Falcon Flies

This blog entry started as a post in the Mexico Mike Forums, but because I wanted to expand on the topic a bit, and give part of my own history with Falcon Oil & Gas, I decided to bring some of my hyperbolic or colorful writing over here. Anyone interested in investing in Falcon, can read the entire thread in the link above to get a good sense of the kind of shenanigans that have gone on with this stock in the past few years.

This also follows up a bit on a previous blog entry I did about Natural Gas.

As background, Falcon Oil & Gas (FO.v) sent out a news release (NR) stating that Exxon will be putting their Mako Trough property, a potentially staggering natural gas resource in Hungary, into development. That means moving their Mako Trough resources into the next stage of flow testing, which CEO Bruner could never do.

So why is this a big deal? Because Europe is growing and they rely heavily on natural gas (for now). Russia controls a large percentage of the natural gas resources available to Europe, as well as the pipelines that supply Europe with their gas supply. And they play hardball, so Europe's quaking a little. Yeah, the Euro is doing some major domination with their currency, but the group of countries are not a strong enough gang to stand up to big, bad Russia. After all, it takes a lot of wimpy kids to take down the school bully.

Falcon's gas resource in the Mako Trough property, is therefore, in Martha Stewart terms, a good thing for Europe. Especially since it wrests control of a big natural gas resource from Russia.

So back to the original discussion on smartinvestment.ca:

stevens wrote:
From waiting for ridiculously overdue flow test results, to go directly to a JV announcement is definitely a huge surprise. Next to Margaret Kent at CMM, Bruner is my least favorite CEO, but at least FO has a deposit that a major is interested in testing. I still don't understand why Shlumberger and all the rest couldn't come up with flow test results for us but I'm happy that Exxon is taking an interest. Don't even bother worrying about the millions Exxon will pay FO. Bruner will suck that up like a six pack on Saturday night.

Still, this is REAL NEWS!!!!! Amazing for FO. Just remember that in the past FO has always risen BEFORE news and gone down ON news.

nerudite wrote:
You are so right. So I was surprised yesterday to see that FO.v actually ended the day in the green (and by a decent percentage).

After thinking about this for a bit last night, I actually feel fairly positive about this deal. With other jrs., I would probably be a little disappointed, because you want to keep control over such a huge resource just for the sheer upside potential if it goes into production. But in this case, I think Bruner would never get it off the ground, and if you're going to have a white knight, it might as well be someone with unlimited capital like Exxon at this point in time.

So I think I'll hold on for now, and see what a new exploration team does with Falcon's massive natural gas resource. After my initial burn and Bruner's bungling a few years back, it's tempting to get out after an 80% run up from where I bought in this time around. Especially now that I'm a little in the green overall. But I'm intrigued about the Exxon thing, so I'm in for the next chapter of FO's crazy soap opera.

That kind of sums it all up. And stevens really nailed it when it came to Bruner. I have a little history with this stock, mostly because I got totally swept up in the potential of Falcon's massive resources when I bought initially (in the upper-$3.00 range) a few years back. And then after the big correction of the market in May 2006, the company became one of the most heavily manipulated stocks I've ever seen. I ended up selling at a loss just to get out of the drama, and then about six months later Bruner put out the white flag, and the SP gradually tanked to somewhere in the $.20s. I bought in somewhere in the $0.50 range (too lazy to average out the different purchases for the purpose of this blog), thinking it wouldn't go lower, but it did and for quite awhile. So it's close to doubling since I repurchased the stock, and normally I'd take some money off the table. But I think that the Mako resources are now in better hands, and in the long run that will be good for the stock. The Mako Trough, while a big resource, is also very deep in the ground. But if anyone can get it out of there, it'll be Exxon.

And for all of the anti-Americanism out there in the world today, I think that European utilities are breathing a sigh of relief that at least another American company has control of the resource so they may have options someday. A new bully has come to school to even out the natural gas playing field.