USOG is a small stock with HUGE potential

How can investors play in the “oil patch”, but not expose themselves to exploration risk? I think a great way is by trading today’s alert company: U.S. Oil and Gas Corp (USOG)

Today’s alert company is a holding company that has a unique “compound” growth strategy focused on multiplying the value of the company through acquisition of oil service firms AND application of patents and proprietary technologies in the oil and gas industry. What a compound growth strategy means is that the company has several ways that they are creating value for shareholders.

Their corporate strategy involves several initiatives:

1. Acquisition, integration and collaboration of existing and profitable small to mid-sized oil and gas services companies;
2. the development of innovative, proprietary oil and gas exploration and extraction technologies enabling higher production efficiency at minimal environmental impact.

The company’s acquisition focus is on existing oil and gas service companies and then leveraging their established customer base and market share, strong revenue, and proven management of the acquired companies to gain traction in the O&G service sector. In their own words, USOG primarily follows an inorganic growth strategy through which it acquires profitable family-owned companies with a strong growth history, capable management willing to stay on board for minimum two years, and strong balance sheet with little or no debt.

In 2009, USOG has acquired one company, Turnbull Oil, which in 2008 generated $16.5 million in revenues and $447,000 in EBITDA. According to the company, they expect Turnbull to post 2009 numbers that are better than 2008!

*** Now mind you this stock is only trading for .02 right now. When you consider what they’ve already got their hands on and how cheap the stock is, I don’t see how this one has anywhere to go but up!!

USOG is also waiting for confirmation that all terms and conditions have been met for the second acquisition (United Oil and Gas, Inc.). United Oil and Gas is a North Dakota-based distributor of refined fuels and other oil-based products. Revenue at United is expected to total $8 million for the year ending December 31, 2009, with steady growth moving forward. Revenue for 2008 totaled $7 million, to-date the company’s best on record.

USOG has identified other acquisition candidates and the Company is looking forward to continuing to grow strategically in 2010.

The company’s second initiative is in the area of commercializing oil service technology that the company either creates or acquires. USOG currently has two patent applications for the following:

• Simple Fiberoptic Seisometer for Rugged Environments - The company believes this technology has the ability to reduce the cost of seismic sensor arrays, having the fidelity and reliability necessary for permanent downhole and seafloor installations. The advancement could make “big oil” techniques for oilfield production management and exploration techniques available to middle market producers.
• Leveling System for a Portable Drilling Rig - The technology is designed to save setup time and increase precision drilling efficiencies with the smallest footprint to minimize environmental degradation.
  

USOG plans to monetize these technologies by using them through their own oil service operations and/or licensing the technology for profit.

USOG is on the march!

According to the company, USOG is in the process of filing with the SEC for listing on the NASD over-the-counter (OTC) exchange. The company plans to continuously work towards increasing market awareness and move the stock to a higher profile exchange. Filings are expected to list the company’s stock on the American Stock Exchange (AMEX) after move to Bulletin Board (OTCBB). About

And for us “bottom fishers” out there, the chart is looking very good, too!

• The stock’s most recent high in early November of 13 cents “sets the bar” for how the stock “could” perform. The stock has minor resistance at the 3 and 4 cent levels with little meaningful resistance at levels above that;
  
• The MACD is on an uptrend. The “bullish divergence” between the MACD and its stock price could indicate that a rally is possible;
  
• The stochastics are indicating that the stock is under accumulation again (as does today’s volume bar). The crossover is a positive sign that the stock is on an uptrend.

Even if USOG only retests its December high of 4 cents, it could be a huge winner for members. There are no guarantees, but the stock appears to be in a good position for gains.

Due your due diligence right away and get this one on your radar screen. I am looking forward to this one being my first big winner of 2010!

Good luck and good trading!!!