Oil and Gas plays have been very popular with Soup members this year.  We have seen some solid gains from this sector and I expect that trend to continue.  One thing that I have noticed is that many of our oil and gas picks have been solely exploration companies.  They are sitting on (exploring) some very promising properties, but much of their value is based on expectations of earnings.

Not so with today’s alert stock.  Doral Energy Corporation (DRLY)

DRLY is BOTH an exploration company and a PRODUCTION company. continue

Cheyenne Resources Corporation (CYRS)

This is an exploration company that has a very clear focus on the quickest way to generate revenues (and, of course, profits) continue

Talk about a “beatdown”! Delta Petroleum Corporation (DPTR) last week announced the devastating news that their  initial completion results from the Gray 31-23 well in the Columbia River Basin were very disappointing.  The market HAMMERED their stock and it dropped like a stone.

At the time of the news, the stock had been on an upswing and was trading at a high of $4.68 on September 17, 2009.  Currently, the stock is trading at $1.77 or a 58% decline from its high.  It was dropping so fast that it looked like it was going to become a penny-stock! I am thinking that DPTR might be an attractive trading opportunity.

The company is not one of those natural resource exploration companies that is HOPING to find oil or gas….they are a producing oil and gas company.  They had $22MM in revenue last quarter (down from previous quarters and, unfortunately,  no profits) and have cash in the bank and receivables.  I wouldn’t, however,  say that they have a strong balance sheet.    Their Quick Ratio is under 1 and they have $455MM in long-term debt.   But, they appear to have enough there to fund operations for the foreseeable future.

Let’s look at the chart:

The stock is sitting at a strong support level (around $1.75) and is heavily oversold.  The MACD is still bearish.  I would suggest watching the histogram to see if the angle of bearishness subsides.  The stock could continue to decline for a few more days, but I would expect a bounce.

I wouldn’t be at all surprised if it bounced.  I can’t even begin to guess the long-term prospects of DPTR, but in the near term it might afford my readers a nice trading opportunity.

MCKE is sitting pretty, I’m hoping for a nice run for it

It does not take a genius to know that America is facing a severe energy crunch. Oil imports continue to skyrocket and natural gas production in the US peaked in 1971.  Yes, that was 1971! Until recent years, environmentalists and politicians had made new exploration almost impossible in the United States.  Currently, 80% of all wells are drilled for gas, not oil, but in spite of this increased effort, the production decline has not been reversed. Our alert company is one of those companies that is working to reverse the trend. (Source:North American Natural Gas: published in the journal, Natural Resources Research.)

Today’s alert Company is Morgan Creek Energy Corporation (MCKE), an independent exploration and development company created by an expert management group with a strong history of success in the oil patch. According to the company, MCKE has acquired significant land positions in two project areas and plans to be able to initiate drilling operations in the last quarter of 2009.

The good news for MCKE is that the demand for natural gas in North America is increasing. Sixty percent of all homes in the United States are heated with gas, and seventy percent of new homes are designed for natural gas consumption. Natural gas, it seems, is the fuel of choice for electric power production due to its clean burning qualities. Ninety percent of all new power plants developed by 2002 or later are gas-fired. (Source: IBID)

Another major contributor to current gas shortages is the lack of new supplies from northern Alaska and northwestern Canada. According to the company, a pipeline to Alaska’s gas is roughly 12 to 15 years away, and Canada’s pipeline is still several years away.

MCKE has two major projects that are currently in the works: OIL in Oklahoma and GAS in New Mexico!

Frio Draw Prospect - Gas Project in New Mexico

Morgan Creek Energy has retained a 100% interest in the 13,252-acre Frio Draw Prospect and intends to fund exploration drilling on the prospect. According to geologic and test data, the company believes that approximately 180 wells can be drilled on the Frio Draw Prospect acreage. Following a planned initial well drilling and completion, Morgan Creek Energy’s management team expects to establish a set of drilling initiatives on the Frio Draw based on technical data and drill results.

Company President Peter Wilson states, “We have seen a tremendous upswing in the energy markets while drilling costs have gone down drastically. This gives Morgan Creek Energy the opportunity to fund its own drilling initiatives and therefore control the entire process.”

Full press release:  Click Here

North Fork 3-D Prospect, Oil Project in Oklahoma

MCKE has entered into a Definitive Agreement, with Bonanza Resources Corporation (”Bonanza”), for an option to earn a 60% working interest of Bonanza’s 85% working interest in the North Fork 3-D prospect in Beaver County, Oklahoma.

Bonanza Resources has completed a multi-component interpretive 3-D survey on approximately 8,500 acres to image the Morrow A and B sands. The 3-D interpretive survey has identified 40 drill ready target locations. Using this data as a basis, the Company plans to proceed with exploration drilling on the North Fork 3-D prospect in 2009.

Company President Peter Wilson states, “This agreement and program are important to Morgan Creek Energy because they help set a new direction for the Company going forward. I expect this to be one of several key projects that give Morgan Creek the ability to add solid value in this energy cycle.”

Full Press Release: Click Here

According to MCKE, they are continuing their efforts to seek, acquire and exploit all forms of hydrocarbonates (oil and gas).  They intend to begin drilling operations on both properties in 2009 and are seeking other qualified land prospects to create a path to immediate revenue.

