In 2017, the oil market saw its strongest year since the major energy correction began in 2014. WTI Crude Oil has surged 21.81% over the past year and the price currently sits around $64 per barrel. Furthermore, the Commitment of Traders (COT) report shows that commercial hedgers and institutional traders are continuing to increase their positions to the highest levels in over a year.
According to Goldman Sachs, the oil markets are expected to remain strong throughout 2018, as the investment bank sees strengthening compliance among Organization of Petroleum Exporting Countries (OPEC) to follow the continued production output cuts. Being that OPEC just extended its production cut strategy through the end of 2018, Goldman Sachs believes this will help contribute to lower inventories this year.
Goldman Sachs also sees strength within the global demand of oil beginning to come back this year, which will help continue to decrease the inventory glut. As a result of its forecast, Goldman estimates that the oil market will face steeper backwardation (near-term futures contracts are priced higher compared to futures contracts for a later delivery date).
“Greater backwardation will, in turn, provide long investors with positive returns despite a spot forecast near current levels and we forecast +9% crude total returns over the next 12 months,” detailed the Goldman Sachs report.
As the oil market continues its rebound, here is one overlooked low-cost producer to keep an eye on: Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC).
Overview: Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC)
Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) is engaged as an oil exploration and development company, which focuses on low-cost and low-risk well projects. The Toronto, Canada-based company seeks to build consistent cash flow by increasing oil recovery from 10-15% to up to 75% per well. Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) utilizes its enhanced recovery strategy throughout each property’s oil pool in order to streamline costs and risks, while maximizing output.
The company primarily operates across Texas and currently has around 24 low cost and risk oil prospects, across three properties within the state. While Canada is known as an oil-rich country, the company chooses to operate in Texas due to the fact that WTI Crude Oil prices are higher than the Western Canada Select prices. Furthermore, the cost of operating in Texas is over 50% cheaper than in Canada.
Current Oil Properties:
- La Vernia: 3,500 plus acres (Guadalupe County)
- Saratoga: 400 acres (Hardin County)
La Vernia
Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) acquired interest in La Vernia property in May 2014. The company later acquired additional leases to cover more acres. As of January 2018, Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) holds leases for over 3,500 acres within the La Vernia oil field. In total, the La Vernia property spans across 10,000 acres and was first discovered back in 1939.
In 2015, Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) drilled its first well at the property, which was named the Weisman 30 well. The Weisman 30 well would later go on to produce at a rate of 24 barrel of oil equivalent per day (BOEPD). It is estimated that the Weisman 30 well has reserves of 13,600 BOE. Overall, the company maintains a production cost of around $11 per barrel on its La Vernia leases.
In February 2017, the company had the La Vernia property undergo an independent NI 51-101 report, which was prepared by MKM Engineering. According to the report, the undiscounted net present value (NPV) of the property’s proven and probable reserves totaled $96.70 million. Furthermore, the NI 51-101 independent report took place when Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) held 1,200 acres. The company now has 2,000 acres across the La Vernia property.
Overall, there are still a lot of potential in the La Vernia property. Management notes that there are still several infill drilling opportunities across the property that are located in existing proven reservoirs. In addition, there are several locations throughout the company’s 2,000 acres on the property that still need development.
Saratoga
Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC)’s first property acquisition took place in 2013, when the company acquired leases on 400 acres in Hardin County, Texas. The area is known as Saratoga and it sits on top of a Salt Dome. “Salt Domes are unique geological features in which a vent of salt has pushed up to form a dome shaped structure where surrounding formations were pushed up with the dome to form additional structures. All these formations have the potential to trap significant oil and gas production.”
The company currently has two oil-producing well located on the 400-acre property: Caswell #1 and Marlatt #1. Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) also has a development well (Caswell #12) and a salt water disposal well on the Saratoga property. Overall, the company maintains an acquisition cost of $12 per barrel at its Saratoga property.
In July 2015, Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) commissioned an independent NI 51-101 report on the Saratoga property, which was completed by MKM Engineering. The report determined the property to have an undiscounted NPV of proven and probable reserves of $36 million. Combined proven and probable reserves came in at 634,590 barrels of oil.
Currently, the company has no major long-term plans for expansion at its Saratoga property. Management acknowledges that there is a chance the company may drill another well in the long-term, but there are no plans to add any additional wells to the property at this time.
