TomCo is making its return to AIM, after a two-year absence from the market.
Now refinanced thanks to a successful placing and open offer, the company hopes to develop two oil shale licences in the USA. Independent engineer SRK has estimated some 230m barrels of recoverable oil within TomCo’s acreage,
for which the company has proposed a staged development using technology called ‘EcoShale’, licensed from Red Leaf Resources.
It is hoped that first production will occur by 2014. As Red Leaf prepares for development on its own site nearby, following a successful pilot, news flow from both camps could serve as a driver for the stock. This is an unconventional resource
development, so not without its risks, but the rewards could be significant.
Accordingly, the shares are rated a Speculative Buy.
• TomCo has licensed Red Leaf’s EcoShale technology to exploit its near-3,000acre licenses held on the highly prospective oil shale of the Green River
Formation in Utah.
• The ‘Holliday Block’ alone is considered by SRK to hold some 123m barrels of recoverable oil. Overall, the company has claimed a net present value (at a
10% discount rate) of US$500m, rising to US$1bn on production.
• The plan is to develop a 9,500 barrels of oil per day production facility with a 20-year life. First oil is slated for 2014, dependent on Red Leaf’s progress.
• EcoShale is said to offer an efficient solution for the extraction of shale oil in an environmentally responsible manner. There are competing technologies,
some being used by the majors, but TomCo believes EcoShale is the most appropriate for its target resources.
• TomCo has the financial backing of mining entrepreneur Chris Brown, who
founded and grew London Mining into a multi-million-pound enterprise,before leaving its board in 2009.
• As the USA imports the majority of its oil from overseas, the directors see an increasing internal lobby for development of previously untapped domestic
resources.
• The company has just raised £3.5m in a Placing and Open Offer at 1p per share in order to repay loans and provide working capital.
