Finding Oil

The United States, in 2005 alone, consumed per day an estimate of 9 million barrels of crude oil and 13.21 million barrels of imported oil. This oil is refined into gasoline, kerosene, heating oil and other essential products. To keep up with this demand, oil companies must constantly look for new sources of petroleum, as well as improve the production of existing wells.

The fossil fuel oil can be found in countries all over the world. It was formed from the remains of tiny plants and animals (plankton) that died in ancient seas millions of years ago. After the organisms died, they sank into the sand at the sea's bottom. Over the years, the organisms decayed in the sedimentary layers. Because there was little oxygen there, the organisms broke down into carbon-rich compounds. This material mixed with the sediments, forming fine-grained shale which known as the source rock. As new sedimentary layers were deposited, they put intense pressure and heat on the source rock which distilled the organic material into crude oil and natural gas. The oil flowed from the source rock and accumulated in thicker, more porous limestone or sandstone, called reservoir rock.

Movements and shifts in the Earth's surface trapped oil and natural gas in the reservoir rocks between layers of impermeable rock, or cap rock, such as granite and marble. These movements of the earth included folding when the rock moved horizontally inward creating a fold or anticline; faulting where the layers of rock cracked with one side shifting upward and the other downward, and pinching out when a layer of impermeable rock squeezed upward into the reservoir rock.

Oil companies like {a href=" http://tdecorp.blogspot.com/2007/11/finding-oil.html"}Triple Diamond Energy Corporation employ directly or under contract from a private firm, geologists who actually find the oil. Their task is to find the right conditions for an oil trap--the right source rock, reservoir rock and entrapment. They interprete surface features, surface rock, soil types, and small core samples obtained by shallow drilling and, nowadays, with the additional help of satellite images. They also can use sensitive gravity meters to measure tiny changes in the Earth's gravitational field that indicate flowing oil, as well as sensitive magnetometers to measure tiny changes in the Earth's magnetic field caused by flowing oil. They can detect the smell of hydrocarbons using sensitive electronic noses called sniffers. And they also most commonly use seismology, creating shock waves passing through hidden rock layers. In seismic surveys, a shock wave is created by a compressed-air gun which shoots pulses of air into the water for exploration over water, a thumper truck which slams heavy plates into the ground for exploration over land, and explosives drilled into the ground for exploration over both land and water.

Although modern oil exploration methods have made it easier for finding oil, geologists still only have a 10-percent success rate for finding new oil fields. Once a prospective oil strike is found, the location is marked.

About the Author

Chris Jent is the Chief Marketing Officer of {a href=" http://tdecorp.blogspot.com/2007/11/finding-oil.html"} Triple Diamond Energy Corp. {a href=" http://tdecorp.blogspot.com/2007/11/finding-oil.html"} Triple Diamond Energy specializes in acquiring the highest quality prime oil and gas properties. For more information, visit htttp://www.triplediamondenergycorp.blogspot.com

Pennant Energy Proves a Profitable Producer

Instead of running with risk in view of huge oil findings, the company maintains a conservative approach based on guaranteed opportunities and diversification on drill-ready or existing wells within Canada.

An August article in Canadian Business magazine titled “What’s Next for the Oil Patch?” included a brief discussion that portrayed a not-so-bright future of junior energy companies in Alberta. Intrigued by the news, ResourcexInvestor talked with Thomas Yingling, president of Pennant Energy Inc. [TSXV: PEN] a junior company successfully venturing into oil and gas. Yingling’s opinion is clear: Alberta has an excellent, unmatched environment for oil and gas exploration and production (E&P).

Contrary to the fragile environment the article presents, E&P opportunities in Alberta are better than ever before, he says. Rigs are available at realistic prices, the price of the oil mix is up, the legislation works, and the number of experienced workers, technicians and managers outnumbers most of the other producing locations in the world. Moreover, Yingling said that the current Canadian taxation scheme for income trusts benefits the junior companies because it freed up lots of Crown Land allowing juniors to access more projects. Under the new taxation law, many income trusts are pulling back from the arena.

