The projects below are either finalized or in final stages of negotiations.
E&P Technology Developments
During the past 2+ years, with the severe downturn in oil and gas prices, the oil industry has made steady improvements in drilling and completion procedures for horizontal wells in unconventional resource plays, especially in the USA.
The integration of very complex geological, geochemical, and geophysical datasets to better understand the impact of different drilling and fracking fluids on varying physico-chemical reservoir conditions has been much slower. A comprehensive understanding offers better selection of well locations and better completion procedures for oil-rich and gas-rich reservoirs and greater positive impact on the E & P Cost/Performance model.
As indicated earlier, using in-house expertise in cooperation with associated privately-held technology companies, TSO is carefully assessing and assembling a better tool-box for the whole E & P process.
These complex unconventional reservoirs require this fully integrated approach to identify the “sweet spots”, maximize initial production and provide better recoveries. Together it equals greater EUR (Estimated Ultimate Recovery) barrels of oil equivalent per well and per field. Example: for shale oil field areas, the industry forecasts a field-wide recovery of 4-6% of original-oil-in-place (OOIP). We conservatively forecast recoveries of >12% with these improved technologies. Conceivably, as we further tune the technological procedures, it is reasonable to expect recoveries of 20% or more.
Strategically, we are choosing to avoid the licensing route, preferring to deploy our technical advantage on internally acquired distressed producing properties: enhance the production and then bring in a joint-venture operating partner to fully develop the oil and/or gas field for mutual benefit.
Australia Acquisitions
In cooperation with associates from Australia and New Zealand, the Company has been evaluating two acquisition opportunities that are strategically selected because they meet our requirements for being relatively low-cost to acquire, in need of our high-tech approach and offering substantial upside for enhanced oil and gas production.
For one of the projects, TSO retained an independent consultant to advise of the likelihood that the state governmental authorities would support our unique exploration and development plans using proprietary technologies for one of these Australia opportunities. The consultant’s initial advice is to proceed cautiously. He forecasts a positive response from the authorities if a new development program and budget are reasonable and the current owner also cooperates.
If TSO’s plans are successful, the upside is large; the local market demand for product is huge. The project involves well re-entries, new vertical and horizontal wells, along with additional seismic, geochemical and geological work.
The current operator has confirmed from their preliminary assessment of existing wells that the primary target reservoirs are hydrocarbon-bearing but are tight sands. They failed to drill the wells to planned total depth, unable to test the full section. A major shale has also been forecast to exist in this very under-developed sedimentary basin. These reservoirs are excellent candidates for our tool-box.
Kurdistan Projects
Political events, social unrest and conflict have combined to make Kurdistan a difficult region for oil and gas projects even though it is acknowledged as one of the geologically most-promising areas in the world for additional oil field development. Recent events, along with special relations and great respect for the Kurdistan people have combined to cause TSO’s management to reactivate a major effort to conduct oil and gas projects in that region.
TSO, along with its partners, is pursuing projects involving equity interest (oil field exploration & development, refineries and power plants) and EPC Contracts (integrated engineering, procurement and construction services, some related some and unrelated to equity interest projects).
Texas Exploration & Production Projects
New Trend Play
A geographically regional alignment of common geologic features is known as a geologic trend. Where geologic features and geologic history coincide to provide repeated accumulations of economic natural resources along the trend then it is commonly called a “Trend Play”. The Witwatersrand Gold mines and Gulf of Mexico Miocene oil fields are conventional trend plays. The Bakken shale (North Dakota), the Marcellus shale (New York), and the Eagle Ford and Barnett shales in Texas are unconventional trend plays.
The most profitable companies in all of these trend plays are those that take the risk, drill the “prospects”, confirm new trend plays, whether conventional or unconventional, and have the foresight and financial commitment to capture a substantial acreage position along that new trend play area – ahead of the competition.
The Eagle Ford Shale trend play is credited with being one of a few new oil and gas trends that substantially provided the economic engine for recovery from the 2008 depression. It is considered to now be the largest “oil field” complex in the USA. (see https://www.eia.gov/todayinenergy/detail.php?id=3770).
Our Company is currently pursuing a similar opportunity. Acquisition efforts are resuming. Our next step will be the purchase of additional gravity, magnetics and seismic data to map additional drilling targets and acreage acquisitions as the Company positions itself for a potentially huge trend play project as the oil prices recover. The initial wells will allow us to test the model while intersecting known reservoirs (secondary targets) to minimize risk and virtually confirm payout.
In the event of success with our primary targets we will acquire a maximum acreage position — timing is everything. For example, when the first Eagle Ford wells were drilled, acreage costs were approximate $80/acre. Successful proof of a trend play led to acreage costs exceeding $20,000/acre within 2 years.
To summarize, we have identified a possible Trend Play with potentially billions of barrels of oil equivalent.
Our strategic partners are very keen to participate in this venture; however, we are carefully overlaying objectives to minimize risk and maximize economic success.
Asset Acquisition
We’re very confident that many distressed (uneconomical and/or the owner cannot sustain viability) oil producing assets are amenable to our new tool box and new oil field procedures. Several test cases of some of these tools have been made with success in all cases, here in the USA and internationally. There is much more to learn and to fine-tune our new tools and procedures for each specific geologic environment in order to maximize the benefits. Meanwhile, we are now proceeding to acquire distressed assets for recompletions and new-drills.
