 An intriguing oil and gas opportunity has emerged in the form of Holloman Energy. Its shares trade in the U.S. under the symbol HENC.
As you will see, Holloman Energy is uniquely positioned with excellent oil leases, highly prospective recoverable oil resources and a tier one management team. Such a combination is rare in the emerging oil sector.
This is why we consider Holloman Energy a high-potential opportunity that merits your immediate attention.
Our analysis for this investment opportunity is based upon a significant combination of positive factors, which we will expound upon below. They include the following:
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According to the internationally recognized ISIS Petroleum, Holloman Energy likely sits on as much as 25 million barrels of P90 prospective recoverable oil resources on just a small percentage of their properties. |
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Holloman has 1.125 million acres (approximately the size of Massachusetts), in the prolific oil and gas prone Cooper Basin. Top ten leads covering 34,100 acres are estimated to have 371 million barrels of prospective oil in place (STOIIP) and 25 million barrels of P90 prospective recoverable oil resources.. |
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Recent wells drilled offsetting Holloman lands have tested at rates up to 6,000 barrels of oil per day. |
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45 prospect leads have been identified on Holloman's lands by an independent geological and geophysical firm. A detailed assessment of the top 10 leads, covering only 3% (34,100 acres), has provided significant potential. The unexamined leads gives early investors more upside potential than the 25M barrels of initial prospective recoverable oil resources currently reported. |
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Holloman Energy has a tier one management team that already runs one of the largest employee-owned, energy-sector engineering and construction companies. |
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Holloman Energy's management and its directors have recently been buying shares in the open market. |
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Unlike in Iraq and Iran, or in Latin American and former Soviet bloc countries, Holloman Energy's prospective resources are completely within Australia. Australia production tax rates and native royalties are among the most attractive in the world and it's a politically stable country that won't seek to nationalize its reserves. |
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With its estimated 25 million barrels of prospective recoverable oil resources, Holloman's acreage may be highly attractive and prospective to industry and financial partners. |
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Australia's strategic location makes oil found there extremely attractive to rapidly expanding economies like those of China and India. |
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In our opinion, shares of HENC are significantly undervalued at this time. |
Why We Believe HENC Is A Better Investment Opportunity Than Any Other Emerging Exploration Company We've Ever Come Across!
The question we always ask when looking at a particular emerging oil and gas company is "How can we validate that the company is the real deal and not just another company that will never drill a hole?"
When we asked that about Holloman Energy, the answer we received was something that we thought we would never hear used in regards to an emerging exploration company. It was something so profound that we immediately knew that Holloman Energy was something special and not just another fly by night oil and gas company.
 You see, the controlling shareholder of Holloman Energy, which beneficially owns 48%, is the privately held Houston-based Holloman Corporation.
Ok, great... so who is Holloman Corp. and why does that matter?
Holloman Corp. just happens to be one of the largest employee-owned engineering, procurement and construction companies in the United States. The Houston-based Holloman Corp., with its more than 1,000 employees, generated nearly a third of a billion dollars in revenue last year..
 Knowing this, you might ask yourself, "Why is a company the size of Holloman Corp. getting itself into a controlling position with an emerging exploration company like Holloman Energy?"
Well, I'm glad you asked... :)
We recently sat down with one of the executives at Holloman Corp. and asked him why the company decided to get involved with Holloman Energy.
 The answer was simple and clear... they see Holloman Energy's properties in the Cooper Basin as an incredible opportunity for them to possibly generate more net income than they are currently producing at Holloman Corp.
They believe in Holloman Energy's properties to such a degree, that not only did they acquire 48% of the company, but the President & CEO of Holloman Corp. (1977-Present), Mark Stevenson, decided back in July to become President & CEO of Holloman Energy. (Click here to view the press release)
On top of that, Eric Prim, the Vice President of Holloman Corp. (1997-Present), decided to become COO of Holloman Energy. (Click here to view the press release)
 Because they are already compensated for their positions at Holloman Corp., they are refusing to accept salaries for the long hours they put in at HENC. They are major shareholders in the company and expect HENC's success to be their reward, as illustrated by their recent open market buying of HENC stock.
For our team, this was a huge validation that Holloman Energy's properties are the real deal and that they potentially offer early investors a high probability of success.
One last note regarding the Holloman Corp. / Holloman Energy relationship... Holloman Corp. is also providing a portion of Holloman Energy's general and administrative expenses. So Holloman Energy is being run extremely lean!
