They are two of the richest oil and gas states in the Union. Tens of billions of barrels have been extracted from inside their borders beginning more than a century ago. Yet back then finding and especially recovering oil from fields was a primitive exercise.
When petroleum prices crashed in the early 1980s Big Oil packed up and left some of the most plum regions in America. For nearly three decades a underground oasis of un-captured oil and gas have quietly sat in massive pools. That is until now!
New companies employing state-of-the-art technologies are continuing to harvest billions of barrels of oil and trillions of cubic feet in natural gas buried right beneath our feet. The fruition of this work will help America become energy independent and make millions of dollars for savvy investors.
And nobody is doing this work better than American Petro Hunter (AAPH.OB).
American Petro Hunter has struck it big in Kansas. It seems the fourth largest oil producing state in the Union has not yet given up all her treasures. This will be to the delight of investors who have seeded pennies and will harvest dollars in American Petro Hunter. You see AAPH has not one, but two mega projects in Kansas.
The first is a mega discovery that is putting AAPH on the map.
It might not be an elephant oil field (more than a billion barrels), but American Petro Hunter’s newest trophy is definitely big game.
I am talking about the gusher found at AAPH’s Rooney oil project in southern Kansas not far from the Oklahoma border.
Third party estimates indicate, the first of 10 wells at AAPH’s Rooney project is likely to produce 250 barrels per day and hold potential reserves of half a million barrels of oil. When the other nine wells come in on target that will give American Petro Hunter 2,500 barrels of oil production per day!
Right now the industry is paying $35,000 per flowing barrel of oil per day. Given that ten wells could generate 2,500 barrels per day; that works out to an asset worth $87.5 million dollars! This property alone gives AAPH an asset that is worth four-times the company’s current market cap. It’s called a game changer and I think it will transform American Petro Hunter from a good junior oil & gas company to an important intermediate.
The oil situation could be a windfall for AAPH investors. But American Petro Hunter has even more going for it, including the exploration and production of America’s most under-priced energy asset – natural gas.
Backing it all up is the Poston Prospect in Trego County Kansas.
I am talking about the #1 Lutters well that was successfully drilled on the Poston Prospect, Trego County Kansas last spring. The well has the thing that the world thirsts for – light oil. Tests show 44 degree light oil with 65 percent oil cut. Testing indicates 10 percent gas and mud with – best of all -- no water. The well has already been cased and lodged.
The #1 Lutters well began production as a commercially viable oil well in summer 2009. Best of all, AAPH’s 750 acre lease block has the potential for a multi-well program with 2 to 3 offset locations possible to fully exploit the acreage.
Shipments of oil began in June 2009 meaning AAPH was generating revenue just four months after it hit the ground with its exploration program.
With successful offsets planned to the east and south the field could ultimately produce between 150 and 200 barrels per day.
Additional oil wells are planned for January 2010 and production estimates are bountiful.
In total there are 2 to 3 offset locations which are likely to fully exploit the acreage at Poston. Full development of the property could produce up to 400 barrels per day of light oil.
Given the excellent transportation and support infrastructure in the area, it easily supports storage facilities on site.
Both Kansas sites could produce up to 2,900 barrels per day which equals an estimated $74 million dollars in annual revenue. And that’s with oil at $70 per barrel. Since AAPH receives a 25 percent Net Working Interest from current production at the Poston site and a 50 percent Net Working Interest from current production at the Rooney site, it has potential to earn over $34 million dollars in combined revenue.
It might surprise you to know that California’s biggest export over the past century hasn’t been movies or even crude culture… just crude oil.
In 1865, only 6 years after Colonel Edwin Drake's monumental discovery in Pennsylvania, California's first productive well was drilled by the Union Matolle Company in California's Central Valley. This area, east of San Francisco, became the scene of much of the drilling activity through the rest of the 1800's.
In 1900, the state of California produced 4 million barrels. In 1910, this had jumped to 77 million barrels. In the 1920s three major fields were discovered in rapid succession - Huntington Beach, Santa Fe Springs and the biggest of them all, Long Beach Field.
In the century that followed over ten billion barrels of oil were pumped out of California. And yet something very valuable was left behind – massive reserves of natural gas. In the last 6 months American Petro Hunter has sent reconnaissance teams to comb out the best gas fields remaining in California. What they have come up with are some plumb targets, AAPH’s timing couldn’t be better.
Before the liquidity crisis of ’08 natural gas was trading for $13 per Mcf. The ensuing recession knocked the socks off of the market and pushed the price of “clean petroleum” down to $2.50 per Mcf.
But American Petro-Hunter did their homework. They bought into California’s rich and very productive gas fields when the price was incredibly cheap. And now the company has all that leverage going for it.

My expectation is that next year natural gas prices will again be over $8.00 per Mcf, and perhaps as high as $10 per Mcf. That means that all the natural gas that AAPH has acquired and is flowing from its properties will be worth four to five times more than the acquisition costs. Now that’s leverage!
I am talking about the company’s Sacramento Gas Project.
In early 2009 with natural gas dirt cheap AAPH has acquired a 25 percent working interest in the play.
The project is located west of Modesto in the Central Valley of California, near Sacramento.
Potential Recoverable Reserves have been calculated to be an impressive 42 BCF at a depth of only 7,400 feet. Hell sometimes water wells are drilled that deep!
According to an independent third party engineering group, if the pay zone is 60-70 percent gas filled and the well is brought into commercial production an initial production rate of a whopping 5,000 Mcf per day may be achieved!
At a price of say $10 per Mcf and production of 5,000 Mcf per day, AAPH’s 25 percent interest will earn the company $8,000 per day or almost $3.5 million per year. Not bad for a company that right now has a market cap of less than $15 million!
Taken together Kansas and California could generate up to $37 million in annual revenue for AAPH. This is incredible potential for a company with a market cap of less than $15 million.
With oil & gas properties like this the company’s market cap is going to shoot up as the Street wakes up to the reality of the energy price recovery and as investors learn of the amazing potential of American Petro-Hunter (AAPH.OB).
Right now is the critical time says American Petro Hunter President Robert McIntosh.
"Our upcoming drill program in Kansas and California is the culmination of a significant preparatory effort that included the professional assessment of many highly technical engineering reports and extensive financial projections and cost-benefit analysis… Our strategic aim is to rapidly develop the means whereby the Company can generate sufficient cash flow on a monthly basis in order to fund future project costs and operations.”
“With even a modicum of success,” McIntosh believes that the chances of achieving the company’s goals are “excellent”.
That is good news, but around Wall Street good news spreads faster than methane leaking off a pump-jack. I wouldn’t be surprised if American Petro-Hunter is just about to be discovered.
If you look at the stock price chart on AAPH.OB below, you can see some people have bought in at very low prices and have made a profit.
I expect that the next price plateau is just around the corner and may well be struck this winter just as AAPH strikes pay-dirt in Kansas and California.

This incredible stock, ripe with potential and backed by bedrock fundamentals, could rise as high as $4.00, perhaps even to $6.00 per share.
I’ve seen it happen before, and my subscribers have pulled in the gusher-like profits from stocks just like American Petro Hunter.
Actionable Advice: Buy American Petro-Hunter (AAPH.OB) up to $2.50 per share. Look continually for higher prices from this stock until the energy bull has run its course. That is most likely two to three years away. Call your stockbroker today. And to learn more about this terrific company at their Web site: http://www.americanpetrohunterinc.com/.
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Jarret Wollstein, Editor
Intelligent Investor Report
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