At the end of last month I brought your attention to the shares of a start-up oil and gas company, Bison Petroleum, which trades over-the-counter under the symbol BISN. That was around the time Bison Petroleum management issued an update on its plans to tap into its Wyoming oil prospect reserves?which became the catalyst for some notable buying interest in BISN shares, ultimately driving them to a new all-time top of $1.70. Congrats to all readers who jumped in and profited from the initial trade alert.

As I previously wrote in my original piece on BISN, Wyoming probably isn?t the first area of the country that comes to mind as a major player in domestic oil production. The fact is, however, that state has a long and storied history as a significant oil producer, with the renown ?Muddy Formation? discovery in the Bighorn Basin region of the state having already generated 3.1 billion barrels of oil to date.

Despite the massive amount of oil and natural gas that has already been produced in the region, estimates by the University of Wyoming put remaining recoverable Bighorn Basin oil reserves at over 2 billion barrels. Estimates also include the potential for 3.5 million additional barrels waiting to be tapped. In addition, the state?s natural gas deposits are estimated to be in the neighborhood of 2 trillion cubic feet.

What initially whet investors? appetite for BISN shares was the company?s October 30th update business update, when Bison management announced its plans to develop its two Bighorn Basin prospects, located within 10 miles of two giant oil-producing fields owned by Marathon Oil. Known collectively as the ?Independence Prospect,? Bison?s two leases include a 100% working interest and 80% net revenue interest in a total tract measuring 840 acres. Company estimates put potential recoverable crude for the prospect at north of 5 million barrels.

Included in the company?s update was an exploration plan for these leases complete with 2D seismic acquisition, a Seep Study, and 3D seismic to define optimized drilling locations in the targeted Lower Cretaceous Muddy Formation. The Independence Prospect is located along several of the existing structures marbling the area, which are cut by numerous faults. Bison expects the Muddy accumulations to be between 2,000′ to 6,000′ drilling depths, with well-spacing potential at 10 acres per well.

By focusing on historically proven basins and utilizing conventional drilling technology, Bison management believes it can achieve relatively low-cost production with substantially less capital risk than many of its industry peers. And I?m hopeful as well. Having its assets located so close to established industry infrastructure should dramatically reduce the overhead often required to transport oil and connect to a pipeline network. Bison also plans to evaluate the natural gas holdings on its acreage, which may result in a significant additional revenue stream.
In another development that may bode well for Bison, acquisition activity has been notable, with several established heavy hitters in the industry recently buying out mid-level Wyoming producers. Taken together, Breitburn Energy Partners and Linn Energy have recently made production acquisitions in the region of more than $1 billion. Other potential suitors with current production operations in the area include big-time players Chevron, Conoco-Phillips and Royal Dutch Shell.

Shares of BISN began actively trading over-the-counter at the end of October, with solid volume coming in throughout November. The company?s exploration and development plans, coupled with a bullish article on the company in the Oil Stock Journal, drove some steady buy-side interest?despite an ongoing decline in the open market price of crude.



A round of profit-taking kicked in on Friday, pushing BISN shares all the way back down to an intraday low of $0.81?with the entire oil and gas sector under sell pressure during the week. That?s when buyers stepped into the fray once again, bouncing BISN shares back to the $1.05 level where they currently reside.

One of the biggest battles for development-stage companies is trying to accurately determine how much demand there is for their products. In the case of American oil and gas companies there is no such fear. Oil production in the U.S. is on the rise, with domestic energy security one of the few areas where common ground exists on all side of the political spectrum. In fact, it?s estimated that by 2020, roughly half of all U.S. oil demand will be supplied domestically.

As a result, the spotlight should continue to shine on oil and gas production companies?both big and small?with the potential to help supply this growing demand in the years ahead. It?s always difficult to predict how the market will treat the share price of young start-up concerns like Bison, but good news from the company, accompanied by a bump in worldwide oil prices, might make the recent price pullback in BISN shares an attractive entry point for an aggressive investor.

As always, trade BISN and all stocks with care!

Warren Gates, Senior Analyst, Oakshire Financial

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