TSO has been vetting several acquisition opportunities that complement our economic targets, our technological targets and overlap with our Trend Play targets. By “stacking” these primary objectives, we can substantially mitigate risk of capital. That is a key component to our strategy and our partners appreciate this point. Together we are scheduling the acquisition of key assets in the USA, possibly in Australia, and then we’ll expand into Canada, Mexico and elsewhere. We have established strategic partnerships with financial, operational, and technical parties.
Texas Refinery
An earlier effort to acquire a disabled refinery in Texas was terminated. Recently, with new data from the US Environmental Protection Agency, TSO has approached an interested party that has agreed to partner in the acquisition, environmental clean-up, refurbishment and subsequent re-commissioning for resumption of operation. As soon as the tank farm and refinery can resume operations, the partners foresee expansion of the plant to more than double its current capacity of 44,000 barrels per day. Location is good because it offers Gulf of Mexico supertanker access for export of refined products.
In the next few months, work will resume on the negotiation of a purchase and sale agreement with the current owner believed to be in default with state and federal environmental and operating rules. Ongoing communications with these agencies convinced the Company that the project is viable and can become a significant economic boost to the local communities. This project will include operating income and equity ownership participation among the partners.
Oil & Refined Products Trading
In 2015, one of our Chinese partners requested that we assist them in sourcing naphtha product from the US Gulf Coast for delivery to clients in China. From this initial project, TSO has now established a small team within its core group who have a priority focus on crude oil and refined products trading. Currently, there are 3 large trading projects active and progressing towards completion of the initial transactions with contracts ranging from 6 months to 5 years. Each project has its own participation agreements: one is simply performing a brokerage role (outside the Company’s strategic business model) and the other two involve equity interest in the transactions.
Minerals Projects – American Mining & Metals Inc
GOLD TAILINGS PROJECT, USA
The Gold Tailings Project (GTP) is a minerals project involving two primary income streams: (1) sale of aggregate from a huge stock-piled supply of several hundred million tonnes of waste rock piles accumulated from an abandoned old mine; and (2) reprocessing the fine-particle tailings (dried-out ponds) to recover gold and other precious metals assayed and known to exist in economic quantities. Because we are only reprocessing and/or selling already-mined material we avoid the myriad of mining regulations. Each income stream can stand alone and provide moderate to outstanding economic returns on investment. After designing and costing an engineered reprocessing facility, a gold (and other precious metals) refinery, and an aggregate sieving/sorting and loading facility, we utilized a large variety of sensitivity analyses to build 4 separate cases.
The results: legal, environmental, social, economic and technical assessments indicate this project can start to generate cash flow in less than 6 months following the purchase of the property assets. The Return-on-Investment is forecast >13X
CAPEX and Start-up OPEX for Phase One (initial 3 years) is approximately $100 million This includes the purchase price, for both primary income streams – precious metals AND aggregate.
GOLD DREDGE PROJECT, NEW ZEALAND
During the last 30 years, one of the Company’s principals has monitored the alluvial gold opportunities in many countries worldwide. One of TSO’s associates in New Zealand identified an alluvial gold project acquisition opportunity in that country that is very attractive. Initial assessment work indicates that the project has a positive combination of political, socio-environmental, technical, economic and legal conditions.
Assuming a number of issues have now been overcome, AMMI is in the enviable position of being able to acquire the operation and all assets at an attractive price.
This project represents another low-cost opportunity to (a) quickly establish cash flow and (b) book a net asset value greatly in excess of entry costs. In addition, it fits our team’s expertise and is quite compatible with the Gold Tailings Project. Essentially, both projects will employ the same physical extraction/processing procedures and equipment. One project will provide knowledge for the other project.
The location of the project is in an environmentally, socially, legally, and tax friendly area of the world. This adds some measure of stability and reduction of risk to the project. The basic terms and forecast outcomes are
Total Proved Recoverable Gold
150,000 oz of Gold
TEXAS SAND & GRAVEL
TSO’s president was approached regarding a proposed sand & gravel project whose original financing has failed. It is located along a meandering Texas river not far from Houston, Texas. In his service role for AMMI, Cormick evaluated the business plan from the perspective of (a) the work he had done regarding the aggregate component of the Gold Tailings Project (see above) and (b) the Texas-based oil industry’s insatiable appetite for frac sand. After encouraging the original project designers to upgrade the engineering assessment work to include frac sand quality testing and to expand the business plan for two dredges (rather than one), the resulting pro forma and risk assessment collectively made the project a very low-risk, excellent payout opportunity for an astute investor.
We have identified 3 active oil companies drilling in the nearby area ready to offer competitive bids for purchase of frac sand from this project. It was confirmed that 6-month to 2-year offtake agreements for 100% of the forecast frac sand production are now likely.
The property is currently under a Purchase & Sale Contract expected to close in 2-3 weeks. Independent engineering studies and reports from core analyses of the property have been obtained along with the frac sand quality and crush strength analyses. Reserves are greater than 35 million tons of high quality saleable product, including frac sand. The property will be developed with 2 dredges which will allow for full recovery of the reserves in approximately 25 years.
The operations management team has >35 years’ experience in this business in this part of Texas. They forecast start-up of the operation to be within 7 months from the date of closing on the land. Rigorous pro forma analyses indicate an ROI >15X.