As a string of natural disasters get firmly placed in the rearview, demand for oil is rising and tentative bullish signs are flashing across the sector, particularly as the U.S. oil benchmark recently closed at its highest level since late May. As more evidence of this optimistic narrative, OPEC and IEA both raised global oil demand forecasts.

An important driver in the oil price surge is actually the reconstruction activity that is beginning in the Texas Gulf, the southern tip of Florida and soon-to-be Puerto Rico. Not to mention, before hurricane season reached its peak, strong economic growth was seen in emerging markets like Asia where there was an increased demand in oil for industrial, freight and construction activity. Meanwhile, events in the news have created a cascade effect, and drained inventories around the world means so that oil and gas numbers could be very tight before winter leading to a continued spike in price.

Though it’s still early, this market update is welcome news for a sector that has experienced extreme oscillations in price over the last few years. Nevertheless, one company that has seemingly been making hay rain or shine is Viking Energy Group, Inc. (VKIN). The company recently announced it has acquired more oil and gas leases in Kansas. Remarkably, this will be Viking’s third acquisition in less than 30 days, and its second in the past week.

The most recent deal for Viking gives them an 80% interest in six new oil and gas leases spread across Kansas counties: Riley, Geary and Wabaunsee. The leases produce oil from various zones, including the Conglomerate (at depths of 1,650 to 1,800 feet), Viola and Simpson Sandstone (at depths of 2,917 to 3,063 feet) and offer the potential for several future drilling locations. Historical records for these leases (e.g. drilling logs for one well showed initial production at 3,000 bopd; and another well produced for an extended period at 100 bopd), suggest new drilling on these properties could significantly enhance existing production.

In Viking’s deal announced on Oct. 2, the company acquired a 100% interest in six additional leases in Miami and Franklin counties in its wheelhouse of Eastern Kansas. The acquisition, similar to the transaction referenced above, was made through the company’s subsidiary, Mid-Con Drilling, LLC. This deal and the former include an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations.

Previously, in mid-September, Viking purchased an interest in 980 acres of oil and gas leases in Anderson County, Kansas. Those leases produce oil from the Cherokee Formation – an important group of sandstones, limestones, shales and coal bed outcroppings in Eastern Kansas – at 850 feet, with the prospect for more drilling in the future.

Viking’s CEO James Doris underscored the company’s business model when we spoke to him in Mayshortly before they were uplisted to the OTCQB – and he seemed to predict the current milestones the company has been knocking down.

“Kansas and Missouri is our initial focus,” Doris said in May. “That is where we have our extensive relationships, and our plan is to leverage those relationships and continue to gather assets in those areas. We’ll focus on where it’s been proven that the oil is there and where there is a high success rate for drilling.”

These three quick acquisitions show Viking fortifying its position in Kansas. The deal announced on Oct. 5 was finalized for $400,000 and the deal for the assets in Miami and Franklin counties closed for $530,000. With the current oil price at a little more than $50 per barrel, these properties could be repaying themselves in spades in no time at all.

The dip in oil prices that occurred in early 2016 opened the door for a savvy company like Viking that has a disciplined long-term approach. Furthermore, the company’s leadership understands the Kansas area and persistently scoop up properties with verified historical production.

“When we assess acquisition opportunities, we consider a number of factors before determining if it’s something we want to pursue,” Doris told Equities.com. “The particular project not only has to be producing oil but also generating positive cash flow at today’s prices, and have development upside. We look at current production, reserves, cash-flow, decline curves, the basin, target zones, and overall lifting costs. A number of people provide input on any acquisition target, including representatives of the operator, engineers, geologists, and other oil and gas investors. We then collectively make a decision on how we want to proceed.”

Albeit unorthodox, Viking’s philosophy strategically positions them to either stay profitable in a down oil market or reap serious rewards during an upswing like what might be ahead for the commodity sector. The continued aggregation of efficient and proven Kansas properties mitigates risk, removes speculation and coupled with low overhead costs allows them to generate positive returns. So, as each month rolls by and the oil cycle changes, Doris and his team methodically move another piece around the chess board growing into a larger company that is gaining momentum at the precise time.

“We think we’re on the right side of the cycle,” Doris states.


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