Wildcat Exploration Ltd

On the Brink of Collapse?

Before I go any further, you should understand what's going on out there.

After meeting with a number of analysts recently, I had an overwhelming feeling that the apocalypse was upon us.

And with that line of thinking came a number of solutions — sell this, dump that, get rid of everything.

I was overcome with a sense of déjà-vu...

Not wanting to be rude, I simply smiled, nodded, and placated their rants. In the back of my mind, I knew I absolutely had to get out of that room as fast as possible.

The reason for my hasty exit was that their anxiety was completely unnecessary; to find the culprit for oil prices falling below $70 per barrel, look no further than the U.S. dollar.

If you ever wanted to know what could knock oil prices down 21% in a matter of weeks, take a look for yourself:

As expected, oil prices didn't have much of a leg to stand on:

So is that it? Is it time to throw up our hands and walk away?

Hardly...

An Undeterred Bull

If you're going to convince me that it's the end of the world for my energy plays, you'll have to do a little better than using a stronger dollar as the crux of your theory.

At the very least, I would need to see a drop in demand. And, according to data from the Energy Information Administration, that simply isn't happening...

U.S. demand for petroleum production is on the rise — more than one million barrels per day compared to a year ago.

The latest offshore debacle involving BP, Transocean, and Haliburton is further proof of how far we're willing to go for oil.

(Remember that the explosion occurred at a well that wasn't very profitable; the only reason they've been producing oil there was its close proximity to a pipeline.)

Of course, I'm not the only energy bull in the room. I know there's someone else that agrees with me.

That someone is China.

Ever since oil prices crashed to $33 per barrel in December 2008, China has been on a buying spree, dipping their hand in nearly every major energy source on the planet.

During the last two years, China has expanded their oil and gas reserves over and over again.

From Iran to Canada, there is no place that China considers off-limits:

• May 18, 2010: CNPC, China's largest oil firm, acquires a 35% stake in Syria oil from Shell.

• April, 2010: China spends $5 billion stake in the Canadian oil sands. The purchase gives the Chinese a 9% share in Syncrude Canada.

• May, 2010: China closes a deal to develop the Missan oil fields in Southern Iraq. Current production from the Missan field is 100,000 barrels per day.

• September, 2009: China invests $16 billion barrels on oil exploration in Venezuela.

• Today, PetroChina just announced plans to invest $60 billion in overseas oil and gas output, hoping to add about 4 million barrels a day to current production.

The list goes on, but I think you get the point...

A Buying Opportunity You May Not See Again

Although I can't pinpoint for you the exact minute at which things will turn around, one thing I'm sure of is that my energy plays have in common — nearly all of them are oversold by the herd.

Let's face it: You and I both know the door is wide open for investors. The only question now is where to look for that door.

My readers and I have been riding these volatility waves for years, and we're about to double-down on some of our best oil and gas picks.

Our latest oil play, for example, has put us in a win-win situation. Not only can we take advantage of the oversold conditions, but the fact is that this tiny, unknown company would be turning a healthy profit if oil were to collapse to $35 per barrel again... an event that is next to impossible, especially considering that demand is rising. I've put all of the details for you in this special report.

Once my distressed and overtired reader took a few deep breaths and changed her perspective, I could tell she was seeing the big picture.

There are very good reasons why we buy the fear and sell the greed; one which cannot be understated is to avoid restless nights of clock-watching.

Tonight, forget counting sheep... I'll be sleeping like a baby.

Until next time,

Keith Kohl

Editor, Energy and Capital