I believe that the small cap investments I make today are just like the first chapter of a success story entitled “The One That Didn’t Get Away.”
Editor’s Note: Today’s issue of Daily Profit is the second half of a story of perseverance and wealth creation from drilling in the Texas Oil Fields. If you missed it, read Part I here.
This article picks up with Curt Hamill’s account of events from his book, We Drilled Spindletop:
“When the second puff came my feet either slipped off the ladder or were kicked off by the volume of oil. I don’t really know how I reached the derrick floor… The rest of the crew had run… and I could hear them calling me to get off and get into the clear.
My eyes were full of oil and I couldn’t see, but the boys kept hollering at me. I got off the floor some way and made my way to them. I pulled out my shirttail and wiped the oil out of my eyes and off my face.
I saw then that the pipe had blown completely out of the well and clear over the top of the derrick. It was scattered all over the ground. How I kept from getting hit by that pipe I’ll never know.
But the thing that really caught my eye was a solid six-inch stream of oil shooting out of the well and rising more than 100 feet above the derrick.”
This well, known as the Lucas geyser, was the first big hit of the Spindletop oilfield and would shoot over 100,000 barrels of oil a day into the Texas sky for 9 straight days before being capped.
The strike changed American history. Spindletop would become the most productive oil field the world had ever seen, producing over 150 million barrels to date.
It would give rise to the Texas Oil Boom and give the country a stable supply of energy. Household names like Gulf Oil, Texaco, Chevron (NYSE: CVX), and Exxon Mobil (NYSE: XOM) all got their start at Spindletop.
The perseverance, and eventual success, of Higgins, Lucas, and the Hamill brothers showed that despite the huge risks, it was possible to strike massive oil reservoirs in an undeveloped country. The oilfield would make some men rich beyond their wildest dreams, and bankrupt others.
These days, investors might think that the boom days for oil and gas discoveries are over. That the big hits, known as elephants, have all been made, and that only small discoveries will be found.
Nothing could be further from the truth.”
I love this story, in part because an ancestor of mine was a landowner in the area of Spindletop in Texas. My family still receives small royalty checks from the oil fields that were discovered in the early part of last century – even though he sold a good portion of his land prior to the strike.
Everybody has some version of the story of “The One That Got Away.” A story of a stock or a house or a baseball card that they sold too early.
But a much better story is “The One That Didn’t Get Away.” I like that story much more. But in order to tell it, you have to hold on to your investments.
I like to believe that many of the small cap investments I make today, and which I encourage my subscribers to make, are just like the first chapter of a success story like “The One That Didn’t Get Away.”
By the way, the stock I was trying to motivate my subscribers to buy by telling this story in 2011 was a little company named Africa Oil (AOI.TO). It was a $1.85 stock at the time.
Africa Oil went on to become the first company to find oil in Kenya in 2013. Shares rocked 500% higher.
Today, the company is still drilling. Shares have come down and are only up 280% from when I recommended them. But I’m not worried.
Just like at Spindletop in the early 1900s, I’m not expecting all the oil in Kenya will be found in just a couple of years.
Like Al, Curt and Peck Hamill, and like my ancestor that owned property near Spindletop, I’m not getting out of Africa Oil – just like I won’t get out of most of my small cap investments.
Decades from now I plan on telling many versions of the story of “The One That Didn’t Get Away.”
Also, if you’d like to discover one telltale signal that predicts which stocks are ready to soar 190%, 484%, and 495% in 2014, then come join me at 100% Letter.