Oil Stocks: American Liberty Petroleum (OREO) Undervalued

Shares of the oil speculator penny stock of American Liberty Petroleum Corp. (OTC: OREO) have taken a bit of a slide since dropping below $1.00. OREO stock appears to be “extremely oversold” with the shares reaching a new 52 week low even after gaining 4.86% in the last trading session. Investors in oil stocks seem to not understand the land which American Liberty sits upon and who their oil drilling neighbors are. That could all change now after the Company’s recent progress on the Cortez Operation.

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OREO Stock Chart

Market Cap: 40.90M
Price/Book (mrq): 29.85

52-Week High
(Mar 26, 2012): 1.99
52-Week Low
(Jun 4, 2012): 0.36

Avg Vol (3 month): 804,400
Avg Vol (10 day): 1,289,860
Shares Outstanding: 105.40M
Float: 37.80M

The operation, located on the 3,840-acre Cortez lease in Gabbs Valley, Nye County, Nevada, includes two wells: Cobble Cuesta 1-12 and Paradise 2-12. In early May, work resumed on the Paradise 2-12 well, including a fluid level test that indicated a 1920′ fluid column in the well bore above the pump.

Following the application of hot water and a new proprietary chemical formula treatment, the well produced additional fluid consisting of an oil/water mix. In total, roughly 29 barrels of crude was shipped to Foreland’s Eagle Springs Refinery, representing American Liberty’s 2nd sale to Foreland. The BLM was also notified of the sale in order that American Liberty might secure “held by production” status on the Cortez lease.

The key about any oil in Gabbs Valley is that the oil pocket is deep underground, as much as 10,000 feet or more, and it rests at an angle. The oil pocket is as much vertical as it is horizontal. Until recently, oil drilling technology would have had a hard time reaching the oil, but thanks to advances in modern drilling technology that has opened up wide shafts of the U.S. to oil exploration, it should not be too hard to reach the oil in Gabbs Valley.

Bottom Line: OREO is one of the undervalued, oversold penny stocks that is a steal based on the fact that they are in one of the highest untapped oil producing areas in the U.S. OREO stock saw its PPS trade as high as $1.99 before any proof of oil existed on the land they have leaseholds on.

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