Striking Gold in the Bakken
Quantum Energy (QEGY) plans a black gold project in the Bakken. Instead of drilling for shale oil, they are going to build one of the first refineries constructed in the US in 37 years. The last major refinery was built in 1977 in Louisiana but there have been several smaller refineries built since then. Quantum Energy plans on building a 20,000-barrel a day refinery to produce diesel fuel for the North Dakota and Montana market. The diesel will meet the new 2014 ultra-low sulfur requirement.
The shares of this OTC Pink Sheets company have been on a wild ride over the last month blasting higher 14 days in a row from $.055 on March 11 to $1.29 on March 31 before coming back to earth. The market seems to like the story of a refinery right in the middle of the hot Shale Oil play in the Bakken.
Quantum announced on March 26th the appointment of a highly experienced new President Andrew Kacic. Mr. Kacic founded a company known as American Resources that went from $220,000 to $40 million in under 4 years so this isn't his first rodeo. He has been an advisor to Quantum since mid-2013 and took over as President a few weeks ago.
The success of the company hinges on two key elements. They believe they have the $250,000 million required to construct the refinery in hand. The refinery will capture excess CO2, compress it, and supply it to well operators for use in Enhanced Oil Recovery (EOR) thereby creating an extra source of income.
The company did recently announce they have signed an agreement with Northstar Transloading LLC to purchase 80 acres for the site of the planned Fairview Refinery. They are in the process of modifying the agreement to add an additional 42 acres so they have room to build a crude stabilization processing facility. This stabilization facility will strip off the volatile Non Gas Liquids (NGL) to make shipping the crude safer.
The Fairview Refinery will process 20,000 barrels of crude daily and create 7,000 barrels of highly-in-demand low sulfur diesel fuel. There will be extra revenue flow from sale of the CO2 and NGLs. Back of the envelope calculations by the company suggest annual revenue of $600 million and EBITDA of $60+ million.
It's an ambitious plan and early shareholders have already seen a 1000% return. The future success depends on financing and terms of the money necessary to construct the facility. At $1.40 two weeks ago, the stock price was nuts but at Friday's close of $.51 some sanity and potential has returned to the share price. A $22 million market cap is not unreasonable. Watch for an announcement on financing. Depending on conditions, the stock could do another 1000% return.
Quantum Energy is an advertiser. I am an advisor to the company and have been compensated with options granted at a much higher price but I am still biased so you should do your own due diligence.QUANTUM ENERGY, INC
QEGY-OTC.PK $.51 (Apr 11, 2014) 45 million shares Quantum Energy website
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March 30th, 2017
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