The Making of a Good Partnership
Holloman Energy is actively pursuing a senior joint venture partner in the Cooper Basin. Just recently, Holloman engaged energy specialist Macquarie Tristone (Tristone Capital) as its exclusive financial advisor, to assist them in finding a solid joint venture partner that can provide them with the necessary capital and expertise necessary to support its exploration.
A further validation to the Holloman Energy story is the fact that Tristone Capital accepted management's request to represent them.
 You see, Tristone Capital a member of the giant Macquarie Group, doesn't take on anyone that just comes and knocks on their door. Tristone Capital is a global energy sector specialist that has completed over $25 Billion in equity financings, $27 Billion in corporate transactions and over $17 Billion in energy asset package transactions.
Tristone is a leader in the energy advisory field. It is the Goldman Sachs of the global energy sector! So when the Tristone team takes on a client, they believe their efforts will result in success.
With Holloman Energy, Holloman Corp. and Tristone Capital, we are looking at a team here that is undoubtedly the best that we have seen in any emerging exploration company!
Q: Why Are Tier 1 Oil & Gas Companies Joining The Holloman Energy Team?
A: Holloman Energy's Prospective Resources and the Success of its Neighbors are at the Core Of this Movement...
 At their essence, oil exploration firms are nothing more than the resources they control and the ability to get those resources to market. So, as you read on, we hope you'll adopt our stance and contain your excitement to Holloman Energy's current prospects (34,100 acres), while not forgetting the attractiveness of its unexplored potential (1,125,316 acres).
Still, at 25 million barrels of P90 prospective recoverable oil resources, we are convinced that Holloman Energy is off to a good start in Australia's Cooper Basin.
Also, as a reminder, we note that while reserves are inherently unknowable, geologists with sophisticated tools can estimate prospective resources within a range and assign a probability to their estimate. A P90 estimate of prospective recoverable oil resources refers to the amount of potential oil that can be extracted economically with a probability of 90%.
So, it is significant that Holloman has such great potential on just a small fraction (3%) of its property holdings.
Wait one second... who gave Holloman's properties an independent review & assessment???
Well, I'm glad you asked that as well. :)
 Recent drilling successes by Beach Petroleum, Cooper Energy and Victoria Petroleum on adjoining leases prompted Holloman Energy to undertake a re-examination of its Cooper Basin resources. The probabilistic resource study was conducted by ISIS Petroleum Consultants Pty. Ltd. of Australia, an independent and internationally recognized petroleum geoscience and engineering firm.
Is ISIS Petroleum just another engineering firm in the oil and gas arena?
I'm afraid not... ISIS is an internationally recognized petroleum geoscience and engineering firm. A few of their clients just happen to include:
 Anadarko - 33 billion dollar company
Apache Energy - 23 billion dollar company
ChevronTexaco - 65 billion dollar company
Shell - 70 billion dollar company
CLICK HERE for a full list of ISIS clients.
Another important point to make, is that ISIS Petroleum is an independent petroleum geoscience and engineering firm.
Even though these estimates are yet to be proved up, what's so powerful about them, is that they came from ISIS Petroleum. If ISIS wasn't a reputable firm, then multi-billion dollar companies like Chevron-Texaco, Shell, Alcoa, Hess, ConocoPhillips, Anadarko, Apache Energy and many more wouldn't use them.
So we believe Holloman Energy's information coming from ISIS Petroleum regarding their properties is extremely powerful.
 ISIS recently increased Holloman Energy's (P90) prospective recoverable oil resources in Australia's Cooper Basin by 600%. The study, received by the Company analyzed 10 of 45 drilling leads and concluded P90 prospective recoverable oil resources related to those leads were 25 MMbbl.
Ok, so who really understands what that means???
Well, in layman's terms (which is the way I like to read things), it essentially means that Holloman's properties in the Cooper Basin have powerful prospects!
Cooper Basin, Two Decades Of Success
 It is also notable that Holloman Energy's P90 prospective recoverable oil resources are adjacent to huge reserves that have been tested at production rates of up to 6,000 barrels a day. That reserve is owned by Beach Petroleum, which has a strong presence in the Cooper Basin.
Beach Petroleum is a small oil and gas company, only producing around 9.6 million barrels annually, and it sits on 66 million barrels of oil equivalent and contingent gas and liquid resources of 293 million barrels of oil equivalent. I hope you caught my sarcasm at the beginning of that paragraph.
