Oil and energy stocks are always great for day trade and long set ups, especially with the price of oil at around $105 per barrel currently. One of the oil and energy penny stocks to watch, if you aren’t already, are the shares of Circle Star Energy Corp. (OTC: CRCL) which is currently pretty cheap. CRCL very well could wind up being the best of the penny stock picks going into this summer.
CRCL, a performance-driven oil exploration & production company, is already generating over $120,000 in monthly revenue from its Texas operations. Just two weeks ago, Circle Star Energy leased another 111,000 net acres in addition to the previously announced 64,000 acre leasehold in Gove and Trego counties, positioning CRCL‘s total contracted Northwest Kansas acreage position at approximately 175,000 net acres.
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CRCL Stock Chart:
CRCL Stock Analysis:
Market Cap (intraday): 72.79M
Price/Sales (ttm): 95.04
(Apr 4, 2012): 2.75
(Mar 6, 2012): 2.15
Avg Vol (3 month): 74,650
Avg Vol (10 day): 186,375
Shares Outstanding: 29.89M
5 Day History
Percent Change -6.35%
Moving Average 2.49
Average Volume 171,779
The land lease agreements come just shortly after Circle Star Energy announced an outright land purchase of approximately 7,500 acres prospective for the “Original Mississippian” formation in Southern Kansas. CRCL plans to exploit the shallow 4500′ Kansas City-Lansing sub-formation at an estimated cost to drill and complete of approximately $500K per well.
With a very healthy balance sheet and income statement, it would be tragic for one of the good penny stocks like CRCL to not be at the top of everyone’s watch list.
About CRCL Oil & Gas Properties:
Permian Basin: An oil field located in West Texas and the adjoining area of southeastern New Mexico. The Permian Basin Oil Field covers an area approximately 250 miles wide and 300 miles long. Various zones and terms such as the Avalon Shale, Leonard Shale, Spraberry Formation, Yeso Oil Play, Bone Spring Formation &Wolfcamp Shale are all part of the Permian Basin.
Bullard Prospect (Scurry County, TX) is a producing oil/gas field located in Scurry County, Texas which is located in the Permian Basin in West Texas. Circle Star Energy owns a 1.25% – 2.50% working interest (0.9375% – 2.0833% net revenue interest) in eight oil/gas wells producing out of the Clear Fork and Glorietta formations at an approximate depth of 3,800 to 3,900 feet.
Further, the operator may drill in 5-6 more locations in the Bullard Prospect in the next 12 months. As of January 3, 2011, the operator had identified approximately 6-10 undeveloped locations in the Bullard Prospect. Circle Star Energy has interests in wells located in the Bullard Prospect operated by Unitex Oil & Gas. Circle Star Energy holds interests in 3,104.19 gross acres, 2,862.69 of which is undeveloped, and 75.34 net acres, 71.57 of which is undeveloped.
TXL Extension (Crane County, TX) is a producing oil/gas field located in Crane County, Texas, which is located in the Permian Basin in West Texas. Circle Star Energy has interests in wells located in the TXL Extension operated by CML Exploration, LLC. Circle Star Energy owns a 1.00% working interest (0.75% net revenue interest) in two wells producing out of the Wolfcamp formation at an approximate depth of 8,000 to 9,000 feet. Circle Star Energy holds interests in 80.00 gross acres and 0.80 net acres in the TXL Extension.
Eagle Ford Shale: Located in South Texas, the formation produces from various depths between 4,000 and 12,000 feet. The Eagle Ford Shale takes its name from the town of Eagle Ford Texas where the shale outcrops at the surface in clay form. The Eagle Ford is a booming shale play. The Eagle Ford Shale is a geological formation directly beneath the Austin Chalk limestone and it is considered to be the “source rock”, or the original source of hydrocarbons that are contained in the Austin Chalk.
Circle Star Energy has interests in wells in the Pearsall Prospect which is a producing oil field located around and between Crystal City and Carrizo Springs, Texas, located in South Texas. The wells in which Circle Star Energy has an interest are located in Dimmit and Zavala counties.
