Savoy Energy Corp., an independent oil and gas company specializing in the turnaround of abandoned wells, is in a rather unique position within the industry. While many oil and gas companies depend upon searching for and discovering new wells, still a largely speculative process in spite of all the technologies now being applied, Savoy goes after existing wells. These are wells that still have oil, but which were abandoned earlier because previously available technologies and processes were simply not able to economically extract the remaining stock. Using innovative approaches, Savoy is able to tap into those remaining resources, bringing the wells back online.
Savoy is currently producing oil from four wells, with another 18 being evaluated. This is expected to increase significantly over the next few years. However, the company is very careful in identifying and evaluating well candidates, a move that greatly reduces the risks for the company and its investors.
Most people are unaware that nearly two thirds of all the oil discovered in the U.S., a whopping 200 billion barrels, remains trapped underground after conventional recovery operations. Many old wells in the Los Angeles area, for example, were originally shut down after less than ¼ of the oil was taken out. There are an estimated ½ million wells containing residual oil. Large oil companies, with high overhead, are quick to turn their back on low producing wells. Savoy’s low overhead allows profitability at very low production rates. In addition, the company continues to increase efficiency.
This unique approach, coupled with an anticipated rise in oil and gas prices as the economy recovers, paint a bright future for Savoy. It is expected that the company will go from 4 wells to 24 operating wells by 2013, producing over 100,000 barrels and generating projected revenues of $9.6 million. Gross margins, already at 54.7%, are expected to reach over 58% by 2013, with net margins remaining attractive.
The key factors supporting Savoy’s prospects are:
• Ability to economically extract leftover oil
• Increasing oil and gas prices
• Small overhead costs compared to other companies and other approaches
• Continued push for U.S. oil independence
• Strong industry contacts
• Overall advanced technologies and managerial experience
Let us hear your thoughts: Savoy Energy Corp. Message Board