Beach Petroleum is one of the largest and most respected operators in Australia and they have a market cap that proves it.
Exciting discoveries as recent as July of 2009 are only 7 kilometers away from Holloman's northern PEL 112 targets. 3 recent discoveries by Beach Petroleum - Perlubie 1, Perlubie South and Butlers - have been tied in and are currently in production. These wells are situated on a potential migration path to Holloman Energy's properties (See map below)! What kind of positive impact would this kind of success have on HENC?
In our opinion every investor should pay close attention to Beach's success, especially the newest and closest discoveries. They are solid indicators of how successful the areas surrounding Holloman Energy's leases have been. Ten of its 15 exploration wells have become oil producers... a 67% success rate!
Additionally, all 15 of the development wells in this area are successful (100% success rate), according to the respected, independent petroleum geoscience and engineering firm ISIS Petroleum.
Another ISIS report, which we'll share with you, suggests that Holloman Energy's leases are on an migratory pattern for how the oil flows throughout the Cooper basin.
How to Value Holloman's P90 Potential
 As oil prices rise - they have exceeded $80 a barrel again - it would be tempting to attach some exciting billion dollar or greater value to Holloman Energy's P90 prospective recoverable oil resources, but we would rather look at what they can generate in profits as opposed to a simple revenue stream. Again, projecting profits is an extremely conservative manner by which to evaluate a company.
We think after production costs, it would not be unreasonable to project that Holloman Energy could generate $50 a barrel gross profit during the coming years at oil prices in excess of $90 per barrel. Remember, the profit margins will continue to increase while the cost stays the same as oil again pushes past $90 and $100 a barrel.
Since Holloman Energy is not yet in production, we give the P90 prospective recoverable oil resources an industry standard of $10 a barrel in the ground (unproduced), which conservatively makes Holloman Energy a $270 million company on a small percentage of its property's potential.
*** Remember, Holloman still has more than a million acres left to explore in the Cooper Basin ***
This of course is the long-term reason to invest in Holloman Energy (HENC).
Global Realities Make Holloman Energy a Most Intriguing Emerging Opportunity
Finally, while we think Holloman Energy stands on its own in any climate, current petro-realities make HENC a compelling story.
For the first time ever, the world is burning oil faster than it can be produced. And, please digest that sentence carefully. The sky is not falling and there is no shortage in world oil reserves. In fact, as you witnessed with Holloman Energy, prospective oil resources expand every day.
*** Truly absorb this next paragraph ***
But, the U.S. Department of Energy has confirmed that for the first time ever, that the world has crossed an important oil threshold: worldwide, we now consume more oil than we can produce each day.
And, more critically, the DOE numbers show that the world will run short of oil sooner than anyone thought.
The DOE's International Energy Outlook leaves no doubt that the era of cheap oil is drawing to a close... $90 a barrel will soon be a reality again.
We know that on the surface this may seem inconsistent with the fact that there is no shortage of oil reserves that are found in the ground.
The problem is a unique one. The world is running out of cheap oil in places where it can be safely or easily pumped to the surface. The real oil truth today is that there is less and less of the cheap, easily accessible oil in politically stable countries.
But, we must stress, one last time, it is completely untrue that the world is running out of oil as a whole.
Here's an example. The latest finds of more than one billion barrels have either been deep offshore (BP's Tibor deposit)... in more politically volatile areas (Iran's 8.8-billion-barrel find)... or trapped in formations that are difficult to access (Athabasca oil sands)... or they are controlled by Socialist-inclined country leaders such as Hugo Chavez.
Into this unstable formula you can stir ramped up demand from fast expanding countries such as China and India. They've bought into the American dream, and now they've stuck their thirsty straws into world oil reserves.
 Holloman Energy's P90 Prospective Recoverable Oil Resources
And, this puts Holloman Energy (HENC) with its 25 million barrels in P90 prospective recoverable oil resources in the perfect place at the right time. In our eyes, this is the essence of an investable opportunity.
Because ISIS Petroleum Consultants have shown that the Cooper Basin oil could migrate directly through Holloman Energy's holdings, we are counting on future exploration to greatly expand Holloman Energy's reserves.
But, this well-run company, one run by men who are historically risk-adverse, should be a solid medium-term investment even should they not find another drop of oil. Its 25 million barrels of P90 prospective recoverable oil resources are a significant and an attractive asset! |
