To be successful in the hunt for emerging opportunities you need to look where nobody else is looking. Virtus Oil and Gas (VOIL) isn’t doing just that, it is also looking for something nobody else is looking for these days.
Virtus Oil and Gas is on the hunt for a big oil discovery (rather than a shale play) inside the United States.
American oil production has been rocking and rolling for half a decade.
The source of all of that new oil production is the development of shale oil using fracking.
While fracking booms, the amount of oil being produced from old school vertical wells inside of the United States continues to decline. The reason for that is not because oil companies prefer shale oil, it is because over the past century the industry has drilled up virtually every old school oil opportunity.
Given the opportunity oil companies would much rather be developing an old school oil property instead of shale oil. That is because old school oil costs $20 to $30 to find and develop while the average shale play costs $70 plus.
When it comes to oil it is all about take what you can get, not get what you want.
Virtus Oil and Gas is a small company that is looking for one of those old school, big barrel, non-shale oil plays. These boys appear to be hunting for something significant.
Headquartered in Houston, Texas, Virtus Oil and Gas was founded in 2013 with the mission of acquiring and developing onshore oil and gas working interests in proven basins in the United States, such as the Central Utah Thrust Belt Region.
The Virtus Oil and Gas corporate strategy is based on the following fundamental principles:
· Acquire oil and gas properties that give them a majority working interest and operational control
· Maximize the value of their properties by increasing production and reserves while controlling costs
· Utilize a highly experienced team of geologists, engineers, and landmen
· Remain focused on proven reserves located in major basins in North America
It sounds like a great plan, but at this point it is really nothing more than that…a plan.
The company has drilled zero wells, has zero barrels of booked reserves and has yet to disclose how it will finance those efforts. There are lots of questions yet to be answered.
What the company has accomplished is assemble a decent team to lead its efforts:
Brett A. Murray
Chief Operating Officer
Brett A. Murray worked for Gunnison Energy Corporation an Oxbow Company owned by William Koch in 2012 as Land Manager. Prior to GEC, Mr. Murray spent time with Phil Anschutz’s private company, Anschutz Exploration Corporation where he was heavily involved in the $1.4B divestiture of the company’s Southern Bakken properties and as well as its $114MM Northern Bakken property sale. Murray went to work at Sundance Energy, Inc. in 2008, and was promoted to Land Manager at age 27. While at Sundance, he was involved with multiple divestitures and business development of nearly 150,000 acres and nearly $80MM in transactions. At Anadarko he was a company landman that worked on curative issues before drilling in the Wattenberg Basin. Murray started his land career as a field landman in Northeastern Colorado. He was the main lease buyer for Tecton Energy where he had leased near 100,000 acres in the Albuquerque Basin, New Mexico.
Dr. Robert Benson (Bob)
Dr. Robert Benson has had nearly forty years of exploration, development and management experience in the energy industry. He obtained his BSc in Geophysical Engineering and his MSc and PhD in Geophysics from the Colorado School of Mines in 1976, 1984 and 1997, respectively. A major focus of Benson’s work includes seismic data acquisition, processing and interpretation, in both the Rocky Mountains and worldwide. He has worked extensively in reservoir characterization with emphasis on multi-component, 3-D and 4-D seismic methods.
In addition to having a decent looking team Virtus Oil and Gas has (on paper at least) an interesting looking prospect to drill.
Here is how Virtus Oil and Gas describes its main asset:
The prospect is comprised of a 55,477 acre tract in the Central Utah Overthrust (CUO) region of southwestern Utah, in Iron County.
The prospect is located approximately 80 miles south of Wolverine Gas and Oil’s Covenant Oil Field, also located in the CUO region, which has produced 3.1 million barrels of oil (MMBO) in Utah from structures and reservoir horizons. Potential for the discovery of a similar field within this southern portion of the overthrust belt is suggested by structural interpretation of a large seismically-mapped 4-way structural closure.
The Covenant Oil Field exhibits closure over approximately 11,000 acres with about 400 feet of pay in the Navajo, thus allowing a projection of nearly one billion barrels of oil within that field. A similar structure lies on the Parowan Prospect Iron County leases, with a potential for an oilfield of similar order of magnitude, particularly when multiple prospective horizons are considered.
Virtus Oil and Gas Corporation controls 55,477 acres in the Iron County section of the thrustbelt play. It has agreed to drill a 12,000 foot deep test well to evaluate the Navajo, Kaibab, and Permian Queantoweap Sandstone within 2 years.
Virtus plans to complete an analysis of the potential reservoir rocks, source rocks, structural traps, and reservoir sealant horizons, leads to a recommendation to refine structural parameters with a review of seismic work, and possibly some more geological detail and gravity surveying, followed by drilling of a test well.
Test well drilling is tentatively scheduled to commence by September 2015.
There aren’t any typos in the above description. The company is claiming to be chasing something that could have close to a billion barrels of oil. A person would likely want to make note of the word claim and the word could in the preceding sentence. Again, this is very early days for this company.
On a first look it is hard to know what to conclude about Virtus Oil and Gas. The people involved and the numbers that the company is throwing about are certainly interesting. Whether any of this ever amounts to anything of true value is however completely unknown.
Either way Virtus is an emerging opportunity worth watching. In a world where a barrel of oil fetches $100 an old school oil discovery is very valuable. Especially if it is a big one.