Outside capital needed but hard to come by for local oil project
© — Star photo by Geraldine Brophy
Cabot Martin of Deer Lake Oil and Gas Inc. spoke at the Western Newfoundland Oil and Gas International Symposium at Marble Mountain, Thursday.
CORNER BROOK Capital is needed to advance oil exploration in the Deer Lake Basin, but it’s going to be a challenge to find it.
That’s the message from Cabot Martin, president and CEO of Deer Lake Oil and Gas Inc., who spoke at the Western Oil and Gas International Symposium at Marble Mountain Thursday.
The company currently has eight test wells drilled throughout the 1,000-square-mile area that runs from the Birchy Narrows past the Town of Deer Lake to Pasadena and out to Cormack, encompassing most of the Grand Lake. Recent developments in the United States, he said, are tying up outside investments just as the company is readying to look for those investors.
Martin said in terms of outside investment, today’s business climate offers the worst market they’ve seen for gaining capital. Deer Lake Oil and Gas Inc. has spent about $6 million of its own money in the past few years, but now are at the stage where they need more.
“Markets are so attractive right now in the United States that it’s sucking up a lot of the investment,” he said. “Five years ago we would have seen significant interest from companies as far away as Kentucky or Louisiana, but today it’s very hard to get them interested.”
Unfortunately, he said, it was the American companies that traditionally showed the most interest in this part of the country, with Canadian companies making investments mainly in Alberta’s booming oil industry.
As for when oil may actually start flowing out of the ground in the Deer Lake Basin to be sold on the markets, Martin couldn’t even hazard a guess at a timeline. The company is in a position where they have to show there’s product before they get investors, but to prove the product is there, they need more cash flow to find that product.
In other words, they need investor capital to attract investor capital.
“We’re a long way from saying we’re at X or Y, in a lot of cases it’s tied up in what else is available,” he said. “If you were to take a look at a map right now, probably half to two-thirds of the United States has shale (oil) potential, so what can we do but struggle on?”