Picking a time to be aggressive in a business model is critical to any company, but especially to an exploration company. The life cycle of an explorer is long and generally moves with sizable waves which present investors specific areas for valued opportunities.
When a company is pushing hard to execute growth strategies, savvy investors pick up on it quickly and look for the opportunity to present itself as one of those "doors of opportunity" usually is available right before a company enters the exploration stage on a promising piece of property.
Billings, Montana-based UnionTown Energy, Inc. (OTCBB:UTOG), a company focused on the acquisition, exploration, development and production of oil and natural gas properties, is quenching its thirst for growth recently through multiple acquisitions in the month of April.
The first two acquisition targets, Musselshell and New Miami, have already been successfully closed and have combined estimated recoverable oil reserves of 12.8 million barrels over approximately 8,480 acres. Those acquisitions were announced on April 6 and April 8, respectively.
Wednesday, UnionTown announced a third acquisition through the signing of a non-binding Letter of Intent to acquire the 11,000+-acre Teton River oil and gas property in northwest Montana; notching a third mark on the corporate bedpost in seven days. A $100,000 non-refundable deposit has been advanced on the signing of the LOI to be applied towards the final purchase price with the terms of the definitive agreement presently being finalized and slated to be announced on closing of the transaction, which is anticipated within 30 days.
The property is highlighted by the Swift Sandstone oil field with a 1980 discovery of dipdown oil on the Belt Island High that led to exploration in the area and producing wells. Wells have been previously drilled on the Teton River property that have produced positive oil results and lead UnionTown to believe that their property can outperform the Bannatyne and Utopia fields; two nearby and producing fields that are pulling oil from the Swift formation.
UnionTown plans to use advanced technologies, such as Steam Assisted Gravity Drainage (SAGD) to bring the wells into production in the medium term. SAGD is an enhanced oil recovery technology for producing heavy crude oil and bitumen. SAGD uses a pair of horizontal wells that are drilled close together (the upper well is only a few meters above the lower) and a continuous cycle of low pressure steam to heat the oil and reduce its viscosity.
As a result of the lower viscosity, the heated oil drains into the lower wellbore where it is then pumped to the surface.
Investors aren’t jumping hard on this news today as the price of oil and overall market sentiment was on the slide after a strong start to kick off the day. Shares were driven higher with the first blast of acquisition news last week, sending the price of a share of UTOG up more than 30%. Since then, the rise has cooled off to settle on a firm support level presently in the area of $1.70, but still a far cry from the 40-cent level where the shares started of 2011.
With the aggressive growth strategies being demonstrated by UnionTown and interest of investors perking up as shown in the volume increases over the last two months, it is clear that UTOG is hitting the watchlists of more and more people in the oil exploration investment community.
Proper due diligence is always encouraged.
