FormCap Corp. is an emerging exploration and development company in the oil and gas sector. The company’s primary focus is the discovery and development of oil in the continental United States, particularly in the Permian Basin. The Permian Basin is a prolific area that has produced over 35 billion barrels of oil and 100 trillion cubic feet of natural gas. The basin is host to over 20 percent of all domestic oil and gas produced in the United States.
Any oil discovered by FormCap will definitely be needed as the United States competes for scarce energy resources with emerging economies such as China, whose oil imports climb to new highs seemingly every month. Global energy consumption is expected to rise 50% by 2030 to 112.5 million barrels of oil per day. The sharp rise in demand for oil may happen even sooner than 2030 if a strong global economic rebound takes hold.
Adding to the growing demand for oil are concerns about the future supplies of oil. These include geopolitical worries in countries such as Iran, Iraq, Nigeria and Venezuela. But perhaps more importantly are concerns about the diminishing supplies of oil coming from the world’s existing major oil fields, such as Mexico’s Catarell field. The first-of-its-kind study last year by the International Energy Agency (IEA) of the world’s largest 800 oil fields showed that most of the big fields have peaked and production is declining at about a 6.7% rate.
It is with this backdrop that firms such as Goldman Sachs are forecasting that oil prices will average $90 a barrel this year and $110 a barrel next year. And don’t expect help from OPEC – they have said that they do not plan to increase output until a huge amount of oversupply has been absorbed. OPEC itself is expecting $80-$90 a barrel for oil prices in 2010. Natural gas prices have also climbed recently as bitter cold weather has helped to work-off a record-high level of gas inventories.
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All of this plays right into FormCap’s hand with its holdings in the Permian Basin. The company’s first project – the Weber City Prospect located in Curry County, New Mexico – gives them about 4,800 acres of oil and gas leases in this prime property in eastern New Mexico. The region is so prolific that some 1,300 reservoirs have been identified as having production ceilings of 1 million barrels or more. And it is still a vastly undeveloped region – even in the more developed Texas-portion of the Permian Basin. Only 28 percent of the potential reserves have been developed to date. FormCap believes that in a successful case, there is potential to drill up to 100 wells on the property which may produce up to 300 million barrels of oil.
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