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Buy TomCo Energy at 1.3p

By Doc Holiday | Friday 23 August 2013

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

TomCo Energy (TOM) has seen its shares all over the shop of late, forcing the company to issue a statement saying there was nothing afoot. Could it just be that the shares are cheap? I think so.

The statement issued the other day read:


The Company notes the strong performance of its shares in recent days and, for the avoidance of any doubt, confirms that it has no imminent corporate announcements. 


Tomco However did highlight this salient point:


TomCo is aware that the Utah Division of Water Quality is soliciting comments prior to 27 September 2013 on its request to issue a groundwater discharge permit to Red Leaf Resources Inc.


TomCo holds a 100% interest in two Oil Shale leases, comprising 5 blocks covering 2,919 acres in Uintah County, which houses a 126 million barrels mineable JORC compliant resource. TomCo is not your straight laced shale play as there is no fracking needed to access its target resource, the company has entered into a licence agreement with Red Leaf which is itself partnered by Total. Red Leaf states:


Red Leaf's focus is on executing the Early Production System ('EPS') phase of its joint venture with Total. The goal of the EPS is the construction of a large scale capsule. Questerre Energy Corporation has reported that capsule construction is planned for late 2013 with first oil expected in 2014.


In March TomCo raised just shy of £1.8m via a placing at 1.2p and in May suspended its Windsor capital liquidity facility (aka a death spiral). This, coupled with the edging towards the waste water permitting authorisation suggests to me that the company is now moving towards advances in both operations and share price activity.


Tomco has a 5% royalty in the redleaf Ecoshale asset as it played white knight getting the strategic partnership deal with Total away as Total subscribed to an $80m Investment.  Red Leaf is planning a 9,800 bopd commercial operation at its Seep Ridge site.


Tomco's running cost (Cash Burn) is low with its strategy is to develop the Holliday Block lease as a similar follow-on project to Seep Ridge using the EcoShale™ In-Capsule Process, with the same targeted production of 9,800 bopd.


The company has enough cash enough to operate over the next 18 months as it is on the cusp of reflective interest based around Red Leaf / TomCo permitting authorization.Mid-September should see the start of the transformation


A Speculative buy. Target 2p.

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