ANTGF: Recent News and Updates
November 2017:
17th – The company announced that it has closed a non-brokered private placement that raised gross proceeds of $430,000 CDN on nearly 2.87 million units sold at a price of $0.15 CDN each. The company also took the opportunity to announce a debt settlement agreement with two of its creditors.
20th – Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) settled claims against a former U.S.-based officer of the company. As a result of the settlement, the company acquired (among other benefits) an additional 8.38% working interest in the Lerma lease. The company now maintains 100% working interest and 73% net revenue interest in the Lerma lease.
21st – The company reported its first sale of oil from its Rogers and Transue leases on the La Vernia property. The company sold 390 barrels of oil on the open market for a price of approximately $50.00 per barrel.
24th – Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) officially is approved to be listed on the OTCQB Venture Market in the United States.
27th – The company released October 2017 oil production numbers, which showed the Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) sold 1,652 barrels and was able to produce an additional 1,024 barrels of oil. This gives the company a production rate of 33 BOPD in October 2017. Management noted that at the time of this release, the production rate had increased from 33 BOPD to 41 BOPD.
December 2017:
1st – Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) announced the appointment of Charles Dove as CEO and Paul Haber as Executive Chairman of the company. “Mr. Dove is a Professional Geophysicist with over 38 years’ experience in Oil and Gas exploration, development, project and company management of which 28 of those years involved management of private and public companies. Previously, Mr. Dove served as the President, and Chief Operating Officer of Dejour Energy (Alberta) Ltd., and as a Director of Dejour Energy Inc., (TSX: DEJ), (NYSE MKT: DEJ). Under Mr. Doves management, Dejour reached 1,000 BOE per day within its first two years of operation.”
21st – The company made a major announcement that it had been added to the CSE Composite Index. In order to be considered for listing on the CSE Composite Index, a company must have a minimum market cap of $5 million CDN. Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) is one of 171 Canadian companies that comprise the index, which is largely seen as a bell-weather for the economy.
22nd – Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) announces it has raised $637,000 CDN through a non-brokered private placement. The company issued nearly 4.25 million units at a price of $0.15 CDN as a result of the private placement.
January 2018:
12th – Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) announces December 2017 oil production numbers, which showed the company produced 1,191 barrels of oil or 38.5 BOPD. The slight decline in the production rate from November was due to two wells being shut off part of the month for maintenance and repairs. They have since completed repairs and the two wells are once again operational. On a positive note, management currently estimates that its production rate is at 45 BOPD, which is a 10% increase from the November rate reported.
ANTGF: Financial and Industry Analysis
As of January 2018, Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) maintains a market cap of $16.86 million. Furthermore, the Canadian oil & gas producer has a share structure consisting of 191.63 million shares outstanding and a float of 185.53 million shares, as of December 2017. During the third quarter 2017, Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) reported total assets of $10.64 million, total liabilities of $2.05 million, total revenue of $52,000 and net loss of $708,000.
As the overall oil markets continue to rebound, producers are positioned to see greater profitability. Unfortunately, most oil companies carry massive spending and cost structures that continue to squeeze profit margins despite the oil rebound. Low cost producers will continue to see the greatest gains, as the oil recovery continues to gain steam. Unlike heavy oil producers that are interested in tapping oil reserves deeper in the Earth, low cost producers are interested in oil reserves that are closer to the surface which do not require the same extensive, heavy machinery or costs that are associated with deeper drilling.
Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC)’s production cost at its LaVernia Property is around $11 per barrel. Furthermore, the company’s NI 51-101 independent reports verify that Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) has total undiscounted proven and probable reserves of $132 million from its La Vernia and Saratoga properties. This highlights how the company’s profitability only increases as WTI crude oil prices continue to march higher.
Here are five other oil & gas companies that could be used to help determine a proper fair valuation for Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC):
MMEX Resources Corporation (OTCQB: MMEX): MMEX is engaged within the exploration, extraction, refining, and distribution of oil & gas and other petroleum products. The company’s operations span across Texas, Peru, and other Latin American countries. One of the biggest developments for MMEX Resources Corporation is the company’s construction of a crude oil refinery facility in the Permian Basin, which is located in West Texas. As of January 2018, MMEX Resources Corporation has a market cap value of $11.22 million. Furthermore, the company maintains a share structure consisting of 3 billion authorized shares and 1.54 billion shares outstanding, as of December 2017. During the most recent quarter ending on October 31, 2017, MMEX Resources reported total assets of $152,000, total liabilities of $3.53 million, no revenue and a loss of $805,000.
