Small Cap Profits.com Featured Article: (OTC:PPTO)

March 1, 2011

Precision Petroleum Corp

The recent disruption in oil production in Libya, previously among the top 15 oil producing countries of the world, has prompted some analysts to warn that we’ll feel the sting in supply and prices in the US (the “eighth largest supply shock since 1950!” Merrill Lynch announced). Other analysts, perhaps more cool-headed, assure us that in fact the impact will be slight. Whatever your view, however, the broader point is this: oil supply from the Middle East is liable to be always, and perhaps increasingly, subject to the instabilities and political and economic power shifts of the area, and the world.

A savvy energy speculator, might, alternatively, consider investing in the domestic front.

In their 2010 report, the U.S. Energy Information Administration announced that proven reserves of domestic oil and natural gas increased by 11 percent in 2009, to 284 trillion cubic feet (tcf), which is the highest level since 1971, even taking into account an approximately one-third decline in the prices used to assess economic viability. Proven reserves of natural gas have increased in this country every year since 1999, a trend accelerated by technological advances allowing for shale gas drilling. The US has grown its internal natural gas supplies to the point that it is now the largest producer of natural gas in the world, a trend that Business Insider calls a “renaissance in production” that shows no signs of slowing down. Also in 2009, proven reserves of crude oil rose to 22.3 billion barrels, up 9 percent, regaining 1.8 billion barrels of the 2.3 billion barrel decline in 2008.

These increases demonstrate the possibility of an expanding role for domestic natural gas and crude oil in meeting both current and projected U.S. energy demands. To invest in domestic energy production is to invest in an industry that is dependable, lawful, beneficiary of the best technological advancements, and growing.

One company that we believe exemplifies a good investment in domestic oil and gas production is Precision Petroleum (PPTO), an independent gas and oil company based in Oklahoma. PPTO focuses on low risk opportunities that promise dependable returns for its investors. Under the experienced guidance of CEO Richard Porterfield, who has in the oil and gas industry for 36 years and has a proven track record of mapping successful oil and gas properties, Precision Petroleum has steadily acquired and developed promising properties. The company currently has working interests in 26 wells, located mostly in Oklahoma, a state that the US Department of Energy had declared to have 610 million barrels of proven reserves of oil. Many of PPTO’s properties access the Voila Limestone, a dependably productive formation.

The company has recently initiated some bold measures to enhance production. For example, this month PPTO increased the potential of a well named McNeil #1 by

perforating an additional 90 feet of the Viola Lime and performing a major acid frac, a procedure that creates a conductive crack in a subsurface formation, providing an easier path for fluids to flow to the wellbore, thereby increases the productivity of the mine, reducing operating expenses, and of course accelerating income. PPTO announced that engineering estimates indicate that this could allow the company to access an additional 20,000 or more barrels of high gravity crude oil and at least 100,000 mcf of natural gas over the life of the well. The engineering estimates are comparable to a mine called Russell #1, which is a direct offset a half mile to the north, and which to date has produced an estimated 2.4 million dollars in gross oil and gas (using a measure of $80 per barrel and $4 per mcf).

Among other recent developments that promise increased revenue is PPTO’s acquiring of 58.37% of the Thompson #2 well in Garvin County, Oklahoma. This well also produces from the Viola Lime structure. It was recently threatened by incursion of salt water, but Porterfield announced that the company would begin an immediate remedial work-over on the well, which will prevent salt-water damage of the reservoir. PPTO expects oil production to increase up to three times when the procedure is complete. Other Thompson wells in adjacent leases have produced in excess of 22,000 barrels.

Also, recent engineering and geological analysis of a major acid frac on the White No. 12-1 well in Pottawatomie County, Oklahoma, (a 40-acre lease) has indicated the potential for an additional 10,000 barrel recovery from the Hunton Limestone formation. And, Precision Petroleum is also involved in a seven-well producing and development project that is currently producing approximately 12-15 barrels of oil per day but is expected to yield considerably more shortly. In addition, Precision Petroleum signed a joint venture agreement that secures it first rights of refusal on Montana-based oil, gas, and coal properties. The first phase of this major expansion will be the development of a 1,600-acre property and the drilling of 10 wells.

Ensuring that all these promising developments can actually come to fruition and translate into profits for its shareholders, earlier this year PPTO completed a major capital re-organization of its structure. The company has decreased its total liabilities from $1.3 million dollars as of September 30, 2010 to $531,000.

This share restructure removes any major obstacles to the company’s financing potential. We expect Precision Petroleum will be able to complete the reworking of its existing properties for maximum production, and we also have full confidence in Porterfield’s savvy and expertise in securing other productive properties. Indeed, the company has hinted that it is already negotiating for one such major acquisition, to be announced shortly…

In January Precision Petroleum’s economic evaluation revealed its future net worth, based on the proven reserves at the time, to be $2,394,376. We have every reason to believe this amount will increase substantially.