At the time trusts restructured their assets bringing down the oil rig count, they released lots of the pressure on production costs too, due to availability of resources, both human and machinery. It is said that a steep decline in oil rig count has helped push the costs of drilling down 10% since last year. Venture capital may be the main vehicle junior resource companies use to finance their operations, but good financial and operations management are key in keeping a junior resource company afloat. These savings in production costs can translate into increased shareholder value.

For Yingling, profit strategies involve low cost growth but also industrious growth â€" “growth through drilling” as Yingling says, and it is paying off. As a venture capitalist and former president of an investment-consulting firm, Yingling decided to steer Pennant Energy towards strong financials rather than risk. He has taken this Canadian junior with a background in mining exploration for zinc in BC and turned it into a modest Canadian oil producer. His successes almost immediately brought revenues into the financial statements. By June 2007, Pennant reported a yearly production of approximately 3,019 bbl of oil.

Pennant earned 15-45% interest in nine wells from the Willinston Basin in southwestern Manitoba from Rideau Petroleum Ltd., which operates over 90 wells within the Daly field. In 2002, Rideau ranked sixth out of the top 25 operators in the province and reported a cumulative oil production from the operated wells of 1.88 million barrels by the end of 2003.

The Willinston Basin holds most of the oil produced in Manitoba. Discovered in the 50s, commercial light oil production commenced in 1985 with the discovery of the Bakken A Pool in the Daly Field. Exploration since then has extended the productive area to the north and south. Over 6,000 wells have been drilled at the basin by operators including Tundra Oil and Gas, Rideau Petroleum, Grand Banks Energy Corp. and Kiwi Resources.

Pennant’s light sweet oil pours from the Lodgepole and Bakken formations at an API gravity of 39° - 40° warranting a net back price that averaged $60.07 bopd for most of 2007. Initial production from the first well was recorded at 42.8 bopd while production from the second well drilled averaged 35.5 bopd. Production from the Bakken makes up 4% of the provincial total, which is estimated to be close to 18,000 bbl/d. The light sweet crude oil is easy to process and once refined is sold to local buyers or exported into the USA. Wells in this oil field are expected to produce for another 20 years paralleling the producing life of older neighbor wells.

Pennant’s investment in Manitoba proved to be low-risk and, more importantly, had a payback period of only six months, giving the company producer status, something rarely found after one deal. Pennant has no debt. Current cash-flow from its Manitoba operations allows the team to work with its own resources preventing share dilution and giving investors stronger potential for capital gains from future ventures. Although the company believes that Manitoba is a province with excellent conditions to find untapped oil and gas resources, it is also considering low-risk, quick-return opportunities in Alberta and Saskatchewan.

On March 1, 2005 Pennant announced test results of the Meekwap Well in Northern Alberta. During the first days of production, the oil free flowed on its own at rates of 400 to 1,100 barrels of oil per day and solution gas flowed at up to 350 mcf per day. By September 2005, the production rate stabilized at 100 bopd. The company earned the 8% to 4% (after payout) of the working interest to participate in this and another three additional wells on the Meekwap prospect by contributing with 8% of the costs to drill and test the field.

The E&P team at Pennant Energy integrates the joint efforts of leading exploration geologist James Britton, P. Geol. P. Eng., Alan Carswell, David Finn and Rod Morris. Britton’s experience spans over forty-five years and four hundred and thirty oil and gas wells, some of which are still abundant producers. He engineered Dynamic Oil & Gas Inc’s growth from 25 boepd to over 5,000 boepd. David Finn has been active in the oil & gas business for over 30 years. His experience in western Canadian sedimentary basins comes from working at the geological and engineering departments of Amoco Canada. From Amoco he moved to the British Columbia Petroleum Corporation where he was responsible for monitoring the development of northeastern British Columbia gas fields. Allan Carswell is an accomplished and well-renowned geophysicist with a multi-disciplinary geological background in the oil & gas business. He has also been involved in a number of important oil pool discoveries across North America and has earned various academic awards including being the beneficiary of a three-time Canadian Society of Exploration Geophysicists Scholarship and two-time holder of a Natural Sciences and Engineering Research Council (NSERC) graduate scholarship.

