EXACT ENERGY RES INC
Company: EXACT ENERGY RES INC
Ticker: EXER.PK (Pink Sheets)
Yahoo Finance: http://finance.yahoo.com/q?s=EXER.PK
Company Websites: http://www.exactenergy.us/
Last week’s stock made a gain of almost 300% within the week.
That stock was centered around the world problem of counterfeit
goods.
What I have today is about an even bigger World crisis… Oil
As of today the price of Crude oil is $90.81 per barrel.
The price of crude oil has rocket ted due mostly to simple supply
and demand. As more and more countries become industrialized the
demand for oil has risen… At the same time oil supplies are
running out.
Needless to say, with oil retailing now at $90 , more wells will
be drilled in deeper, harder to reach places than were previously
profitable.
To further explain this situation, I need to talk about the
“molecular make-up of oil”. Crude oil, the substance that gives
us plastic and fuel is literally made from dead plants and
animals (who died millions of years ago).
When these plants and animals (largely plankton and algae) died
they settled to the bottom of the sea bed. Over time this
organic matter mixes with mud and becomes buried under more
layers of sediment.
As heat and pressure build up the decaying matter is changed into
oil and coal.
And because this process takes millions of years, it is a very
real problem that in 30 years it is estimated it will all be gone.
The stock I have today has…
Not Solved this Problem!
… The company who does manage to solve this problem will most
likely become one of the biggest most powerful corporations
in the world.
But this stock (EXER) could help make our current oil resources
last longer than 30 years, and it could also cut oil prices
to around $82 per barrel… While increasing profits in this sector…
How?
Unfortunately it’s not easy to explain, in fact the only reason
I know about this is that I have had a keen interest in science
(alongside stocks) all my life.
Firstly crude oil is made up of something called a “hydrocarbon”…
as the name suggests this is just hydrogen and carbon atoms
bonded together in a chain.
Now when Oil is first excavated, it is not runny at all. This is
because it is made up of a long long chain of carbon and
hydrogen atoms.
However that oil can be broken up, into many smaller
hydrocarbons, maybe containing just a few carbon and
hydrogen atoms…
These “runnier” substances form things like Petrol, and Methane
gas - which are all worth more than the less runny “Decane” etc.
Exact Energy Res Inc have developed what they call a:
“Low Profile Fluid Catalytic Cracker”
Now this new converter has a number of benefits. Benefits which
save money in the industry, make it a safer process etc…
These points could maybe make this company a $10 mil or a
$20 mil company.
But what I’m really interested in is something else. I’ll tell
you more about this later.
Firstly the process of breaking up or “cracking” hydrocarbons
has to be done in a large refinery.
Like this:
http://www.eia.doe.gov/kids/energyfacts/sources/non-renewable/images/FCCDistCol.jpg
And you’ see on that picture the different bands around it, each
of them represents the different levels at which materials are
siphoned out.
I.e. Petrol will probably be being spooned from close to the
top, and Methane gas even higher right on the top band.
Anyhow, I digress, this new type of converter:
1. Costs 40% less to build than a standard one. (40% represents
millions of dollars in building costs per refinery)
2. Is 7% more efficient. (Even a 1% increase in efficiency can
mean the difference between bankruptcy and millions in profits in
this sector)
3. It produces less of the cheap stuff like Asphalt (used for
roads) and more of the stuff like petrol and gas.
4. The new design refines oil and lower pressures and
temperatures… So it becomes safer and more cost efficient
to operate.
Now those points I just told you. They sound good right? I think
of these as the “backup plan”.
As I said, with this technology the company could in my opinion
become a medium sized $10 to $20 mil/year company.
But there’s something else:
Oil prices have currently stabilized, they did shoot up to $100
a barrel but it has temporarily fallen to around $90.
And the reason for this price increase is that supplies are
running out. Despite the US being amongst the biggest producers
of Oil…Everyday we consume over double what we produce.
But currently, the US and most other counties have been
excavating the “easy oil”. Oil that can be easily cracked by
today’s level of technology.
This type of Crude Oil is almost all gone, but there is lots of
“Heavy oil”.
Now in the past this was never touched. Even the current best
refinery’s cannot crack this oil to make the useful, diesel,
kerosene and petrol etc.
In addition if they could crack it, it was estimated the process
would need so much heat and so much pressure that it would cost
upwards of $900 per barrel to produce.
Exact Energy’s Low Profile Fluid Cracker uses a new system for
cracking the oil. This new process can crack heavier oil at
an even lower pressure and heat than current technology can
process normal crude oil.
They can also offer this oil at $4 - $8 less than the current
price.
Exact Energy are not going to become the next largest oil
producer. They’d need rights to excavate the “heavy oil” which
are mostly already owned by current companies in the industry.
In my opinion, they are going to sell this technology. And the
worth to the oil industry could be in the hundreds of millions
of dollars.
Now… You should know, this isn’t going to happen tomorrow.
And it probably won’t happen this week either.
But in my opinion investors are going to find out about this
technology, very soon… And when they do those who got in
early could stand to be rewarded handsomely.
Best Regards,
Michael Cohen
This entry was posted on Saturday, January 19th, 2008 at 12:24 am and is filed under Investment Pick. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
