As oil and gas prices continue to set new highs, the talk is always about how old wells can be brought back online. The talk, however, always has a “will and can” tense associated with it. In many instances, those that are using these tenses in their discussions are missing the companies that are already there and producing. These companies have the properties, have the wells pumping, and are showing barrels and CF for their efforts at today’s prices.
Basic Earth Science Systems Inc., an oil/gas exploration and development company, works to find and develop existing and undiscovered domestic oil/gas deposits. Its major holdings are working interests in 83 producing oil and 10 gas wells located in North Dakota, Montana, South Texas, Wyoming, on-shore Gulf Coast and Colorado. As of last report, the company has 1,185,000 equivalent barrels of oil reserves.
In many respects, the company is very “old line” in terms of the way it approaches the oil/gas exploration and development business. It focuses on cash generation and practical land acquisition. Since its founding in 1969, the company has experienced both the ups and downs that markets such as oil and gas provide. As such, it has learned quite a bit about how to approach drilling, exploration and land acquisition. In recent years, it found that at $50-60 a barrel, land acquisition did not fit the company profile after it had already met its land acquisition targets. Now, with record prices for oil, the company is reaping the benefits of acquiring land within its target range as it fit the company’s acquisition profile.
Balance is another positive measurement of the company. When management felt that it had met its oil property requirements, it began to understand that its natural gas position was not in line with its property allocation strategy. As a result, the company began investing in on-shore Gulf gas properties it felt had potential for no other reason than it needed balance. These strategic moves have now born out management’s wisdom and a very nice flow of cash. Basic Earth is a long haul company in the oil and gas game. It has been there and back, and made it in one piece.
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