A Carpe Diem Oil Opportunity

Published July 9, 2003 | By Dr. Jack Wheeler

My friend Edward Goodliffe called me yesterday from the offices of Pan Southern Petroleum Corp. in Puckett, Mississippi. He’s on Pan Southern’s board and wanted to tell me about a fascinating oil play he thought ToThePointers should know about.

There’s a small reserve in a remote area of the state called Bentonia Field. It was drilled in the late 1980s by Coho Resources and has thus far yielded 1,700,000 barrels of oil from multiple pay zones. Coho, however, has suffered massive mismanagement and has gone in and out of bankruptcy several times. Bentonia became neglected, with its equipment falling into disrepair. Coho was bought recently by Denbury Enterprises, which is now auctioning off Coho’s smaller fields that they don’t wish to develop. Bentonia is one of them.

Bentonia is now producing over 2,500 barrels a month. Even with Coho’s extravagant production costs, profits exceed $20,000 per month. Pan Southern has determined that the yield could easily and quickly be doubled. As Pan Southern owns its own workover rig and equipment and has its own experienced field crew, it can greatly reduce expenses entailed in employing contract rigs and crews.

Geological studies indicate that Bentonia is capable of producing another 1,000,000 barrels of oil over the next 12-15 years with prudent operations. Pan Southern’s opinion is that Bentonia can generate between $50,000 to $80,000 per month profit and ultimately yield $15,000,000 in its life.

Since Bentonia is in such a remote location unfamiliar to most oil production operators, and since most operators are only interested in much larger reserves and production, it may be auctioned for the scrap value of the existing equipment now on the field. The salvage value is estimated at $239,000.

The reason for the “Carpe Diem” in the title above is that the Bentonia auction will be held this coming Wednesday, July 16. Pan Southern is willing to offer a healthy portion of Bentonia’s profits to investors providing the funds necessary for the winning auction bid. As Bentonia is already producing, this is a deal that would generate an immediate ROI.

Should you be interested, call Strategy Advisors at 240-988-1406. Carpe Diem.

[Disclosure Note: I am not a shareholder in Pan Southern or have any financial connection to the company.]