This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.

About the Author

Resourcex Investor is an internationally distributed newsletter about emerging junior resource companies. Sign up for a free 1-month trial to our newsletter and get instant access to news and investing tips that have helped many of our readers make more money. http://www.resourcex.com

Natural Gas-A Viable Answer

At a time when conflicts are raging all around the Middle East, the birthplace of civilization as well as the center of the richest oil fields in the world, the United States should take the time to look within. There is a fossil fuel that North America contains in abundance, a clean burning fuel that could answer all the problems faced by a nation dependent upon foreign oil. That plentiful fuel is natural gas.

There exist three different estimates by reputable sources concerning the amount of natural gas that still lies untapped in North America. The first estimate, compiled by the Energy Information Administration, a source of official energy statistics from the U.S. government itself, maintains that there exists 1190.62 trillion cubic feet of recoverable gas in the United States alone. The second estimate by the National Petroleum Council is even higher, stating that 1779 trillion cubic feet of natural gas remains to be recovered and used in the United States. The lowest estimate was given by the Potential Gas Committee, but still maintains that there are over 1090 trillion cubic feet of natural gas remaining to be found.

Concerning the world, the U.S. maintains only 3% of known (proved) natural gas reserves. Proved reserves are reserves that have been located and are currently producing natural gas for consumption by the populace.

Natural gas companies like Triple Diamond Energy Corp continue to search the land for more of this ultra-clean harvestable energy. Nationwide there are currently 1801 rigs actively exploring for oil and natural gas in the United States. This number is up from the official count of a year ago at 1693. Of these rigs, 1459 are actively exploring for natural gas. It seems that the nation is catching on. In order to compete in the world market as the United States is accustomed to, the nation must continue this exploration within its borders. There is so much more natural gas to be located than is being tapped for use currently.

Research has shown the potential; companies must use all the technology, equipment, and resources they have to explore and develop this wealth lying dormant beneath the surface in order that the future of the country can be more secure, more self sufficient, always progressing and moving forward. This movement and progression can be traced back to the idea of “manifest destiny” that still holds its place at the very roots of American history. Perhaps the time has come to take up this optimistic endeavor once again.

About the Author
About the Author: Bob Jent is the president of Triple Diamond Energy Corp. Triple Diamond Energy
specializes in acquiring the highest quality prime oil and gas properties. For more information, visit http:

The Costs of Natural Gas and Oil

Most Americans use is either oil or natural gas for energy. A supply and demand imbalance is currently driving up the costs of both oil and natural gas. Americans are demanding more energy and as this demand increases, our supply of oil and natural gas hasn't increased especially from domestically available resources. Actually, this production is on the decline. It is time to start exploring and tapping new supplies of oil and natural gas here in America. Oil is a worldwide commodity. Prices are bound to rise worldwide with the increased competition/demand and the present stagnant production. Higher prices are also a result of supply disruption "fears" from potential hot spots in the Middle East, Venezuela, and Russia. Worldwide spare capacity has reduced dramatically from 10 million barrels per day a decade ago to about 2 million barrels per day today. The natural gas used in the United States is primarily from North American resources. Importing natural gas in a liquefied state from overseas hasn't yet been fully developed. Natural gas is a preferred fuel choice that powers most new homes and buildings, as well as power plants mainly because it is clean-burning. Inconsistent government policies and regulations have discouraged the exploration and production of new domestic gas supplies. This creates another supply-demand imbalance. Because the increase in natural gas demand isn't being met with new supplies, prices for natural gas rise too. Some other reasons for the rising costs of natural gas and oil include: weather (cold weather will increase demand), hurricanes (can stop production in the Gulf of Mexico), litigation and regulations, lack of public support and government encouragement for new oil and gas wells, Geopolitical unrest around the world, and market speculation. The consequences of no new domestic production makes for fluctuation in consumer prices. Some of our factories are moving their businesses overseas to take advantage of cheaper energy costs meaning lost jobs and lost tax and royalty revenue. Today, 63% of our oil is imported today which is a high reliance on foreign countries, taking on a national and economic security risk. Having the supply controlled by other countries, of course, is not ideal. Plus the extremely high national trade deficit (one-third of which is represented in oil imports) has to stop soaring. The fuel industry needs to re-look at the federal policy recognizing the importance of domestic oil and natural gas. Some suggested changes are: allowing access to non-park, non-wilderness federal lands where abundant, lower cost domestic oil and gas is located, providing for more offshore oil and gas exploration, stopping unnecessary law suits and regulations, providing full federal funding for government agencies that have industry oversight and for oil and gas technology programs to do research, encouraging students to get involved in order to develop a new workforce for the coming years, and offering credits for unconventional resources to be used instead. Currently, in the United States, there are about 5,000 independent oil and natural gas producers. Independents can be small family companies or publicly traded companies. They operate in 33 states and the offshore. Companies like Triple Diamond Energy Corporation drill 90 percent of the wells here and produce 68 percent of America's oil and 82 percent of domestic natural gas.

