Nymex Crude Future $91.62 +$4.49!! GO $UBRG BACK UP THE TRUCK
Texas Gulf Oil & Gas Inc. On December 8, 2010, as part of our plans for growth and expansion, we established a new division known as “Texas Gulf Oil & Gas Inc.”, domiciled in Georgia. That company will acquire and enter joint ventures to develop oil and natural gas field projects, and this will position us to be a “direct supplier” of natural gas to our current and our future utility and corporate customers. We will then be able to purchase the gas from the “wellhead”. This division will also manage the transmission and marketing of the product to our 22 existing major utility customers nationwide. The major benefits to us are, greater revenues, significantly higher profit margins, lower product costs, increased assets, and increased competitiveness. This will also position us to implement our business strategy to become a more vertically integrated company, giving us greater control over the supply chain, directly from the producer, through marketing, distribution, and selling directly to the customer. We are is currently in discussions with several independent oil and production companies, to obtain agreements to purchase natural gas and other fuels directly from the wellhead, to market directly to our customers. The gas would then be marketed and sold to our customers, through our NDR Energy Group.
Progas Energy Services. On December 10, 2010 we signed an agreement with ProGas Energy Services Inc., of Texas (“Progas”). The agreement is a joint venture between "Texas Gulf Oil & Gas Inc," our new subsidiary, and ProGas, to jointly develop a newly discovered or recently discovered oil and gas field located in the Premont Northwest oil and gas field, in Texas's Gulf Coast natural trend, in Jim Wells County Texas. The plans include potentially developing up to 110 oil and gas wells from this field. Three initial wells have already been drilled, are producing oil and gas, and although there can be no assurances, should bring immediate profit to us. . The Premont Northwest field is potentially one of the largest oil fields discovered in Jim Wells County, Texas, the most prolific oil and gas producing county in the state of Texas.
According to Progas, the field was originally discovered in the 50’s and was thought to be a small extension of the Northwest Premont field. However, the field was not developed before the previous operators passed away, and many zones were not known to be potentially productive as have been recently proven with modern drilling and testing techniques. Progas, the operator and developer of the property, prior to our involvement, re-entered existing wells that were abandoned by the previous operator to test potential zones for production. Initial estimated reserves of the field by Progas were under 2,000,000 bbls of oil and just over 4,000,000 mcf of natural gas. However after testing these wells and a considerable geologic study, the projected and estimated reserves were adjusted to over 20,000,000 barrels of oil and 20,000,000 mcf, of gas from 11 potentially productive oil and gas sands. Based on the estimated reserves of the field of 20 million barrels of oil, the oil would have an estimated value of $1.74 billion, based on the August 29, 2011, NYMEX price of $87.42 per barrel. No assurances can be provided that we will benefit from this property or realize a profit from its oil production, if any.
This joint venture is major step for our company, and has three major benefits to us and our shareholders. First it allows us to acquire natural gas reserves from the ground, for a small fraction of the purchase costs that we currently pay to other producers that it markets natural gas for. Second it would provide us with a source of natural gas of our own, which can be marketed to our major utility gas customers throughout the United States While most gas marketers are limited to a 1% to 2% profit on the spread of natural gas prices, (less than 1 cent per mcf), our exploration costs for our share of the field is estimated to be less than 10% of the NYMEX price, allowing us to earn a 90% gross profit. For example, as of August 29, 2011 based on the NYMEX price that day of $3.81 per mcf and allowing we earn a 90% gross profit, we would realize $3.43 per mcf on the spread of gas that we own in the field, and that we sell into the market place. We believe, but cannot guarantee, that this will give us a distinct advantage in the marketplace and a considerably higher profit margin for gas that is sold to our customers. Third, while many gas marketing companies have to buy gas from others, their ability to purchase gas is somewhat subject to availability. We would will be able to supply the natural gas produced (that we own), as well as the natural gas of the other industry partners in the development of the field, such as ProGas, who have offered us the right to market their gas.
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