When it comes to the oil and gas sector, the bulls are out in droves. Oil prices are at two-year highs as immediate global economic demand has drained inventories and tightened the market. Further pinching supply is a compliant OPEC, which is curbing production to boost prices, and could potentially to do so for all of 2018. Reuters recently reported that 11 of the oil producing nations had achieved 92% compliance in October with supply caps previously agreed by the cartel. This number has risen from the 86% compliance measured in September. With four straight months of rising prices, the sector is finally enjoying a brighter outlook and seemingly putting the lean year of 2016 in its rearview.
Of course, the pro-longed low oil price environment forced the industry to learn some hard lessons during those lean times. Cost-efficiency and careful speculation became doctrine, and those that implemented that well are now poised to benefit most from an improving market. One company that has time and again shown a mastery of this conservative approach is Viking Energy Group Inc. (VKIN). The company’s expertise and leadership has deftly navigated a tumultuous market, and has taken advantage of opportune acquisitions when attractive targets have presented themselves.
“Our focus is on acquiring interests in long-life, low-cost producing oil properties, generating positive cash flow at today’s oil prices, with development potential,” CEO James Doris told Equities.com back in May. “We have aligned ourselves with industry experts that have been involved in the oil and gas space for decades, and that have followed a very cost-effective approach and philosophy on how to invest in the sector.”
Viking Energy has been very aggressive over the last two months actually making 3 acquisitions in the span of thirty days totaling 16 new oil and gas leases in Eastern Kansas.
Here is a breakdown of those acquisitions by date:
- October 5th, 2017 – The company acquired 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.
- October 3rd, 2017 – the company acquired a 100% interest in six additional leases in Miami and Franklin counties.
- September 12th, 2017 – , Viking added 980 acres of oil and gas leases (4 in number) 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.
In addition, these three quick acquisitions finalized for $400,000, the second for $530,000 and the first in September closed at $360,000. With the current oil price at a little less than $60 per barrel, these properties could be a steal in no time at all.
Also, critical to note that all three deals included 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. These deals are great example of Viking finding projects that are proven and just need a keen eye to be revived. Nobody does this better than Doris and his team, especially in the Kansas area.
In June Viking released news that it was in final negotiations for a large deal to buy a private oil and gas company that would give them working interest in multiple oil and gas fields. Equally important, the undisclosed acquisition target has 3D seismic data for most of its assets, with numerous drilling locations identified as part of a planned three-year drilling program. The proposed acquisition was put on hold due to external factors but if the deal is able to come to fruition, it could be a game-changer for Viking. The acquisition would also bring invaluable experience to Viking with the management team and other personnel of the target joining the team.
Few domestic energy companies have proven to be as adept as Viking at generating cash flow with low-cost assets. This company is in the process of growing from a microcap into something much larger, as evidenced by the company’s uplisting to the OTCQB in June. Doris and his colleagues have always been bullish on the commodity market and now their moves are starting to really take shape.
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