About the Author
Chris Jent is the Chief Marketing Officer of Triple Diamond Energy Corp. Triple Diamond Energy specializes in acquiring the highest quality prime oil and gas properties. For more information, visit http://www.triplediamondenergycorp.blogspot.com.

Gas Discovery in Alberta Drives Montello toward 12-Month High

With oil prices over $80 per barrel, storm activity in the Gulf of Mexico and a cold winter predicted ahead elsewhere, not to mention worldwide demand for crude oil poised to rise again during the fourth quarter of 2007, now is a great time to be an oil and gas junior.

One company taking full advantage of the sector's upswing with successes of their own is Montello Resources (TSX-V: MEO). This emerging oil and gas company is engaged in drilling and exploration activities on their properties in Canada and the United States - with potential for blue sky payloads in both zones, particularly in Tennessee. Recent successes have garnered Montello a little increased investor attention in the past few weeks, with positive re-completion in Alberta and drilling approaching depth in Tennessee.

The company has a broad investor base, with approximately 150 million shares outstanding, and with new investors piling on, current trading volume is well up over one million shares a day. This increased volume is not surprising, considering that share prices in Montello have gained over 25% in the last month, not to mention the fact that Montello has now surpassed its 12-month high. Last Friday, more than 19 million shares MEO shares changed hands. On that day, the company was the leading volume trader on the TSX Venture exchange. On Monday, Montello was still trading exceptionally high at over 10 million shares.

Some of this success can be attributed to Montello recently announcing (October 4th 2007) positive re-completion results for its jointly owned Pincher Creek project - Montello owns a 25% interest with Paramount Resources holding 25%, a private company owning 12.5%, and the remaining 37.5% being retained by the operator, Pennine Petroleum Corp (TSX-V:PNN). The project, which covers over 4,800 acres, is located approximately 175 kilometres south of Calgary, in the prolific Pincher Creek Field. Since 1947, the field has produced approximately one million bbls of oil and 600 BCF (billion cubic feet) of gas, with estimates of over 220 BCF of gas still remaining to be produced. The region itself, which includes such fields as: Lookout Butte, Turner Valley, and Jumping Pound, have produced more than one trillion cubic feet gas and over 100 million bbls of associated liquids.

Montello's JV partner Pennine recently completed (September 27th 2007) two 60-tonne fracture simulations on the Brown Sand and Cadomin/Kootenay section of the Pincher Creek project, with results uncovering two condensate zones. Both tested between 40 and 46 degrees, plus associated gas, with initial extended flow test results of over 330 boepd where none were pumping before.
The Brown Sand zone yielded an average production of 140 barrels of fluid a day with an initial water cut of 60% for a net 56 boepd and is expected to increase as frac fluid further drains. Montello is planning further exploration in the Brown Sand zone to assess feasibility.

