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Crude Oil, Where is it all going to come from?

Commodities / Crude Oil Oct 01, 2009 - 11:22 AM GMT

By: FleetStreetInvest


Best Financial Markets Analysis ArticleThemes: Oil, Kurdistan, Demand, China

Q-Max buyout is a shrewd move for Netcall

Shares in Aim-listed Netcall (ticker: NET) jump 6% on news that it is acquiring Q-Max for £2.5m.

Both Q-Max and Netcall provide software that improves the efficiency and response rate of call centres. This makes the deal not only highly complementary but also an excellent use of Netcall's cash.

Small cap specialist broker, Hoodless Brennan, says “the key benefit will arise from cross selling Netcall and Q- Max products into both distribution channels. Q- Max adds 100 new customers and enhances the group’s product offering.”

Netcall has seen its share price jump 127% in the last 12 months.

Quote of the Day: ‘Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like.’ Will Rogers

Where is it all going to come from?

  • Why it pays to think small about oil
  • The secret’s almost out: your chance to claim a £30,700 payout

Dear Reader,

Today’s a real red letter day – when I’m going to fill you in a pharma penny share it’s impossible not to get excited about. All will be revealed later. But first…

Consider the following: The number of cars on China’s roads has gone up by a staggering 25% in a single year. So Nick Su, the finance chief of the AIM-quoted Chinese oil refiner Haike Chemicals (ticker: HAIK), told me on Tuesday.

Consider also that China has thrown a sizeable portion of its four trillion yuan stimulus package on a mammoth programme of infrastructure development: Bullet trains will connect major cities and brand new highways will be built across the entire country.

This is ensuring that demand for steel and other natural resources, especially energy, remains sky-high, which is of big interest to you as an investor. So far, so good. But it begs a major question…

Where is the fuel going to come from? The investor who knows this knows where serious money is going to be made.

Take uranium for example. Uranium is in big demand. Here’s what Richard Lockwood, manager of the City Natural Resources High Yield Trust, has to say: “ China’s southern Guangdong province is planning a six-fold increase in its nuclear power generating capacity. Interestingly, this target is approximately 2.6 times China’s total uranium generating capacity. Even more interesting is the lack of any direction as to where the necessary uranium might come from.”

Interesting indeed, and as compelling a reason as I can think of for you to buy a stake in uranium miners like Kalahari Minerals (ticker: KAH).

Of course, one reason why uranium is in demand is because other fuels for generating electric power are in short supply. There is not much chance of oil being diverted to power generation because most of us still need petrol to get about. And with China alone needing fuel for 25% more cars on its rapidly expanding road network, one thing is abundantly clear: the world needs more oil.

Why it pays to think small about oil

It’s clear that a good investor should have some exposure to oil and gas. But you need to know where to look – and here it pays to think small, not big…

There’s a problem with buying into the oil majors, such as BP and Shell. They sell so much of the stuff each day that they a face a continual, expensive challenge to replenish their reserves. But small explorers are not in this position. This is of real significance to you as an investor. Let me explain…

If a small explorer makes a good oil discovery it does not simply offset the oil that it’s selling. Instead, it takes them from a position of having no oil – and consequently, a very uncertain outlook – into one where they have a profitable long-term future. So shareholders who look to small explorers can make big money. But where exactly should you be looking?

For me, the crucial factor is whether the explorer’s licence area has the potential to host a really major reserve.

That is why I like Kurdistan, home of Gulf Keystone (GKP) – which this week further increased the estimated size of its Shaikan find – and Sterling Energy (SEY).

I also like the Falklands, where the licence holders are Borders & Southern (BOR), Desire (DES), Rockhopper (RKH) and Falkland Oil & Gas (FOGL).

But there’s no getting away from the fact that even these ventures pose risks. For example, for the Falklands companies, the attitude of Argentina presents a political risk. There is also a major technical challenge to extract the oil.

This got me thinking: is it actually possible to find a high-reward/low-risk play in oil? It sounds too good to be true. Yet I have found just that…

It is in an area that could hold several billion barrels of oil. It is politically stable. It is in a good spot, geographically. And the exploration challenge looks relatively mild. In short, it looks like an irresistible bet.

An insider friend of mine told me this was ‘the biggest thing he had ever seen’. If you’re interested in finding out more – and you really should be – don’t miss this month’s edition of Red Hot Penny Shares, where I’ll reveal all you need to know about my new top oil penny share tip. You can add your name to the list to receive this by joining up here.

Now to pick up from where I started this email…

The secret’s almost out: your chance to claim a £30,700 payout

On Tuesday I promised to fill you in on the pharma penny share opportunity of a lifetime.

Well the full report is nearly ready and it’ll be with you tomorrow.

For now, I can tell you this: It talks about a company with some jaw-dropping potential. Citigroup have backed its latest product, and called it “transformational”. They can see it hitting sales of “almost $2 billion”... and that’s just ONE product in this company’s pipeline!

I told you my colleague, Dr Mike Tubbs, has been doing some deep research on this. He’s convinced this firm is on the verge of soaring. And from what I’ve seen, he could be spot on.

Mike’s been in this game for 40+ years and has developed an incredible insight into what makes certain companies soar and what makes them flop. I’ll warn you now, this brand knew way of looking at the markets will seem crazy at first, but when you see the results, you’ll be amazed.

How big could the opportunity in this little company be? How does a 614% jump in share price sound?

You can see why it got my attention. That’s the kind of gain that could turn a small amount of money into a whole lot more very, very quickly.

Anyway, as promised, you’ll find out all about this astonishing opportunity before anyone else tomorrow. So keep an eye on your inbox!

Good investing,

Tom Bulford For The Penny Sleuth

P.S. Mike’s new report is out tomorrow. But a quick reminder before I go – just in case you need any more convincing about the new oil penny share tip I mentioned earlier. Let me tell you that this company has already secured licences to explore at 22 sites. The potential yield from these sites is a staggering 11 billion barrels of oil. The ball is already rolling. This could be bigger than Gulf Keystone! To pick up the next issue of Red Hot Penny Shares and find out how you could cash in, click here.

Please note: Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares; never risk more than you can afford to lose. Please seek independent financial advice if necessary.

Copyright 2009 © Fleet Street Publications
Fleet Street Daily is an unregulated product published by Fleet Street Publications Ltd. Information in Fleet Street Daily is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Appropriate independent advice should be obtained before making any such decision

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