FormCap Corporation (OTCBB-Pink Sheets: FRMC) is an emerging Exploration and Development company in the Oil & Gas sector. Its primary focus is the discovery and development of oil in the Continental United States. To date, the Company has assembled 4,800 acres of oil and gas mineral leases, the Weber City Prospect, located in Curry County, New Mexico. There is potential to drill up to 100 wells estimated to produce over 300 million barrels of oil in a successful case. The Weber City Prospect has been defined by detailed geological information; well log data, seismic, Landsat and independent third party geological interpretation.
Highlights
FormCap's Weber City Prospect is estimated to contain potentially over 220 million barrels of oil. Prospect wells are anticipated to flow at initial rates averaging 300 barrels per day, free of formation water. Based on a modeling of a look-alike existing producing field (the Anton Irish field), well recoveries are expected to range from 100,000 to over 500,000 barrels of oil per well. With 40 acre spacing in this prospect, there is room for approximately 100 wells.
The smart money is investing in the Permian basin - Oilmen will tell you that mother nature did everything right to create the major petroleum reserves of the Permian Basin. Events that transpired thousands of years ago contributed to the deposition of thick, organically rich source beds and excellent reservoirs for the storage of oil and gas in the Permian Basin. This is why FormCap is there. This is why Exxon Mobil wants back in.
Exxon Mobil buys back Permian Basin assets it sold to XTO Energy in the largest U.S. energy takeover since Houston-based Conoco-Phillips acquired Burlington Resources - Exxon's recent $31 billion acquisition of XTO Energy in December of 2009 - largely in part for XTO's significant Permian Basin assets, which Exxon originally sold as part of a larger land package to XTO Energy for $500 million five years earlier - signals an important shift in strategy for Exxon. After years of insisting that the best oil and gas prospects were located internationally, Exxon has come back home to explore for petroleum, evidently conceding that it overlooked the significance of the domestic, onshore exploration assets in the Permian Basin. Importantly, Exxon's acquisition of XTO Energy validates the independent exploration and production business model of the smaller companies that rightly focused on the development of the Permian Basin of West Texas and New Mexico as a key, future source of energy.
Recent M&A activity in the Permian Basin highlights the growing importance of this historically prolific, domestic source of energy. Shortly after the takeover, a Bloomberg article of December 14, 2009, reported that Exxon's $31 billion acquisition of XTO Energy may signal a wave of new acquisitions. Yet, Exxon's deal with XTO Energy was not the first transaction to take place. On Sept. 25, 2008, Occidental Petroleum bought all of Plains Exploration & Production interests in the Permian Basin of West Texas and New Mexico and the Piceance Basin of Colorado for $1.25 billion. Likewise, SandRidge Energy just bought Forest Oil's Permian Basin properties for $800 million. It seems likely that there will be more deals to follow because the Permian Basin, with its development history and stable, long-life, shallow decline reserves, is a strong bet for petroleum exploration companies.
The latest drill logs show that the Permian Basin is a hotbed of activity. Recent drill logs show that interest in the Permian Basin is on the rise, and are an acknowledgement of the areas rich oil and gas potential, just as begins to become more challenging to find inexpensive, US-friendly sources of petroleum. Permit applications approved by the Texas Railroad commission in late August of 2009 list all of the big oil companies, with names that include: Anadarko, Apache, Chevron, Conoco-Phillips, Devon Energy, Kinder Morgan, and Mobil, to list just a few. The upshot is that the smart money is exploring for oil and gas in the Permian Basin.
Projects
Weber City Prospect Summary
Curry County, New Mexico
FormCap Corporation is pleased to announce the formation of its Weber City Prospect. The Prospect is comprised of 4,800 acres of oil and gas leases, all with primary terms of 5 years. All leases were initiated in June of 2009 and all leases have been duly recorded in the State of New Mexico. The Weber City Prospect is located in Curry County, New Mexico which lies on the eastern most side of New Mexico bordering the state of Texas. Geologically, this Prospect in on the northern flank of the prolific Permian Basin and focuses on the Cisco Formation of Pennsylvanian Age. The initial well within the Prospect will be drilled to a total depth of 7,000' to test four potential productive hydrocarbon zones; the San Andres, Clearfork, Wolfcamp and finally, the primary objective, the Cisco Formation. The Prospect's multiple secondary objectives are all oil and are primary producing zones in the Permain Basin of New Mexico and Texas. Based on modeling of a "look alike" existing producing field, the Anton Irish Field, well recoveries are expected to range from 100,000 to over 500,000 barrels of oil per well. With 40 acre spacing in this area, the project is estimated to produce over 220 million barrels of oil in a successful case. Project wells are anticipated to flow at initial rates averaging 300 barrels per day, free of formation water.
In order to better understand how the Prospect developed geologically, the following provides a brief description of the formation of the Pennsylvanian Reef reservoirs. The Cisco Formation is primarily marine limestone and shales, with the reservoir developed in limestone sequences. During deposition, the Pennsylvanian seas were relatively shallow and warm or tropical. At the same time in this area of the Permian Basin, an incipient basin margin started to develop. Associated with this development, structures evolved on the Pennsylvanian seafloor. Upon these structures, patch reefs began to grow. As the Pennsylvanian sea deepened, the reefs grew vertically in an attempt to stay close to the surface and most critically within the photic or sunlight zone. A major regression or withdrawal of the seas, ended reef deposition. But leaving the reefs exposed led to excellent porosity and permeability development. Several of these Pennsylvanian Reef reservoirs are giant oil traps, producing over a billion barrels of oil in the Permian Basin. The Weber City Prospect focuses on the same type of oil trap.
