eagle Ford Shale, Austin Chalk, Wolfcamp, Woodbine and Deep Bossier formations.
“EnCana Oil & Gas (USA), Inc., Chesapeake Energy, Newfield Exploration Company, CML Exploration, LLC and Petromax Operating are operators of the respective assets.
“Revenue from the properties averaged more than $125,000 per month from April, 2011 to January, 2012.”
With this start up acquisition, CRCL locked in:
1. Ongoing Revenue
2. Proven Reserves
3. Top Tier Operations
Many of the oil and gas juniors we evaluate don’t report revenue for years, if ever!
With substantial holdings in Kansas and a solid base of Texas operations, CRCL is building impressive potential for a potential explosive future growth.
With the global demand for oil growing, political tensions heightening and new oil supplies shrinking, oil may surpass $150 a barrel sooner than expected.
For more information about Circle Star Energy (CRCL), please visit http://www.CircleStarEnergy.com
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