With oil well over $105 a barrel and the dollar losing ground to other world currencies daily, the commodity markets in the United States are currently hotter than they have ever been. Heartland Oil & Gas is providing investors with a tempting and very affordable vehicle to position themselves in the oil and natural gas sector. The investment may be speculative at best, but the upside potential outweighs many of the risks associated with the play.
Heartland Oil & Gas Corporation is an exploration and production company that is developing oil, natural gas and coal bed methane gas resources in both eastern Kansas and Texas. The Company’s exploration activities focus on the Cherokee and Forest City Basins, which are believed to be two of the largest coal bed methane basins in the United States. The company has assembled a board of directors that bring over 47 years of experience from backgrounds including oil and gas development, real estate and even law.
Earlier this week, the company released the news that in January of 2008 it generated revenues from the sale of natural gas in excess of $137,000 from its properties in Texas and more than $81,000 from its coal bed methane fields in Kansas. These numbers were all-time high monthly sales for the company, and they were generated without any revenues from the sales of oil. Those astounding numbers nearly surpassed the total revenues for the company for the previous six months combined.
Heartland is projecting a lot of expansion for the upcoming months and continues its four-pronged production enhancement efforts by accelerating the construction of a 4 ½ mile pipeline to connect 12 wells in its Jake Coal Bed Methane Field. In addition to commencing the application of its two-stage well recompletion program to 16 of its existing wells in Kansas, the Company is also pursuing negotiations to acquire a connection to a low pressure pipeline in order to bring more wells online in its Palo Pinto Field. It is also projecting to drill 30 new wells per quarter for the remainder of 2008.
The company reported total revenues of $339,828 for the 9 months ended September 30, 2007 compared to only $286,235 for the same period the prior year. This is an increase of over 18% year over year, but with the early revenues reported for January of 2008, the company is on target for revenues upwards of $2.6 million. The company has assets valued at nearly $7.3 million.
Heartland Oil & Gas is fighting an uphill battle, because many of its competitors enjoy a size advantage. The industry average market cap for the oil and gas sector is just shy of $650 million, compared to the meager $1.02 million of Heartland. This gives companies like Abraxas Petroleum (AMEX: ABP), PetroSearch Energy (OTCBB: PTSG), Carrizo Oil & Gas (NASDAQ: CRZO), and Newfield Exploration (NYSE: NFX) a greater advantage based on economies of scale and sheer manpower, but the management of HTOG is prepared for the challenge.
On February 22nd of this year Beacon Equity Research rated the stock a “speculative buy” and set a target price of $0.22. This analysis was completed before the company released their January revenues. The stock is currently trading at $0.037 with over 27.2 million shares outstanding and holds a float of 22.1 million shares. After the sales figures that Heartland released earlier this month and the continuation of their aggressive growth plans, we would suggest keeping an eye on this company.
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