more info on www.geckoresearch.com
www.geckoresearch.com
Our comment
Finally, the day we have been waiting for in anticipation is here as GulfSlope (GSPE) has found a partner that will commit to drilling on two prospects. Over the past two years, from the time when we started to invest in GulfSlope, we have witnessed the collapse of not only the oil price but also the Gulf Of Mexico (GOM) exploration activity.
Today's release comes from Energulf Resources (eng.v) which is reacting very well to the news, up 114% for the day as we write this. What has been signed is a non-binding Letter of Intent (LOI) and we suspect that this is the reason why we haven't seen a release from GulfSlope yet.
In theory, Energulf could pull out of the deal as it is non-binding but since they have already made payments to GulfSlope, we consider this a done deal. What also points to the fact that this deal is sealed, is the addition of Jim Askew and John B. Connally as advisors to Energulf. Both these gentlemen were part of the creation of GulfSlope in the past and for them to join Energulf says it all to us.
Now it should be pointed out that since this news isn't yet released by GulfSlope, most people familiar with the GulfSlope story has no idea of what's going on. We wouldn't be surprised if the GulfSlope stock reacts well to this news once released by them after the binding agreement is signed. This is perhaps an opportunity for those who don't own any GSPE.
The News
The GulfSlope story and business idea has always been about discovering sub-salt oil fields in the shallower part of GOM, also known as the shelf. During the interpretation of the seismic data, GulfSlope has also discovered above salt prospects and two of these are now subject of today's news. These are small prospects but very well defined and more importantly, very shallow.
Because they are so shallow each well is expected to cost only $2 million and take about two months to drill. Add to that a permitting process of 4-6 months and we could have a success on our hands as early as New Year in a best case scenario.
Energulf will commit to drill two wells. First well will be on the Canoe Prospect and a second well on either the Canoe Prospect (appraisal well) or “Selectron Shallow Prospect (exploration well). Upon payment of $400,000 (of which $200,000 has already been paid to GulfSlope), Energulf will own a 43.75% non-operated working interest in the Canoe and Selectron Shallow Prospects.
For an additional $400,000 Energulf will acquire 25% non-operated working interest in four sub salt prospects (Alpha, Beta, Baryon and Proton). These prospects are not drill ready and need a lot of work done on them.
Full version of Energulf's press release
* EnerGulf Announces Participation in Gulf of Mexico Projects (June 9)
What this means for GulfSlope shareholders
The last two years has been hard and trying for us shareholders. We realize that many of our subscribers who, like us, bought two years ago may have sold already, taken the loss and moved on. This is perfectly understandable.
Speaking for ourselves, we have never doubted the potential and quality of the assets and although our investment has been a disaster so far, we never sold a single share. Our thinking now is that we will give GulfSlope even more time as today marks the starting point for the company. Sure, with the smaller shallow prospects we are off to a smaller start than we were hoping for two years ago. But at the same time we consider these prospect to be of lower risk = higher chance of success.
When/if the drilling shows success, GulfSlope will have plenty of options at hand. They could monetize some part of the assets and go after the sub salt prospects as an example. Either way, we think the bottom is in and more exciting times lie ahead.
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