Detailed mapping, landsat imagery, seismic analysis and log evaluation outlines a major, combination stratigraphic, structural trap on the Prospect; the existing Anton Irish Field. Structural analysis of the Permian Basin over a 20 year period integrate with landsat analysis by a renowned structural geologist outlines a probable compression structure or "pop bloc". South of the structure, Gulf Oil tested significant oil from the Cisco Formation. A shallow well drilled and completed in 1947 as a 1,600' oil producer is located at the crest of the Weber City "pop bloc". Finally, a well off of the northern flank of the Prospect, drilled into over 1,200' of basinal shale and defines the northern limits. As in Anton Irish and Pennsylvanian Reef Fields in the Permian Basin (Kelly-Snyder), individual leases can produce over a million barrels of oil.
Company Stock Chart & Analysis
FRMC has retreated more than 33% from it's near term high of around $.46 around February 7th. Since around February 16 FRMC has started an uptrend on increasing buy-side volume and trading volumes that last four trading sessions has increased significantly.
On February 16th the MACD and Stochastics indicators bottomed out and turned bullish and this bullish trend is continuing this week with a buy-side trading volume surge.
The share price has surged above it's 13 day moving average and is moving upward toward it's 50 day moving average. With Friday's significant news that the company is initiating a new exploration program we think that FRMC may be poised for an upside breakout from this trading range so put FRMC on your watchlist and watch for an entry opportunity early this week as we think volume will increase significantly and there is likely to be a strong upward price surge from the current price level.
Management
Graham Douglas, President
Graham Douglas is an experienced business executive with 35 years of financial and operational management. After graduating in 1970 with a Bachelor of Commerce Honors degree, Mr. Douglas was employed by two large Canadian banks in the area of corporate finance. From 1978 through 1985, Mr. Douglas was involved in the commercial/industrial real estate development and construction industry in a financial capacity, progressing to be the President of the Company. In the period 1986 through 1992, Mr. Douglas was the Chief Operating Officer of a large west coast Canadian transportation, warehousing, freight forwarding and sea terminal operator. In this capacity, he oversaw the restructuring of the company's operations and the eventual sale of the various operating entities.
Beginning in 1992, Mr. Douglas has been active as a business consultant in the area of corporate restructurings, mergers and acquisitions, corporate finance and public offerings. Mr. Douglas has been an early stage investor and assisted in raising later stage funding for several companies in a variety of industries. Industries include the following: beverage, food processing, clothing, tourism, real estate, construction, telecommunications, hightec, mining and exploration, heavy equipment auction, oil and gas exploration and biofuels. In several instances, Mr. Douglas has taken temporary positions in management and governance through transitional periods or in difficult circumstances. Mr. Douglas is a resident of Mexico and works throughout North America and the international markets.
Advisors & Consultants
Thomas Markham, Chief Geologist
Mr. Markham is a professional geologist specializing in evaluation and development of oil and gas plays in the mid-continental US, since receiving his Masters of Geology from LSU in 1976. He began his career working with BEPCO, ARCO and then TENNECO, acting as geologist on a wide range of projects spanning over 12 years of development on leading plays including the Pinon, Allen Hill, Brunson Ranch, J.D. Shale, Brown Bassett Extension and NYY projects. During this period, he directed 15 graduate-level geologists and managed annual exploration budgets up of to $21 million.
He has recently acted as Chief Geologist in charge of the supervision and generation of a 21,000 acre Pennsylvanian gas play in the Permian Basin. In Oklahoma, Mr. Markham was instrumental in play development and directed negotiations with the Osage Tribe of Oklahoma for drilling rights on 57-quarter sections (9,120 acres). He has been an independent oil and gas geologist managing project generation and evaluation for various industry and non-industry groups primarily in the Mid Continent.
Mr. Markham has successfully drilled and completed proprietary prospects (while providing the supervision of seismic, leasing, drilling, completion, and production activities) of 88 oil and gas wells (to 10,500') in Texas, New Mexico, and Oklahoma. He was the generating geologist of a 5 TCFG overthrust play in Central Texas, he finalized a New Mexico San Andres stratigraphic play (50 to 100 MMBO at 4,000') and a Permian Basin Devonian structural play. He has managed the screening and evaluation of Springer - Atoka sub-basin prospects of the Anadarko Basin (3-D).
Tom has been published in the American Gas Journal and he has been invited on a technical tour of the former Soviet Union to review oil and gas assets. He was also guest speaker at the American Association of Petroleum Landman's (AAPL) "Buying Oil and Gas Properties" seminar.
Randall K. Boatright
Most recently Mr. Boatright served as Interim President and CEO, CFO and Director of Dexterity Surgical, Inc. He has extensive experience in the energy business as he was formerly EVP, CFO and Director of Abraxas Petroleum Corporation (AMEX:ABP) and Controller of a large private independent oil & gas company. Prior to that, Mr. Boatright practiced accounting with the firm of Coopers & Lybrand LLP. He is a CPA and a graduate of the College of William & Mary in Virginia.