The Chart

I am seeing several things from the chart:

• STRONG increase in volume coming in to the stock lately
• Stock is not oversold
• MACD is strongly bullish
• The stock has come off its recent high of $1.00

With the strong price action in the stock lately and increases in volume, I would definitely watch this company. Just a few weeks ago, I shared the story of AVRO Energy, Inc. (AVOE).  They are a natural resource company that is similar in many respects to MCKE.  If you remember, AVOE got HOT and saw a 500% gain in the stock followed shortly by a 1400% gain. Of course, I can not even begin to claim that MCKE would make such a move, but the potential is certainly there for any oil and gas stock….as evidenced by AVOE.

Given the strong uptrend of the stock, the pattern may very well continue.  However, with a stock that has run as far and as fast as MCKE, I would make sure to set a tight stop on it in case the price action goes against my members.

Here is MCKE’s website for your own due diligence:  MCKE Website

I would recommend doing your due diligence and watching this stock closely.  If it catches fire, you will definitely want to be in on ANOTHER winning stock from me. 

The email comes at 9:30 and my Twitter page posts at the same time.  I don’t want you to miss a single WINNING stock pick!

Good luck and good trading

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I think AEXP is ready to FLY

I love Oil and Gas penny stock plays.  With the right company, the gains can be extraordinary.  Price moves of 400% to 1,400% are not uncommon from what I have seen.

There is an undiscovered oil and gas small cap stock that I feel is ready to bring to my members.  It is American Exploration Corporation (AEXP). The company is engaged in the exploration and development of oil and gas prospects in the continental United States.  It is a nice little company that has been under-the-radar and now is becoming known.  Once the market sees this stock, I could easily see HUGE GAINS.

Here is a case in point of what I mean about “extraordinary gains”. Take a look at Avro Energy (AVOE) was a penny stock that got HOT!  The chart demonstrates just what I am talking about.

AVOE got HOT, retail investors became aware of the stock and it SOARED! A 560% GAIN followed by a 1,400 % GAIN…That is AMAZING. There is no way to know if AEXP could pull a move like AVOE, but i want to make aware of it today in case it does.

So, who is AEXP?

AEXP is an exploration company focused on natural gas.  The company is pursuing an initial natural gas prospect located in the Gulf Coast Salt Basin trend, also known as the Haynesville Shale Prospect. AEXP has signed an agreement securing lease interest in approximately 5,000 acres of shale gas property, with an option to acquire additional interest in surrounding lands.

What is Shale Gas?

Shale gas is natural gas produced from shale rock.  The gas is trapped in the porous rock and most shale deposits have not historically been large producers of natural gas. But the NEW TECHNOLOGY allows AEXP to be able to cost-effectively extract the gas.

What is so special about the Haynesville Shale Prospect?

If you want the inside track to the best fields for natural gas, then you need to know about this region.  Using new recovery methods, the Haynesville Shale Prospect has emerged as an ENORMOUS gas resource.  IN FACT, it is now projected to be the largest onshore gas field in the United States.

AEXP already has a great deal of information about the viability of their first prospect.  WAY back in 1981, Chevron dug a test well on the property confirming the presence of gas on the property.  The technology did not exist, nor were the prices high enough to warrant Chevron developing the property.  FAST FORWARD to 2009 and AEXP has proof that they have a property with exceptionally high gas rates and Chevron’s data indicated that this section of the prospect has an extremely thick “prospect layer” (the area where gas will be extracted from).

And then AEXP got CONFIRMATION on their field yesterday!

Schlumberger, a global oilfield and information services company, completed their shale gas analysis , evaluating the total gas in place within the Haynesville Formation (Shale) in the mineral leases held by the AEXP in Mississippi. The assessment demonstrates estimated gas in place of at least 300Billion cubic feet/section (a section is 640 acres). This places more than 2 Tcf of estimated gas on the property.  That is 2 TRILLION cubic feet of gas on AEXP’s property. Read the full release here.

It goes without saying (but, I’ll say it anyway) THIS IS HUGE!

The infrastructure is already in place.

A Gas Facility is located only 5-6 miles away and pipeline permits exist to transfer 60-70 Million cubic feet/day.

AEXP has a plan!

The company is doing everything it can to monetize their property as quickly as possible.  According to the company, they have realized that becoming drillers themselves is too time and capital intensive.  They are currently focusing on evaluating the property, mapping the prospect, doing a sophisticated evaluation of mineralogy and geochemistry, mapping out drilling locations, etc…. Once they are ready for drilling, they will bring in drilling and extraction partners to extract the gas from the shale deposits.

The Chart and Discussion

The chart shows a penny stock stock that is just starting to get known. Volume is picking up and could really spike as the stock becomes known.  The MACD is showing a strong bullish tendency.  The stock is in new territory trading above the 13, 50 and 200-day MA’s.  The Stochastics are indicating that the stock is overbought, but with the new volume that I expect to come into the stock and the bullish MACD, that indicator can stay oversold for quite a while.

Click here for the chart:  AEXP Chart

You are welcome to check AEXP out for yourself by clicking on this link:  AEXP’s website. I would recommend that you do your due diligence.  As you can see from the chart, it has been highly volatile lately. Remember “trend is your friend”.  The trend is positive for AEXP, but make sure to protect your gains.  Tight stops are always recommended.

Be sure to let me know how you do with this one.  I love hearing from my members!