Putin’s Wrath Can Be Your Gain

On March 4, I wrote a Daily Dispatch on the European dependence on Russian natural gas. Since then, Putin has annexed Crimea and is engaged in a new “Cold War” with the US and EU, which means the situation is about to get worse for the EU-27 countries, not better.

Almost one month later, on April 1, Gazprom jacked up the natural-gas price for Ukraine by 44% overnight, and there’s a lot of talk within the energy sector that more price hikes may be on the way.

With so much happening on the European energy scene right now, Doug Casey and I decided that it was time to take a look for ourselves.

As Doug and I usually do when we find something interesting, we ring our travel agent (whom we have on speed dial) and get the next flight out. (I do have to give credit to her because we ask a lot from her; often our flights go to places few people have ever heard of.)

This week, Doug and I will hit up five countries in seven days, and I’ll be visiting five major oil projects in Europe during the trip.

Gazprom’s Death Grip on Europe

Last week, BusinessWeek ran an article stating that Russian Gazprom, the world’s largest natural-gas producer, “has tumbled three straight years in the stock market.”

“Since [April 2007],” writes BusinessWeek, “no company among the world’s top 5,000 has suffered a bigger collapse in market capitalization than Gazprom, a $154 billion plunge that’s become emblematic of the malaise that has overtaken President Vladimir Putin’s economy.”

What they seem to overlook is how much clout Gazprom has on the European continent, share price drop or not. Fact is, in the pie chart below you see the company’s clients—with Germany being Gazprom’s number one customer and Turkey, Italy, Poland, and the UK making up the rest of the Top Five Countries with Energy Thumb Screws.

Even more alarming and shocking is other European countries’ dependence on Gazprom, seen below:

On this fact-finding mission, Doug and I will be visiting Germany, Italy, the UK, and two other countries to meet with government officials, complete site visits where we will see the drill rigs turning, and find out which companies are in the best position to make a profit for our subscribers.

Lord Browne Gets It!

I firmly believe that Lord John Browne, the former CEO of BP and now the chairman of Cuadrilla Resources, will sometime in the near future be viewed as a visionary and hero by the people of England.

The Casey Energy Team published Cuadrilla’s first-ever research report back in 2007. A cuadrilla, by the way, is the team of helpers that aid the matador in a bullfight; the founders of the company believed that production from shale gas would help Europe free itself from its addiction to Russian natural gas.

After we recommended Cuadrilla Resources to our subscribers in late 2007 and early 2008, Riverstone Holdings, a large New York-based private equity firm, invested in the company, and Lord Browne made his comeback to the energy scene in a big way.

Today, Lord Browne is fighting the good fight. He will prove that he’s right and that the shale gas development within Europe was a smart move. Thousands of jobs will be created, and the result will be a decreased reliance on Russian natural gas.

The UK Parliament is fully supporting shale gas exploration and development in Britain, and in the coming months and years, more countries will follow the British model—not because they want to, but because they have to.

In early March, natural-gas futures in both the UK and Germany popped over 10% as the Russians took over Crimea. Germany, Spain, Norway, Sweden, the Netherlands, Finland, and Denmark all have approved shale exploration in one form or another. Of course, it will take time for various shale oil and gas formations to be developed—and just like in North America, not all shale formations are the same—but it will happen.

What’s happening right now in the unconventional oil and gas sector in Europe is similar to the North American Shale Gas Revolution in the early 2000s. And just like in North America, incredible fortunes will be made by those who bet on the right management teams exploring the right shale formations in Europe.

The European Energy Renaissance Has Started

At the most recent annual meeting of the World Economic Forum in Davos, Switzerland, this past January, the main talking point was energy and the quest for energy independence. This is a topic every US president has talked about since the 1960s, but it wasn’t until shale oil and gas became a reality that America had the very real potential of achieving energy independence, or of at least decreasing its dependence on imports.

The European nations—such as the UK, Germany, Spain, and Poland—are well aware of the success of the North American unconventional shale oil and gas sector. It has caused electricity prices to drop—something Europe desperately needs, as the citizens of most EU countries pay 100-300% more for electricity than the average North American resident.

Cuadrilla’s Bowland basin shale project in Lancashire, UK, was a not a grassroots discovery. The model was actually quite simple. I know, because I was one of the largest investors in the deal before Lord Browne and Riverstone stepped in.

The business plan was to apply modern North American technology and equipment to a known geological formation. With my experience through Cuadrilla, I have refined my investing model: Bring modern North American unconventional technology and equipment to past-producing, known oil and gas fields.

This is why Doug and I are flying across the world, going to five countries in a week, and looking at five major oil and gas projects in Europe.

We will not only have an update on our “Next Bakken” company after we visit the site and see the production results for ourselves—we will also put the final touches on our research report on one of the most important oil wells being drilled in all of Europe. We have done our homework using the Casey “8 Ps” as our guide; we’ve met with management and gone over all of the geology.

Now we’ll meet the drillers on site who are currently drilling the project using one of Europe’s most modern drill rigs. We want to see how the drilling is going, and our Casey Energy Report subscribers will be the first to know what we expect from the drill results.

This one story has the potential to return anywhere between 150% and 500% in the next 12 months, based on the current drilling alone. I don’t have any doubt that this may be the most important oil well drilled in all of Europe in 2014, and many major international oil companies will be watching.