Dimmit County, TX is situated in South Texas where companies are targeting oil, condensate, and gas. Dimmit County produces from both the condensate rich and oil prone areas of the Eagle Ford.
Zavala County, TX is also in South Texas and forms part of the Eagle Ford Shale Oil Play. The county lies within the Maverick Basin where oil & gas companies are targeting the Eagle Ford Shale and the Pearsall Shale Gas Play. Drilling in the Eagle Ford targets depths of 4,000 ft to 6,000 ft in the central and southern portions of the county.
Pearsall Prospect: The Pearsall field was originally discovered in the 1930’s and is part of a major oil-producing trend that stretches from near the Texas/Mexico border to the Texas/Louisiana border. Circle Star Energy’s Eagle Ford interests in the Pearsall Prospect are operated by Chesapeake Energy Corp. Circle Star Energy owns interests in various non-producing overriding royalty interest in the Eagle Ford Shale, which is a deeper, productive formation located in the same geographic area below the Austin Chalk formation and is generally considered to be the “source rock” for much of the regional production.
Chesapeake has permitted 13 Eagle Ford wells on the acreage in which Circle Star Energy owns an average overriding royalty interest of 0.16% across 25,000 acres, and 9 wells have been, or are currently being drilled on the aforementioned asset. In addition, Circle Star Energy owns a 1.00% overriding royalty interest in 3,200 acres operated by Chesapeake. Chesapeake has permitted 13 Eagle Ford wells on the acreage in which Circle Star Energy owns an average overriding royalty interest of 0.16% across 25,000 acres, and 9 wells have been, or are currently being drilled on the aforementioned asset.
In addition, the Circle Star Energy owns a 1.0% overriding royalty interest in 3,200 acres operated by Chesapeake.
Approximately 50% of the horizontal drill wells in the world have been drilled in the Austin Chalk. The Austin Chalk is a prolific reservoir that has been developed with vertical and horizontal drilling techniques. Circle Star Energy’s Austin Chalk wells in the Pearsall Prospect are operated by CML Exploration, LLC.
Circle Star Energy owns a 0.24% – 5.00% working interest (0.17% – 3.75% net revenue interest) in 20 oil wells producing out of the Austin Chalk and Buda formations at an approximate depth of 6,000 to 7,100 feet. Circle Star Energy holds interests in gross acres of 36,687.53 and net acres of 90.2365 in the Pearsall Prospect. Oil and natural gas production from this area is 40 degrees-gravity oil and 1,200 – 1,600 BTU natural gas.
Circle Star Energy also owns interests in various non-producing overriding royalty interests in the Eagle Ford Shale, which is a deeper, productive formation located in the same geographic area (see Eagle Ford Pearsall Prospect).
Nursery Prospect (Victoria County, TX) is a producing gas field located in Victoria County, Texas. The Nursery Prospect is situated in an area that has exhibited excellent gas and very good associated condensate production. Circle Star Energy owns a 2.75% working interest (2.00% – 2.10% net revenue interest) in two gas wells producing out of the Frio and Miocene formations at an approximate depth of 4,400 to 6,000 feet. Circle Star Energy’s wells located in the Nursery Prospect are operated by CML Exploration, LLC.
Circle Star Energy holds interests in 8,000 gross acres and 22,000 net acres in the Nursery Prospect.
Madisonville Woodbine Prospect (Grimes and Madison Counties, TX) is a producing oil field located south of Madisonville, Texas. Circle Star Energy owns a 0.00% – 2.90% working interest (0.019% – 2.90% net revenue interest) in six oil wells producing out of the Woodbine formation at an approximate depth of 7,800 to 9,000 feet. Circle Star Energy acquired these interests via an acquisition which enjoins mineral and working interests in the Madisonville Woodbine Prospect through perpetual mineral deeds. Circle Star Energy’s wells located in the Madisonville Woodbine Prospect are currently operated by CML Exploration and Woodbine Acquisition Corp.
