E American Sands Energy: A Revolutionary Unique Oil Sands Play

The onsite engineer had informed us it will take thirty minutes for a fresh batch of oil sands to be processed, so we walked next door to the gas station to purchase drinks. I had no complaints as I underestimated Arizona's harsh heat and was wearing formal business attire, I was drenched in my own sweat standing outside. We spoke about the potential of the company's process and how it could be working on oil sand deposits globally without the use of water; a substantial feat.

We walked back to the pilot plant to be greeted by COO, Rob Gereluk, and another investor whose name I didn't get. All four of us watched as the engineers moved some levers and soon enough we watched oil pour out of the nozzle.

(Source: Adem Tumerkan Cellphone)

I thought to myself how intrigued I was with how the oil and the sand were separated.

(Source: Adem Tumerkan Cellphone)

The sand that came out of the other pipe was completely oil free. I was amazed how that dirt clod I saw earlier was shoveled into this machine and out came pure oil on the left nozzle and perfect sand from the right nozzle.

Gibbs looked at us and laughed.
"Pretty cool, right, gentlemen?" 
"Very cool, indeed," I said.

Unfortunately my phone (with its camera) had died right before Gibbs handed me a small 16-oz glass jar that was filled with the oil to hold. Gereluk was continuing to answer questions that the other investor and myself had. The next steps were for the hopeful approval of Utah's permitting of the Sunnyside project and then the financing and construction, they emphasized.

After we spent some time discussing the oil market and any other questions we had, the heat had taken its toll on all of us and the nameless investor had to take a flight back to New York soon. We shook hands and parted ways.

On the drive home, I was thinking back on the experience I just had with AMSE. I was very pleased with management's knowledge and easiness to communicate with. I was very thankful also that the CEO and COO were both there to walk me through and give me a demonstration of the pilot plant in action.

And after seeing the process in person, I became ecstatic about the potential and future for the company, especially with those thick consistent margins.

The Investor Interview with Peter Epstein

The following is a transcript between a voice interview I had with Peter Epstein on October 30, 2014.

Adem Tumerkan: Peter, who are you and what are your credentials?

Peter Epstein: I used to work at a hedge fund where I was a senior natural resources analyst until 3 1/2 years ago. I left and started my own consulting business, MockingJay Inc, and that was in June 2011, since then I have been blogging and also in some cases helping companies get publicity.

Adem Tumerkan: If I am not mistake, you like oil and energy companies. What do you look for in your potential investment prospects?

Peter Epstein: Near term production. Low cost production and strong margins due to a world of rising cost. Non-declining production curve, which is what all oil sands companies have, but American Sands Energy especially has an easier and cheaper and less energy intensive process.

Adem Tumerkan: Mentioning American Sands Energy, the market just does not seem to care so far about them. What attracted you as an investor towards AMSE and cause your bullishness towards their project?

Peter Epstein: Well I had experience with a previous company, RedLeaf Resources (private company), and I got to know the Utah mining space and how friendly it is towards mining. There's a lot of oil and gas mining and potash in potential in Utah. It is also a very mining friendly place.

The thing I also really like about AMSE is that they are in a place where there is so much resource that competition won't hinder them or investors. AMSE has competition, don't get me wrong, but even if 2 or 3 companies are successful, there is so much resource that all the companies could potentially prosper for decades. And with AMSE in particular, they can use their proprietary process all around the world for other oil sand deposits.

Adem Tumerkan: Now from my understanding AMSE is relatively environmentally cleaner due to the absence of water in their proprietary process, could you elaborate on this significance and as an investor why that is important?

Peter Epstein: Well because the only reason that oil sand production in the US is not happening yet is because of the tarnished publicity from the environmentalists and the acres and acres (thousands) of tailings ponds (information for "what is a tailing?"). You simply don't have any tailings ponds with AMSE. That's just one example of why they're environmentally cleaner, they also have less emissions because the temperature and pressure at which the solvent extracts the sand is fairly low. And that's why you can get something of upwards 60% less energy used relative to the Canadian oil sands producers. That is greener and more cost effective which is ideal.

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Peter Epstein 4 years ago Contributor's comment

American Sands Energy is high risk, but a real company with a real chance of making it really big. Obtaining permits is the first big challenge/opportunity. Permits should be in hand within a few months. First oil in 2016 is a lot closer than it sounds, it's almost 2015....

Adem Tumerkan 4 years ago Author's comment

Yes this is a speculation not an investment in my opinion. As all early oil development companies are extremely risky and need funding to survive. But AMSE has incredible deposit and cash costs that I dont believe can be ignored.

John Fitch 4 years ago Member's comment

Oil is a finite resource, so inevitably it will be gone. What then will happen to the countries counting on the revenue derived from oil? The majority of US oil consumption was in the form of fuel for our automobiles and airplanes. Ultimately there will need to be an oil-less solution for that (hybrid, electric, etc.) and what happens to oil then? These solutions are also more environmental friendly. Instead of looking for an environmentally clean oil company to invest in, why not find an environmental company to invest in? (i.e. a company that is developing cleaner alternatives to oil) Seems to be more forward thinking in my eyes.

Adem Tumerkan 4 years ago Author's comment

I agree we as people are a dynamic economy but how many people are going to sell their cars to purchase even more expensive energy efficient vehicles such as Tesla?

John Fitch 4 years ago Member's comment

The hope is that with technological advancement, the cost of producing energy efficient vehicles will fall; thus allowing other companies to enter the market, and subsequently, offer lower priced alternatives to Tesla. Perhaps competition in the space will also cause Tesla to lower their prices. Not in the near future, but eventually I do see those vehicles becoming the norm; and people will eventually need to sell their car and slowly begin transitioning to energy efficient vehicles.

Moon Kil Woong 4 years ago Contributor's comment

1) The US is still importing tons of oil due to current US oil company contracts thus leaving a surplus at home which they are now trying to export (a bit ridiculous).

2) The US oil collapse is coming. Now is not the time to invest in more production.

3) The oil price decline should have happened sooner along with everything else but the Federal Reserve is trying to prevent the natural price declines associated with a downturn which did nothing but prolong the downturn for years because the economy can't realign without the natural savings it gets from price declines.

4) Politicians and the government don't make jobs save ones that cost more jobs, they destroy them unless they cut taxes. Given they do not do that, they could care less if the US oil economy collapses or the rest of the economy. In fact a weak economy allows their banker friends to issue even more QE money and give them out like candy to them and the politicians. Thus, regardless of what everyone says, most bankers and politicians love the zombie economy. It means they get rich while you get poor.

Adem Tumerkan 4 years ago Author's comment

1. The US only produces at most 9% of the world supply. Low cost producers are what need investing.

2. As marginal producers came online in America many countries have reduced oil output such as Syria and Egypt, Libya and Nigeria due to internal factors.

3. The with the Fed's war on deflation and cost of productions increasing, I doubt falling energy prices will be short. With many countries bypassing the US dollar in all oil trade anyways is growing worrisome.

4. I agree completely.

Adem Tumerkan 4 years ago Author's comment

As you were just saying, oil prices will come down from globabl worries and growing supply and the feds "low" inflation.

But what will those high cost marginal oil producers do? They will turn off. Its not as if oil isn't a good business, its at what cost. And my argument is that AMSE will be a low cost producer with a great asset that could survive even $55 oil as many other producers in America go offline, which would inevitably lead to high prices anyway.