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Vangold Resources and Peak Oil

Bob Moriarty
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November 9, 2005

I've done a number of pieces mentioning Vangold in the past on 321gold but they were all in light of their work as a gold exploration junior. Last year, about this time, after some snoring exploration results in New Guinea, President and CEO Dal Brynelsen made a decision to branch off into gas and oil exploration/production in an effort to keep the stock from tanking. His timing couldn't possibly have been any better.

I am a believer in Peak Oil. There is more than enough information available by now that we know it's not just a theory, it's both real and here. While most of America sleeps, it's becoming more obvious every day that not only is demand increasing as a result of an Asian transition from an agrarian society to a consumer society, supply is falling. Resulting in higher and higher prices. I'd go so far as to say that in my oh, so humble opinion, we have already seen the Peak and are into the decline of oil production stage. Price swings will become wilder and wilder with a constant movement higher with each swing.

The twin terror hurricanes hitting the gulf production facilities of both Texas and Louisiana this year have taken not only oil and gas wells off line, but also removed major and key refining capacity for a long period, longer than anyone anticipated. While it's at least possible in theory to remove oil from the strategic reserve, there is no such capacity for natural gas and we can't go begging, hat in hand to the Europeans. Oil is easy to move around, natural gas, not. Any given region has to somehow mix and match supply and demand to attain a balance.

And that balance is in a very dangerous state this year. With so much capacity in the gulf shut-in, a colder than usual winter bodes poorly for American consumers. There is a very real chance we may simply run out of natural gas this winter. And England is in the exact same situation with declining production from the North Sea running headlong into increasing demand.

Energy Guru Matt Simmons has suggested $40 natural gas and $180 oil is POSSIBLE this winter but in any case a disaster is not far away no matter what the temperatures are this year. And if anyone has a clue as to what the energy policy of the United States is, email it to me. No one else I know has any clue as to what our national policy is.

It might be a good time to own energy stocks. We have a number of great juniors exploring for both oil/ng and uranium who advertise on 321energy and now that prices have retreated on a temporary basis, it would be a good time to look them over.

I like Vangold. It has double-header potential, as an energy stock and as a gold/copper exploration play. Let me cover some of the interesting and high potential targets they are working on now.

1. Vangold has invested about $400,00 in the Killam North Oil Field in Alberta to drill the first well to earn a 26% interest. The first well has produced 120 BPD for the past 10 months. They have a drill rig on site drilling three horizontal legs every two weeks. They believe each leg will produce 100 barrels of oil per day when completed and have permits to drill 14 legs and based on current experience, they believe they will earn about $400,000 per month. Drilling will be completed in January. The 14 additional wells will cost about $1.3 million more. The payoff is a tiny four months.

2. Vangold owns 10% BPO and 6% APO of a just drilled natural gas well at Sarcee, just west of Calgary in partnership with Arapahoe Energy Corp. The press release announcing the successful well estimates the size of the gas pool at 20 to 30 billion cubic feet. The operator believes production will come in at 5 million cubic feet per day giving Vangold 300,000 cubic feet or $120,000 income per month off the one well. They have located two to three other potential targets on the property which might be drilled. This is a big deal with long term potential.

3. Drilling is to commence in January or February on the Deep Basin/Gladius property. The well will cost about $5 million with Vangold's share at about $1.7 million for a 21% interest. The operator believes the potential is 100 BCF which could produce 40 MCF giving Vangold about 8 MCF or $112,000 in revenue per day.

4. Vangold currently has revenue from oil and gas wells in the Corning district of Northern California of between $75,000 to $100,000 which should climb to about $200,000 per month.

And there is always the gold.

Vangold is an advertiser on both 321energy and 321gold. They have not paid for this article and it is my opinion and only my opinion. As always, we want to remind investors they are responsible for their own investment decisions. I do own shares in Vangold and have owned them for several years. I am biased.

Vangold Resources, Ltd
VAN-V $.32 Canadian 46 million shares outstanding, 60 million fully diluted.
Vangold Resources website

written November 7, 2005
Bob Moriarty
President: 321energy
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