Preliminary swab and flow results for the Cadomin/ Kootenay formation were more promising, having returned an average of 225 barrels of fluid a day with no water cut, and as much as 500 mcf of gas per day which can potentially translate to an additional equivalent of over 70 boepd. Pennine has announced that they intend to install pumping equipment and the required production facilities to test the Cadomin/ Kootenay zone, and following positive results, may submit a Commingling Application to the Alberta Energy Utility Board, in order to take full advantage of the well. An existing pipe line is accessible to transport the gas, with plans for liquids to be taken out by truck to a processing facility. Pennine plans to announce the stabilized liquid and gas production rates following stabilized production.

With the success of recent drilling activities in Alberta, Montello and Pennine plan to follow sand development across the Pincher Creek structure and access hydrocarbon-baring sand via existing well-bores.

Montello is also involved in exploration and drilling activities (with JV partners Great Northern Oil Sands Inc. and Austin Developments Corp.) on its Morgan Highpoint project, located in the Tennessee Appalachians. The project is situated in a precarious but prolific region, near the spot where in 2002 Pryor Oil suffered a massive blow-out on its Howard-White #1 well when its drill penetrated an area containing highly pressurized oil. Incredibly, hydrocarbon fluids spewed up and out of the ground at a rate of 12,000 bbls a day and caught fire. The government stepped in and halted work on the project - permanently.

On its neighbouring property, Montello is using advanced techniques to literally "dig deep", in an attempt to find the source of the Pryor Oil blow out or similar pockets. Montello recently announced that drilling at its John Bowen # 2 well had passed 7,780 feet in the Rogersville Formation and entered the Rome formation at 7,850. The location of the monster payload that caused the blow-out at the nearby Howard-White #1 remains illusive, but a possibility as the company continues toward basement, which is a first for the area - and is believed to be between 8,500 and 9,500 feet deep.

Resourcex Investor asked Marc Davis, a director for Montello, if he was happy with the rate of progress for the Tennessee project, and why no one else had ever tried or been able to drill this deep in this area before.

"It has been tough going, you know. This is a difficult environment to work; the rock is very dense. At the same time, we've seen very encouraging results and believe ourselves to be a few days away from hitting basement."

Davis continued, "As for how we have been able to drill deeper than anyone before in this part of Tennessee, it has everything to do with money. Other companies in Tennessee simply have not had the opportunity to go that deep. But we think we could be close to a sizable pay off here."

The cost of the well, initially estimated at $3 million US, (Montello paid 10% of this) has escalated to US $5 million, to date. Early in October, the company announced, "A Supplementary Authorization For Expenditure ("AFE") of USD $1.7 million has been issued to the partners based on their earned interests in the Test Well being Montello as to 55%, Austin as to 40% and Great Northern as to 5%. All partners have paid their proportionate share of the cash call associated with the Supplementary AFE."

When asked which property he thinks is most important to Montello at the moment, Davis replied, "Tennessee as it has the greatest potential, but Pincher Creek [in Alberta] is money in the bag."

With the recent activity at both their Tennessee and Alberta projects, Montello seems to be garnering more investor interest than ever before. On October 12, volume trading surged past 13 million shares, pushing the stock price past $0.20 for the first time in 12 months. And the volume has continued to be very heavy. Whether this activity is due to speculation of success in Tennessee or Alberta (or both) is hard to say. But the excitement in MEO's stock charts is palpable.

This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.

About the Author
Resourcex Investor is an internationally distributed newsletter about emerging junior resource companies. Sign up for a free 1-month trial to our newsletter and get instant access to news and investing tips that have helped many of our readers make more money. http://www.resourcex.com

Pennant Energy Boasts Solid Performance, Considers New Prospects

Investors looking for Alberta energy stocks would do well to notice Pennant Energy Inc. [TSXV: PEN] a promising oil and gas firm that trades on the TSX Venture Exchange. This company enjoys good cash flow from 15- 45 % interest in eight oil wells in Manitoba's Daly Field, producing medium grade crude from the Lodgepole and Bakken formations.

