Tuesday, August 15, 2017

$450 Billion Oil Discovery Could be a Game Changer for US Oil Industry

 $450 Billion Oil Discovery Could be a Game Changer for US Oil Industry
OilPrice.com News Commentary

LONDON, August 14, 2017 /PRNewswire/ --

A surprise discovery coming out of Utah and Colorado's  Paradox Basin oil field has captured the attention of the petroleum sector today. Over 9 billion barrels equivalent (BOE), to be exact, which if fully realized in today's oil price structure comes at a value of $450 billion.

Well-respected consulting firm Ryder Scott, released an intriguing 51-101 Estimated Prospective Oil and Gas Resource in the Paradox Basin that spans the Utah and Colorado border. The report cited estimates that tallied up to nearly 8 billion barrels of oil in place, and an additional 7 trillion cubic feet of gas, at its highest potential. Mining Resource companies in focus include: Parsley Energy, Inc. (NYSE: PE), Kosmos Energy Ltd. (NYSE: KOS), SeaDrill Limited (NYSE: SDRL), Diamond Offshore Drilling, Inc. (NYSE: DO), Pioneer Natural Resources Company (NYSE: PXD).

The leaseholders in question are not a major such as Anadarko Petroleum, Noble Energy or Encana.

Instead, it's a junior resource company seen as pioneers leading the charge in the development of domestic lithium production, through an innovative method of extraction involving petroleum brine water they call 'petrolithium'.

MGX Minerals (XMG: MGXMF) is currently a $68-million  company, with one of the largest lithium portfolios in North America. Now with a verified Ryder Scott resource estimate in hand, MGX can add potentially major petroleum player to their company description.

Realistic Numbers

While the 9 billion barrels number is at the very upper limit of Ryder Scott's Paradox Basin assessment, even walking back the numbers to their realistic potential is still impressive for MGX's future.

The best estimate total (assessed with 50% probability) comes to nearly 6 billion barrels of oil, and 6.8 billion barrels of oil equivalent.

Of the three tables shown in the company's latest press release regarding the assessment, the best estimate prospective resource net to MGX is nearly 26.5 million barrels of oil equivalent (BOE). At the current price of $50/bbl, the gross value for that kind of resource is upwards of $1.32 billion.

Part of the reason the resource is so large, is that it's comprised of 23 clastics (or payzones).

And even after factoring in an averaging of the report's chance of commerciality at 5.6% on each zone, and using a rough estimate towards its value, the resource is worth a minimum of $74 million net to MGX.

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