Petro River Oil Corp. (OTC Pink: PTRC): Petro River is engaged within the exploration and extraction of heavy oil properties. The company has operations across Oklahoma, California, Ireland, and Denmark. Petro River made several significant oil discoveries in the United States last year, as the company stepped up its use of 3D seismic imaging technology. Using its imaging, the company tests old oil wells for overlooked reserves. This model has led to several high-profile reserve discoveries in California and Oklahoma. As of January 2018, Petro Rive Oil Corp. has a market cap of $29.43 million. Furthermore, the company has a share structure consisting of 17.31 million shares outstanding and a float of 15.18 million shares, as of December 2017. During the company’s most recent fiscal quarter ending October 31, 2017, Petro River Oil reported total assets of $34.76 million, total liabilities of $18.65 million, total revenue of $16,000 and a net loss of $741,000.
Amazing Energy Oil & Gas Co. (OTCQX: AMAZ): Amazing Energy is a Texas-based, independent oil & gas exploration and development company. The company’s flagship asset is a 70,000-acre leasehold in the Permian Basin (Pecos County) of West Texas. As of January 2018, Amazing Energy Oil & Gas Co. has a market cap of $40.74 million. Furthermore, the Texas oil company maintains a share structure consisting of 3 billion shares authorized, 67.88 million shares outstanding, and a float of 5.86 million shares, as of December 2017. During the company’s latest fiscal quarter ending on October 31, 2017, Amazing Energy Oil & Gas Co. reported total assets of $7.4 million, total liabilities of $5.04 million, total revenue of $147,000 and net loss of $2.68 million.
Canadian Natural Resources Limited (NYSE: CNQ): Canadian Natural Resources is engaged within the acquisition, exploration, development, production, and distribution of crude oil, natural gas, and natural gas liquids. The company specializes in light, medium, and heavy crude oil production, as well as bitumen and synthetic crude oil development. As of the end of 2016, Canadian Natural Resources Limited listed gross proved crude oil, bitumen, synethic oil, and natural gas liquid reserves totaled 4,866 million barrels. Gross probable reserves came in at 7,667 million barrels. As of January 2018, Canadian Natural Resources Limited maintains a market cap of $44.74 billion and a share structure consisting of 1.22 billion shares outstanding and a float of 1.09 billion shares. During the third quarter 2017, the company reported total revenue of $4.29 billion and net income of $684 million.
Exxon Mobil Corporation (NYSE: XOM): Exxon Mobil is one the largest and most well-known integrated oil & gas giants in the world. The company has oil & gas exploration and production operations across North America, South America, Europe, Africa, Asia, and Australia. Outside of oil & gas, Exxon Mobil Corporation also manufactures petroleum products, such as: olefins, aromatics, polyethylene, and polypropylene plastics, and other chemicals. At the end of 2016, Exxon Mobil announced that it has proved reserves of 20 billion oil-equivalent barrels. As of January 2018, Exxon Mobil has a market cap of $368.65 billion and a share structure consisting of 4.24 billion shares outstanding and a float of 4.23 billion shares. During the third quarter 2017, Exxon Mobil reported total revenue of $64.42 billion and net income of $3.97 billion.
Overall, Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) appears to be undervalued relative to its peers. Amazing Energy Oil & Gas Co. has a market cap two-and-a-half times greater than Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC), yet the company has a bloated, massive share structure and is reporting a massive net loss due to high costs and spending. Most of Amazing Energy Oil & Gas Co.’s premium likely comes from the fact that it holds a leasehold in the prized Permian Basin. However, costs to operate shale projects can be astronomical and largely uneconomical. Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) is focused on low-cost and low-risk oil opportunities that will generate steady and consistent cash flow. This allows the company to operate a much leaner business structure, which minimizes costs and maximizes profits. As the oil fundamentals continue to improve, Advantagewon Oil Corp. (OTCQB: ANTGF) (CSE: AOC) is positioned to be an outperformer.
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