Circle Star Energy holds interests in 3,466.23 gross acres and 43.9655 net acres in the Madisonville Woodbine Prospect. Circle Star Energy owns approximately a 5.00% net revenue interest in the Oltmann Unit #1. Oil and natural gas production from this area is 40 degrees – gravity oil and 1,200 – 1,400 BTU natural gas. Circle Star Energy also owns an interest in WAC’s Camp #1 well which is undergoing completion and in several undeveloped horizontal Woodbine locations.
EnCana Hilltop Bossier Field (Robertson County, TX) is a producing gas field located west of Centerville Texas, in east Texas. Circle Star Energy owns a 3.76% mineral interest, 0.31% net revenue interest and 0.42% working interest in five gas wells producing out of the Bossier formation at an approximate depth of 11,000 to 12,500 feet. Circle Star Energy owns this interest by virtue of a perpetual mineral interest and royalty interests in the five wells. Deep Bossier wells intersect shale and sandstone formations that are between 2,000 and 3,000 feet thick.
Circle Star Energy obtained its perpetual mineral interest from one of the original mineral owners. Circle Star Energy’s wells in the EnCana Hilltop Bossier Field are operated by EnCana Oil & Gas (USA), Inc. Circle Star Energy holds interests in 1,628.42 gross acres and 9.88 net acres in the EnCana Hilltop Bossier Field.
Giddings Field (Fayette and Lee Counties, TX) is a producing oil field across several counties in South Central Texas. The Giddings field was rapidly exploited in the 1970’s and eventually expanded to include a long, narrow trend which extends from the Texas-Mexico border up through northeast Texas into Louisiana. The primary producing reservoir is the Austin Chalk which produced over 1 Billion BOE through vertical development and then underwent massive horizontal development beginning in the early 1990’s, with secondary production from the Taylor and deeper Buda and Georgetown formations.
Circle Star Energy owns a 0.00% – 3.00% working interest (0.76% – 2.28% net revenue interest) in seven oil wells producing out of the Austin Chalk formation at an approximate depth of 7,800 to 9,000 feet. Circle Star Energy’s wells in Giddings field are operated by Leexus Oil LLC. Circle Star Energy holds interests in 1,766.13 gross acres and 54.25 net acres in Giddings field.
Glass Prospect (Glasscock County, TX) is project area encompasses 1,280 gross acres and 640 net mineral acres located in the oil-rich Permian basin region and is operated by Apache Corp. The operator has already drilled 4 Spraberry wells and is evaluating the potential for additional development. Covering 2,500 square miles and six Texas counties, the Spraberry Formation is one of the largest in the nation for total proved reserves. The formation produces oil from a single enormous sedimentary unit located between the depths of 5,100 and 8,300 feet.
In 2007, the U.S. Department of Energy ranked the Spraberry Trend third in the U. S. by total proved reserves and seventh in total production. Estimated reserves for the entire Spraberry-Dean unit exceed 10 billion barrels.
To-date the formation has produced an estimated one billion barrels of oil. While development on the Glass Prospect leases has focused on the Spraberry formation to-date, the project is prospective for both Fusselmen and Cline Shale opportunities. Apache is actively drilling horizontal Cline shale wells in the same field as the Glass prospect, and a recent Cline well drilled by Apache produced 8,800 bbl of oil equivalent in the first 30 days on-line.
To view the SEC filings for CRCL, click here.
Bottom Line: CRCL is positioned in one of the hottest oil shale play areas in the U.S. and partnered up with some of the biggest oil drilling companies. You have to have CRCL of you list of penny stocks to watch. Oil and Energy stocks always produce well given the right market conditions and performance.
Since the price of oil is currently at around $105 per barrel and CRCL has performed by getting top line numbers onto their income statement with a less than $10M accumulated deficit, CRCL could be one of the hot penny stocks on the OTC this summer.