U.S. OIL and GAS plc's (Ticker: USOP) core activities are in the USA, with ongoing exploration activity in Nevada where the company holds a large lease acreage.
The Investment Case
- US Oil has confirmed the first discovery of light sweet crude oil in Nevada in approximately 30 years. Testing of the Eblana #1 exploration well produced consistent flows of oil and is currently paused for further data analysis.
- Eblana #1, drilled by U.S. Oil's wholly owned subsidiary Major Oil International LLC in May 2012, encountered nine large potential porous oil reservoir intervals (approx. 1,100 feet cumulative net pay) and associated high fracture zones before reaching its target depth of 8,550 feet on 26th May 2012. Gross Formation Thickness was 380 ft (min. 150 ft NPZ) with average effective porosity of 19% (total porosity of 22 - 24%).
- Based on surveys of only 25% of the Company's 90 sq km lease area, a February 2012 Competent Person's Report by Forrest Garb & Associates estimates Gross Prospective Resources of 189 MMSTB OOIP (P50) and 67 MMSTB recoverable oil. Data from Eblana #1 is now being incorporated into a new CPR. The remaining acreage will be surveyed in 2013.
- US Oil & Gas has, compared to oil explorers with similar achievements, a low number of shares in issue.
- The Company is fully funded to complete its currently planned testing programme and the drilling of at least one further well.
- US Oil’s lease area is close to Railroad Valley (10 miles), which has produced over 50 million barrels.
- The company anticipates working with Forrest Garb & Associates as independent processes and data auditors throughout its operations. Their role will also include devising and maintaining the Company's data store.
- The unit cost of extracting oil in Nevada is amongst the lowest anywhere. The Hot Creek Valley lease area is close to a highway and two refineries. As a result, the viability of the field is minimally sensitive to the oil price.
- A discovery in the US, the world’s largest oil market, would be situated in one of the most politically stable, well regulated and secure exploration areas in the world.
NOTE: OOIP figures are those estimated by Forrest A. Garb & Associates, February 2012.
Progress to date