Allied Energy Corporation’s (OTCMKTS: AGYP) value grows as now even super-conservative Morgan Stanley agrees that high demand will make $100 oil per barrel happen by mid-year.
Other analysts are even more aggressive. Triple-digital oil is almost a foregone conclusion with Bank of America saying it could reach $125 per barrel later in 2022. Can $150 per barrel be far behind?
What both forecasts are missing is the possibility of Russia invading Ukraine. That would disrupt global oil markets and make AGYP’s domestic oil even more valuable. Compromised Germany is now wholly dependent on Russian oil and gas.
As WTI and Brent Crude approach $90 per barrel prices, AGYP as an active producer of oil and gas energy is positioned well.
According to our extrapolation, AGYP is positioned to produce over $1 million of oil in the next 12-18 months.
That is at only one of their 6 operational wells. Revenue could be significantly higher. Investors should add AGYP stock to their Watch Lists as this company pumps oil from domestic locations in Texas.
OIL PRICES HIGHER ON INT’L UNCERTAINTY
AGYP is a small independent that has hit oil on six wells. It specializes in making older and abandoned wells commercial again. At today’s prices, its energy is scarce and valuable.
The nation’s top energy analysts already see crude reaching $100 per barrel and higher. Goldman Sachs this week predicts $125 oil this year and remaining at $105 in 2023.
Here’s why:
“The key oil products (gasoline, jet fuel and gasoline/diesel) all show strong crack spreads, steep backwardation, and inventories that have fallen to low levels. None of this signals weakness,” Morgan Stanley writes.
Morgan Stanley in the note reported by Reuters says that oil is headed to ‘triple-digit’ pricing because of low inventories, low spare production capacity and low investment.
AGYP INSIDE THE NUMBERS
No matter how you extrapolate the numbers, AGYP is on pace to perform at a $1+ million annualized production level. And they have only reported oil cut data at two of the six wells where the Company has hit oil. It is exploring for more oil at these locations.
At its Annie Gilmer and Prometheus leases, AGYP is enthusiastic about its energy production:
–ANNIE GILMER: AGYP’s pumps are producing between 160 and 300 barrels of total fluids daily. They have a 2.5-5% oil cut. A newer and more powerful electrical submersible pump (ESP) is designed to handle 1,500 barrels of fluid daily. At a 2.5% oil cut, that’s 37.5 barrels daily or 13,687.5 barrels annually. At a $80 price per barrel, that’s $1,095,000 annually. Remember, many analysts are calling for triple digit oil by the time AGYP will be presumably selling this oil.
The above estimate is on the low end; at a 5% oil cut AGYP would produce 75 barrels daily. At $80 per barrel, annualized value would reach $2,190,000.
Remember, many analysts are calling for triple-digit crude prices by the time AGYP will be presumably selling this oil.
Annie Gilmer oil production could grow even higher as AGYP is in talks with Tri-County to set up 3-phase/200 amp service and add the ESP electrical pumps.
Cause and Effect
- AGYP’s gas motors were inefficient both cost and performance-wise.
- To achieve optimal performance AGYP needs an electric submersible pump ‘ESP’
- ESP’s require electric power
- The gas motors powered production yielding a 2.5-5% oil cut on fluids pumped.
- AGYP’s new electric submersible pump will increase daily fluid production by over ~500%
What This Means For Investors
Capital Gains Report estimated the new ESP could yield between $1.09 and $2.09 million annually in oil revenue based on the reported oil cut, the increase in fluid production, and a cautious $80 crude spot price.
These projections, while pure speculation, still may not fully illustrate the revenue and margin impact the new ESP will bring.
Higher volume pumping could create greater oil cuts
Higher oil cut=higher revenue
Lower energy cost, fewer expenses
Fewer expenses, greater profit margin
ESP Advantages
Electric submersible pump (ESP) systems are:
- Low-maintenance
- Cost-effective
Especially compared to alternatives such as vertical turbine, split case, and positive displacement pumps in various fluid-movement surface applications in the petroleum industry.
The new ESP is ideal for AGYP’s ‘rework’ strategy because they are said to be ‘especially effective in wells with low bottomhole pressure, low gas/oil ratio, low bubblepoint, high water cut, or low API gravity fluids.’
–PROMETHEUS LEASE, WELL 1H: AGYP is pumping more. AGYP is pumping 2,000 to 2,400 barrels of fluid daily. At the same cut of 2.5%, it is pumping 50 barrels of oil daily. At an $80 price, that gives AGYP $4,000 daily, that would translate into $1,460,000 annually.
AGYP ‘RIGHT PLACE, RIGHT TIME’
George Montieth, CEO of AGYP, says, “Yes, 2021 was a foundational year for Allied in which the company successfully achieved initial production at three of our lease sites.”
He added, “We now go into 2022 as a producing oil company that is selling oil to our contracted agent. Our initial production numbers have barely scratched the surface of the real potential of Allied’s six existing well projects.”
He said that Allied is a “producing all-American oil company that is in the ‘right place at the right time in history.'”
Keep AGYP stock on your Watch List as skyrocketing oil prices are causing energy stocks to spike in valuation.
More AGYP coverage: https://topnewsguide.com/2022/01/24/allied-energy-corp-otcmktsagyp-trade-signals-positive-after-news/
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