Is oil settling in place or is this just the calm before another storm? The run of oil to the mid-100S may have been just a bubble and the run back down during the recession may have just been a correction as a product of the overall environment, but the yo-yo seems to be finding its place near $100 U.S. … for now.
With the world’s oil reserves depleting and no completely viable solution taking a firm foothold, plenty of analysts are still calling for oil prices to find another surge in the next decade and hold its place. Of course, predictions are like excuses, but the fact remains that oil is still a valuable commodity at this moment. With constant instability overseas and non-stop market overreactions contributing to volatility, the little magic eight ball tends to point north for oil prices as a matter of weighing the odds.
Already having traction in the market, Seattle-based Legend Oil and Gas Ltd. (OTCBB:LOGL) is a growing junior that controls producing oil wells, a bit of a rarity as most juniors are still just drilling holes and looking for oil pools. Legend’s primary property is the Piqua Project which generates revenues to fund additional expansion.
The "grow grass to seed more grass" business philosophy has proven bountiful for countless companies and it is boding very well for Legend as well. A smaller project in its current state, the Woodson County, Kansas-Piqua project covers 1,040 acres of net mineral leases with 33 active wells.
Per the Company’s website, "With a projected net operating income of $140,000/year (based on an oil price of $70 per barrel and keeping operating expenses constant), the project’s monthly cash flow is expected to cover general and administrative expenses, while providing additional capital for the development of the property."
As the Legend comments allude, the Piqua property appears to be setting the stage for significant expansion. Today, the Company announced that is has signed a Letter of Intent (non-binding) with International Sovereign Energy Corp. (ISR) of Calgary, Alberta, to acquire all of ISR's interests in land and production in Canada for a purchase price valued at $17.0 million in a cash and shares transaction.
This is no small acquisition as ISR owns properties that are "producing a minimum of 300 barrels of oil equivalent per day (gas converted at 6:1), with approximately 30% of the production being crude oil. Proven and probable reserves associated with the assets are approximately 1.0 million barrels of oil equivalent (BOE). Annualized cash flow is anticipated to be over $3.0 million."
Quite a nice leap in revenue for Legend should the deal reach finalization.
Shareholders appear to share the excitement conveyed for the future of Legend Oil and Gas by Legend’s President Marshall Diamond-Goldberg when he stated "…we anticipate increasing production on the properties with a robust capital expenditure program over the next eighteen months."
At the closing bell, shares of LOGL are pinned right against 52-week (and all-time) highs of $2.41, a 4.3% rise on the day. While the run may not be over for this well-aligned company, shares have been on a solid climb over the last two weeks; rising more than 20% in an apparent quest to break all-time highs.
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