Today’s Pick is DRLY, Oil Stocks Are Hot Right Now!
We never get tired of Oil and Gas plays – or at least we don’t get tired of MAKING MONEY FROM THEM.
The old saying "strike while the iron is hot" certainly applies to this
sector. Oil prices continue to hold strong and we haven’t even hit the
annual winter price hike yet.
Today’s alert company is in the oil and gas EXPLOITATION business: Doral Energy Corporation (DRLY)
That might take a little explaining
To DRLY, exploitation is a good thing. Their strategy is to look for oil assets that have proven reserves that
through the application of new technologies and extraction methods can be extracted easily.
By identifying and
leveraging established but under-exploited producing assets with strong
proven developed reserves (PDPs), the Company can increase the value of
the assets and generate very attractive returns on capital investment.
This goal is achieved by acquiring producing properties that are
operating below their potential, either due to outdated technology,
failure to keep up with maintenance required for optimal production, or
lack of access to growth capital to conduct new drilling on proven
undeveloped reserves (PUDs).
The Company also targets new
exploration and drilling programs with low-to-medium risk profiles,
including infill drilling of proven undeveloped reserves (PUDs) on its
existing properties. The goal of the exploration and drilling program
is to provide the potential for very large shareholder returns, while
not jeopardizing the overall cash flow generated by Doral’s producing
properties.
According to the company, they are currently looking at as many as three additional acquisitions….no announcements yet though.
DRLY’s initial project is the 7,800 acre Eddy County Properties
is on the Texas border in the oil-rich Permian Basin. Located in Eddy
County, New Mexico DRLY’s focus on these producing properties is to
capitalize on the proved undeveloped reserves by implementing an infill
drilling program intended to maximize production. DRLY currently has 66 Producing leases spread over its 7,800 acres and has identified over 160 potential infill drilling locations on the property
that have been identified as containing proven undeveloped reserves.
The Permian Basin has
been a top U.S. oil and gas producing region for over 80 years and
according to the company contains 22% of all oil reserves in the United
States.
The Bottom Line
According to DRLY’s website, they have an in-house estimate of PROVEN reserves of over 6.1 MILLION Barrels of Oil Equivalent.
The calculation is simple…I’ll leave it for my members to do. Since
there are no middlemen between the refinery and the producer (unlike
Gold and precious metals) all you do to figure out value of their
reserves is to multiply the spot price of oil by the proven reserves
and,Voila’, you have the value of said reserves.
All I can say is that they are sitting on a veritable fortune.
DRLY is making great progress towards profitability
Last week, DRLY issued its 2009 10-K announcing that in its first full year of operation, it had gross
production of 46.2 MBbls (thousand barrels) of crude oil and 12.2 MMCF
(million cubic feet) of natural gas or 48.2 MBOE (thousand barrels of
oil equivalent), for Company net production of 33.7 MBbls of oil and
8.9 MMCF of gas (35.2 MBOE). The Company also announced that while it
experienced a loss of $1.92 million, it had
experienced a positive year-end EBITDA of $0.53 million……. To read the complete article Click Here
According to the company, they should reach BREAK-EVEN in 2010 with a marked increase in production planned (and the elevated price of oil doesn’t hurt, either)
DRLY is a low priced stock with a GREAT chart:
- The RSI indicates the stock is under accumulation
- The recent price action is in a definite uptrend….after a prolonged downtrend
- The
MACD is still showing a bearish signal, but it is weakening and the
closer it comes to the "o" line the more the bullish signal takes over. - No issues with the stochastics. The stock has a long way to run based upon the stochastics. i.e. not overbought or oversold
DRLY
has the earmarks of a good trade. It has a great story, a great chart,
positive momentum and is sitting on very valuable oil reserves.
Do your DD and get DRLY on your radar right away, we are hoping for an exciting move from here!
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