Overview

North American Energy Resources, Inc. ("NAEY") is an oil and gas exploration company which focuses on properties in Northern Oklahoma. Its wells produce both oil and/or natural gas, with gas production coming primarily from the mulky coal seam. North American Energy Resources has positioned itself to achieve significant profits on a number of oil-producing properties due in part to its 75% ownership of a strategic pipeline. The other large boon to the company is that in its search for natural gas, it also discovered significant oil deposits on their properties.

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Investment Highlights

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Profile

Nothing quite beats finding something valuable when you’re not looking for it. Such was the fate that befell Texas-based North American Energy Resources, Inc. (OTCBB: NAEY) recently when it set up shop in Oklahoma’s Washington County. Drilling for natural gas, the company soon realized it was sitting on thousands of barrels per day of recoverable oil, on a site that had been abandoned in the 1970s when foreign oil elbowed its way onto the American market, driving prices down around the $7 mark. The site had been existence since the Oklahoma oil boom of the 1920s, and may be the catalyst behind a boom for this company.

NAEY is an emerging company – only three years old, and public for less than one year - with the sole purpose of extracting coal bed methane from coal beds mixing unconventional methods with new technology. With new awareness of the need to decrease America’s dependence on foreign oil, it’s a company that bears watching.

Recently, the company bought up four wells in the Mulky Coal section of the Midwest, within the Cherokee group of sediments in the Western Interior Basin. The operator did not attempt to recover the load and the wells were never put on production. Subsequently these wells were acquired by NAEY, who prepared them for production by drilling, pipe-setting and stimulating for pumping the available oil to the surface.

It’s significant for the company because costs are low (only $8,000 per well) with potential recovery of 100,000 barrels. What’s more, a natural gas lease the company acquired this month is nearby to the current pipeline in Washington County so that gas produced can be rushed to market. NAEY also has a working interest in two producing wells operated by an affiliate. The wells have been producing for several months, and the combined natural gas production is 145 thousand cubic feet (mcf) per day.

The natural gas finds create further interest in this story. One of the energy industry’s legends, T. Boone Pickens, came out with a bold plan to move this country toward energy independence. The Pickens Plan seeks to create millions of new jobs by building out the capacity to generate up to 22% of our electricity from wind, to building a 21st-century backbone electrical transmission grid; to provide incentives for homeowners and the owners of commercial buildings to upgrade their insulation and other energy saving options; and use America's natural gas to replace imported oil as a transportation fuel in addition to its other uses in power generation, chemicals, etc. Honda is one of the major automobile manufacturers committing to natural gas, with vehicles already available on the market. It’s a potential link not lost on North American Energy Resources which is neck deep in natural gas reserves.

Back to the oil angle, the site called moneymorning.com is urging investors and energy users alike to enjoy oil and gas prices while they’re relatively cheap, for such bargain basement rates are not likely to last. The site cites a “cadre of analysts” who project a rise in oil prices of 113% before 2009 is out. One could argue NAEY is getting in on the ground floor with oil production before prices skyrocket, which was last seen in the summer of 2008 when prices were around the $150 a barrel mark.

And beyond oil and natural gas; the market for clean energy industries is estimated to reach $50 Billion by 2015. “With innovative techniques and ethical drilling practices,” says company literature, “NAEY is one company that is ready to balance real energy needs with a very real concern for the planet.”

The future has a sky of blue for this company. In late July, one share would cost you only 65 cents, considerably below the 52-week peak of $1.65 reported in mid-May. But the Company has its eyes on the prize: NAEY’s goal is to complete a minimum of 120 wells over a two-year period, maximize lease acquisitions around its pipeline and reach a valuation goal of upwards of $144,000,000. NAEY is definitely a Company that investors will hear a lot more about down the road, as it starts tapping into its new found in-ground wealth.

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NAEY Looks To Benefit From The Pickens Energy Plan

Over the last several years, the people of the world have been hearing the debate concerning the environment and Earth’s natural resources. Contrary to Al Gore’s statements, the debate is not over regarding global warming. However, one of the other leading debates regarding our limited natural resources still continues. Roughly one year ago, T. Boone Pickens, the famous multi-billionaire, proposed a plan for American energy independence. The details of that plan could have a significant impact on many U.S. companies, but looks to significantly and positively influence a relative newcomer to the industry, North American Energy Resources, Inc (NAEY).

We have all seen the Pickens Plan commercial and if not that, then certainly the news coverage of the strategy to reduce our dependence on foreign oil. The plan, as laid out in the following paragraph, details a way for us to bridge the gap between traditional fossil fuels into the future of renewable energy.

