This Micro-Cap Is Merging to Position Itself as a Potential Leader in its Space

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Thursday, May 23, 2024

The energy sector is undergoing a significant transformation.  While oil and gas continues to play a vital role in global energy consumption, there's a growing emphasis on sustainable practices. This is where the recent definitive merger agreement announced between Metawells Oil & Gas Inc. (OTCPK: KOSK) and Global Oil & Gas Recovery Corp. (GlobalOG) becomes particularly interesting. The combined entity positions itself to become a potential leader in a niche but impactful area: revitalizing abandoned oil and gas wells while mitigating harmful methane emissions.

Unlocking Value from "Zombie Wells"

Thousands of abandoned oil and gas wells, also known as "zombie wells," continue to leak methane, a potent greenhouse gas with a warming potential 80 times greater than carbon dioxide over a 20-year period.  Metawells is currently focused on the multi-zone development and Enhanced Oil Recovery (EOR) of “extreme shallow” medium gravity oil. 

GlobalOG brings expertise in EOR techniques, aiming to breathe new life into these dormant wells and extract additional oil and gas reserves. This not only adds value for shareholders but also reduces reliance on drilling new wells, minimizing environmental impact.

Mitigating Methane Emissions: A Moral and Economic Imperative

Beyond resource recovery, the merger prioritizes environmental responsibility. GlobalOG's technology captures the methane typically flared or vented during oil and gas production, transforming it into a usable fuel. This "in-use" methane capture significantly reduces greenhouse gas emissions associated with traditional oil and gas operations.  It's a win-win scenario, supporting energy needs while minimizing environmental impact.

The technology is not merely visionary; it is currently in final development stages and could be ready for production in late 2024. The fact that oil and gas companies flare more than $10.6 billion in methane every year speaks volumes to the incredible market opportunity.

Terms a Win for Investors and Mother Earth

The merger is structured as a shares exchange where KOSK will acquire all the issued and outstanding capital interest or shareholdings of GlobalOG, in exchange for KOSK authorized but unissued common stock. 

As GlobalOG CEO Richard Cindric emphasizes, “[GlobalOG] has been looking for the proper partner to take our business to new heights with our cutting-edge technology.”  It’s a perfect match for a small ($8 million market cap) like KOSK. 

GlobalOG's technology offers the potential for significant value creation by unlocking resources from abandoned wells.  Moreover, the benefits extend far beyond the balance sheet. By re-entering these wells and utilizing EOR techniques, the combined company aims to minimize reliance on drilling new wells, reducing the environmental footprint associated with traditional exploration.

The Market for Sustainable Oil & Gas

The merged company isn't alone in embracing sustainable practices within the energy sector. Several publicly traded companies are knee-deep in the shift to all types of sustainable energy and worthy of investor attention for their Earth-friendly initiatives.

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) is a leading climate positive investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. With more than $12 billion in managed assets, HASI’s vision is that every investment improves our climate future.

TC Energy Corp. (NYSE: TRP) (TSX: TRP) is working to safely move, generate and store the energy North America relies on. The company is delivering solutions to the world’s toughest energy challenges – from innovating to deliver the natural gas that feeds LNG to global markets, to working to reduce emissions from its assets, to partnering with neighbors, customers, and governments to build the energy system of the future. It’s all part of how TC Energy continues to deliver sustainable returns for its investors and create value for communities.

NextEra Energy, Inc. (NYSE: NEE) is a leading clean energy company headquartered in Juno Beach, Florida. NextEra Energy owns Florida Power & Light Company, America's largest electric utility, as well as a competitive clean energy business, NextEra Energy Resources, LLC, which, together with its affiliated entities, is the world's largest generator of renewable energy from the wind and sun and a world leader in battery storage. Through its subsidiaries, NextEra Energy generates clean, emissions-free electricity from seven commercial nuclear power units in Florida, New Hampshire and Wisconsin. A Fortune 200 company, NextEra Energy has been recognized often by third parties for its efforts in sustainability, corporate responsibility, ethics and compliance, and diversity.

Headquartered in Oklahoma City, Chesapeake Energy Corporation (NASDAQ:CHK) is powered by dedicated and innovative employees who are focused on discovering and responsibly developing leading positions in top U.S. natural gas plays. With a goal to achieve net zero GHG (greenhouse gas) emissions by 2035, Chesapeake is committed to safely answering the call for affordable, reliable, lower carbon energy.

Our Future is Powered by Innovation and Sustainability

In the same lane as its much larger counterparts, the merger of Metawells and GlobalOG represents a significant step towards a more responsible and sustainable oil and gas industry. By combining resource recovery with cutting-edge methane mitigation technology, the company positions itself to be a leader in this evolving space.

This merger serves as a testament to the growing recognition within the energy sector that environmental responsibility and economic success are not mutually exclusive. By embracing innovation and prioritizing sustainability, companies like Metawells and GlobalOG can pave the way for a greener future.

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Metawells Oil & Gas Inc. (OTCPK: KOSK) Full Corporate Write-Up: Click Here. 

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