Going For The Black Gold

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Phoenix, AZ --(www.USEquityNews.com)-- 03/04/2010 - In the first half of America's history, it was the search for gold that drove people to invest their lives and savings for something buried in the ground, most famously the California gold rush of 1849 after a chance discovery of gold near Sacramento. Over the course of a few years, the gold rush drew in hundreds of thousands of people, either seeking gold or serving the gold seekers. The common story is that the prospectors went home broke. In truth, the very earliest of them, both prospectors and associated suppliers, often did quite well.


The earliest gold seekers were able to collect large amounts of easily accessible gold by simply panning, earning ten to fifteen times the daily wage of a laborer. One small group of early prospectors, working the Feather River, walked away with the equivalent today of well over a million dollars in gold. But, over the course of the 1850s, the vast majority of the wealth, some $7 billion in today's prices, went to the industrialists who were able to put together the technology, processes, and financing to ferret out the hidden gold that everyone else was missing.

It's ironic that another, and ultimately more significant discovery, was being made at roughly the same time on the other side of the continent. It was 1858, in western Pennsylvania, that Edwin Drake drilled the first well for what would eventually become the world's new gold: oil. As with the gold rush of the 1850s, it wasn't long before people were looking almost everywhere for oil. But it was the turn of the 20th century, when gasoline powered cars started to take over, that marks the real beginning of the oil boom. Along with it came an ever increasing demand for other fossil fuels, especially ones that were easy to use and adaptable, such as natural gas.

Today the world consumes over 30 billion barrels of oil each year, along with trillions of cubic feet of natural gas, and the search for these two increasingly critical resources continues to drive people, ideas, and exploration. As in gold rush days, those utilizing the most advanced methods still stand to take home the biggest profit.

Surprisingly, it's not just a game for big players. Creative and aggressive companies that know how to bring together the right combination of people and ideas, frequently outsourcing the actual work, have proven themselves able to hit pay dirt. There's also a wide geographical spread, with many companies focused outside of the U.S. But there's still an active search for oil by smaller companies within the U.S.

A good example is FormCap Corporation (PINKSHEETS: FRMC). FormCap is an emerging oil and gas exploration and development company focused on the continental U.S. The company has assembled several thousand acres of oil and gas mineral leases in New Mexico's Permian Basin, one of the most productive areas in the country, and their holdings there continue to grow. They've brought together some of the most successful oil and gas industry experts in the country, and are lining up over a million dollars in initial financing. Considering that the area has produced over 35 billion barrels of oil, and 100 trillion cubic feet of natural gas, and is the source of more than 20% of all of the oil and gas produced in the U.S., FormCap's leases there are of understandable interest.

Other small cap companies looking for oil and gas in the U.S. include:

• Strategic American Oil Corp. (OTCBB: SGCA), with interests in Texas, Louisiana, and Illinois
• Avalon Oil & Gas (OTCBB: AOGN), with interests in Oklahoma.
• Savoy Energy (OTCBB: SNVP), with interests in Texas.
• Royal Quantum Group (OTCBB: RYQG), with interests in Oklahoma.

The companies aren't giant, but the potential payouts are. In FormCap's case, part of the interest they've generated is due to Exxon's recent buyout of XTO Energy, which, like FormCap, also had holdings in the Permian Basin. The final total for the buyout: $31 billion. With numbers like that, it's a little easier to understand why they call it black gold.

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