These wells come on strong and then plateau for decades - all are in the plateau stage now and only 4 years old. Pennant's Manitoba Properties provide the cash fuel that helps propel this company's Alberta explorations, and that's a good business model in any oil patch.

On paper, Pennant Energy is a solid performer. The company has no debt and approx $1,500,000 in the bank. The $0.40 cent share price seems compacted - with only 16,164,809 shares outstanding and only 21,255,938 fully diluted, it's a tightly packed structure. This firm has $900,000 in flow through funds to spend before the end of the year, and they need to spend that money in the ground.

When I spoke to President Thomas Yingling on the phone recently, he confirmed that both his team and his land positions are growing. Pennant is looking to acquire more oil production in Alberta, and is presently considering which of three large-scale drilling it will commence in the short term. Yingling categorized all three of these options as, "drill-ready, farm-in opportunities for us to drill before year end. Each of these projects is between one and half and three million dollars which we consider to be low risk, high-return, drill-ready projects. So we're about to move on one of them.'

Another encouraging aspect about Pennant Energy is the strong share position held by management. Yingling, for example, personally holds 1.3 million shares of the company and can therefore be expected to energetically pursue growth. These include "increasing shareholder wealth by targeting opportunities that offer the promise of accelerated oil production with a fast payback," and simultaneously expanding "participation in low-risk developmental drilling projects that provide enough cash flow to mitigate the need to seriously dilute the company's much-envied share structure.

" A seasoned venture capitalist, Thomas Yingling was appointed President of Pennant Energy on June 25, 2003. Mr. Yingling has also served for over a decade as the President of Brahma Communications Corp., an investment-consulting firm that specializes in corporate finance, investor relations and strategic corporate planning for publicly traded companies. In restructuring Pennant Energy, he brought James Britton, P. Geol. P. Eng. out of a comfortable retirement to serve as the firm's Senior Geologist / Engineer and sit on the board as one of the Company Directors.

Britton's wealth of experience spans over forty-five years in the oil and gas exploration and development business. During his notable career, he has been instrumental in successfully commercializing over four hundred and thirty oil and gas wells, some of which are still abundant producers.

Jim Britton has a remarkable track record of drilling 86% commercially successful wells. He was the man who engineered Dynamic Oil & Gas, Inc's growth from 25 barrels of oil equivalent a day (boepd) to over 5,000 boepd.

But drilling for oil is risky business. In the spring of 2007, the company's share price rose to a record $1.07 in on anticipation of the results of testing on Pennant's Kaybob S#1 Project. The company's stock dropped again two months later when Yingling announced "the absence of hydrocarbons in commercial quantities led to the abandonment of this technically challenging $3-million-plus well." There was an upside, however. Pennant's business model works: All of Pennant's financial risk was absorbed by Austin Developments Corp., which paid 100% of the costs of the drilling in return to earn a 50% interest in the venture.

By adhering to a finely balanced risk/reward model, and refueling from their Manitoba wells, Pennant managed to keep its treasury of over $1,500,000 relatively intact and still remains debt free. Just last month, together with Austin Developments Corp. (TSX: AUL), Pennant Energy expanded its Bronson Property land holdings by successful bidding at a September 19th, 2007 Alberta Crown Land Sale. The Bronson Property is now sub-divided as Bronson East and Bronson West with the east portion being the newly acquired 640 acre contiguous property located south east of the existing Bronson West. Positive results from a Geochem survey and a 3D seismic survey have identified several potential drill targets on the 640 acre Bronson East site.

Yingling says the team has everything in place to potentially drill a company-maker in Alberta this winter. With a $0.40 share price, undiluted share structure and record oil prices, Pennant offers a rare opportunity to participate in a ground-floor opportunity of a well-managed and highly ambitious (producing!) oil & gas junior.

This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.

About the Author
Resourcex Investor is an internationally distributed newsletter about emerging junior resource companies. Sign up for a free 1-month trial to our newsletter and get instant access to news and investing tips that have helped many of our readers make more money. http://www.resourcex.com