“There are several pillars to the Pickens Plan: Create millions of new jobs by building out the capacity to generate up to 22 percent of our electricity from wind. And adding to that with additional solar generation capacity; Building a 21st century backbone electrical transmission grid; Providing incentives for homeowners and the owners of commercial buildings to upgrade their insulation and other energy saving options; and Using America's natural gas to replace imported oil as a transportation fuel in addition to its other uses in power generation, chemicals, etc.” (www.pickensplan.com/the plan)

A seemingly large portion of the Pickens Plan requires the transition from traditional gasoline and diesel vehicle fuel to natural gas, which is approximately 20% cleaner than other fossil fuel alternatives. Fortunately for North American Energy Resources, this would constitute a huge increase in the potential market for the company’s primary product, natural gas. North American Energy Resources has been targeting smaller, sometimes overlooked, natural gas producing properties and reconditioning them to increase their efficiency and production.

One of the key features of the Pickens Plan is that it acknowledges the need to transition from fossil fuels to renewable energy. This process will not happen overnight regardless of how much funding is thrown at it. The recognition of this transition will also be beneficial to NAEY and its recent discoveries of oil on several of its properties. The company acquired several properties with the intent to draw the natural gas located in them and discovered that the land was also producing oil in significant quantities.

The true value of these developments to North American Energy Resources lies in the fact that the company owns a pipeline that is in very close proximity to their properties. The pipeline allows NAEY to quickly and cost-effectively get their product from the field to the refinery in the shortest amount of time. Pickens’ Plan is all about efficiency and conservation, which are also key focuses for North American Energy Resources.

The Pickens Plan recently faced a minor setback in regard to their efforts to implement a wind turbine farm in Texas. Fortunately for the plan, and for NAEY, wind turbines were only one small aspect of a much larger picture. The recognition that the Pickens Plan has brought to natural gas and automobiles that run on it will continue to be a boon to natural gas producers like North American Energy Resources.

North American Energy Resources, Inc. recently announced that the company has acquired the Wiser Lease in Washington County Oklahoma in exchange for restricted common stock. The lease has ten existing oil and gas wells, including the Blackstone well with its recent oil discovery in the Dewey sand. NAEY’s consulting engineer estimates recompletion costs of $8,000 per well with potential recovery of 100,000 barrels of oil based upon recoverable reserves of 2,000 barrels per acre. In addition, the Wiser lease is adjacent to the Company's majority owned Apwash pipeline system so that all gas production has a readily available market.

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Recent News and Press Releases

North American Energy Resources, Inc. Enters Into Letter of Intent to Acquire 120-Acre Leasehold and Well Interest From Alt Energy, Inc.
GlobeNewswire (Mon, Jul 27)

North American Energy Resources, Inc. Acquires 37 Acre Leasehold and Well Interest From CLM Oil Production, Inc.
GlobeNewswire (Thu, Jul 23)

 

North American Energy Resources, Inc. Discusses Oil and Natural Gas Properties in Audio Interview On Stockbully.com
GlobeNewswire (Tue, Jul 21)

North American Energy Resources, Inc. Acquires Oil and Gas Lease from Chanticleer Holdings, Inc.
GlobeNewswire (Tue, Jul 7)

North American Energy Resources, Inc. Launches New and Improved Corporate Website
GlobeNewswire (Wed, Jul 1)

North American Energy Resources, Inc. Featured On Stockbully.com
GlobeNewswire (Thu, Jun 25)

North American Energy Resources, Inc. Recompletes Washington County Well and Finds Oil in Lower Bartlesville Zone
GlobeNewswire (Tue, Jun 23)
 

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Management

Dr. Ross E. Silvey, President, has owned and operated franchised automobile businesses, finance companies and insurance companies for over thirty years. Dr. Silvey has taught as an adjunct or full-time professor most of the courses in the upper division and MBA programs at the University of Tulsa, Oral Roberts University, Langston University and Southern Nazarene University. His formal education is an MBA from the Harvard Business School. He has also been awarded the Ph.D. degree from the Walden Institute of Advance Studies. Dr. Silvey is an Independent director for Double Eagle Holdings, Ltd and serves as Chairman of the Audit Committee. Dr. Silvey is also an independent director of Global Beverage Solutions, Inc.

Cecil Magana has been in the Oil and Gas business in Washington County, Oklahoma since 1973. He joined his brother Raymond in forming Magana Oil in 1974. In 1980 the company was split into two separately owned companies. Mr. Magana is responsible for all of the well and lease operations for NAEN, Inc. in Washington County. Additionally, Mr. Magana is actively seeking to increase NAEN, Inc.ís leasehold interest in and around NAEN’s pipeline interest. An additional 8,000 acres is available for lease in NAEN’s area of interest.

David Ainseworth has over 45 years of experience operating oil field equipment including pulling units, cable tool rigs, and pumping units. Ainsworth is responsible for NAEN's electrical and mechanical equipment at the well sites as well as the field supervisions of well completions. He has worked for over ten oil and gas and oil service companies in the area. He has concentrated most of his work experience in Washington County.

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Contact

North American Energy Resources, Inc.

Phone: (877) 482-0155 or (512) 944-9115

11005 Anderson Mill Road
Austin, TX 78750
United States

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FORWARD LOOKING STATEMENTS

This report includes forward-looking statements that reflect North American Energy Resources, Inc. current expectations about its future results, performance, prospects and opportunities. North American Energy Resources, Inc. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause North American Energy Resources, Inc.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.

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