Good morning, fellow small cap stock enthusiasts! As we mentioned in this week's earlier newsletters, today we're serving up another good-looking trading idea. How good is it? The fact that we've deviated from our usual end-of-day publishing schedule to make sure you get this suggestion before the market opens today should tell you just how important - and timely - we feel this opportunity is. Give us a couple of minutes to explain, and we suspect you'll agree. We'll dispense with any fanfare and just get to naming names - Hydrocarb Energy (HECC) is our newest trading idea for you. This junior oil play isn't like many of its peers. As you'll soon see, it's a great blend of value and growth, and a great blend of near-term and long-term prospects. More important than anything else right now, however, there’s a catalyst right around the corner. Hydrocarb Energy - A Closer Look As much as we’d love to get straight to what’s making this steak sizzle, there’s a little groundwork we need to do first. Hydrocarb Energy as we know it today is actually the combination of three divisions.... Hydrocarb Namibia (Africa), Galveston Bay Energy (Texas), and Otaiba Hydrocarb (Abu Dhabi). These three enterprises are as different from one another as they can possibly be, which is one of the attractive aspects of this opportunity. Galveston Bay Energy Hydrocarb owns about 140 wellbores in Galveston Bay, Texas, that were originally drilled by Exxon in the 60s and 70s. Exxon capped all the wells when oil was priced at less than $20 per barrel, selling them to a company that ended up going bankrupt after Hurricane Ike ravaged the Galveston Bay area in 2008. Hydrocarb ended up paying a mere $10 million for these fields - fields that had once been in Exxon’s portfolio - after the bankruptcy made the properties available. This is a significant detail. While new wells make for sizzling stories, the fact of the matter is, too many newly-drilled wellbores don't produce much (if any) crude oil. Yet, all of them can cost between $500,000 and $1 million to complete. It's a huge risk. A previously-drilled well, on the other hand, can cost about half as much to reopen and they're nearly always proven producers. Newer technologies allow those well owners to extract oil that's always been there but couldn't be profitably retrieved in the past. In any case, as of today the company has reopened 30 of the wells. The 30 wellbores in operation collectively produce about 300 barrels per day, which is worth approximately $10 million in annual revenues at current crude prices. This production, however, may be on the verge of a surge. Hydrocarb has planned to reopen 18 more wellbores by the end of this year, with a production goal of 400 barrels per day by the end of the third quarter. All told, the current revitalization plans could increase the company's daily production to something between 500 and 600 barrels by the end of 2014. At this level of production the company should be more than profitable on an operating basis. Better still, 50 more wellbores are being examined for a potential workover, and there are several more Galveston Bay exploration projects on the table. And to answer the next question, yes, the infrastructure has been rebuilt to withstand a category 4 hurricane since Hurricane Ike struck. Hydrocarb Namibia While production continues to ramp up in Galveston Bay, the company continues to explore its property in Africa. Hydrocarb has rights to a 5.3 million acre concession in Namibia. The property has a preliminary resource estimate of 1.1 billion barrels of oil, 295 million barrels of which have been deemed recoverable by a third-party geological/feasibility report. Moreover, the latest high-resolution aerial gravity and magnetics program flown by Bridgeporth, Ltd. looked at the the entire 21,300 sq km Owambo concession in northern Namibia (adjacent to the Angola border), and indicated 16 new potential leads. The HEC technical team is currently evaluating the survey and is in the process of laying out a regional exploration 2-dimensional (2D) seismic program for these identified leads. Only 15% of the concession has been seismically explored, however, so it's entirely possible even more high-odds prospects could be found. Otaiba Hydrocarb Hydrocarb's Abu Dhabi-based oil field services company, Otaiba Hydrocarb LLC (OHC), is currently completing a financial audit... the last step required to finalize its registration process. Once completed, OHC can perform a variety of oil field services, utilizing its comprehensive oil and gas field services license issued by the Supreme Petroleum council of the UAE. And make no mistake - there's plenty of opportunity here. Abu Dhabi facilitates $100 billion in oil revenue annually, and oil players in the region are expected to spend $40 billion over the next five years to increase their reserve base. Otaiba Hydrocarb is in a prime position to make that happen. Why Hydrocarb? So why Hydrocarb Energy instead of another oil play? It’s actually an easy question to answer, for several reasons. First and foremost, you have to like the way this company has a proven, revenue-bearing asset right now in the Galveston Bay project, but also has a potential whale of a find in Africa. The current revenue stream can keep things going - including the stock - while the company continues to cultivate the potential 295 million barrel stash in Owambo. Otaiba Hydrocarb is close to starting operations in Abu Dhabi too, which will provide a fairly consistent revenue stream once up and running. We can say this much with plenty of confidence: There are dozens if not hundreds of oil juniors that would love to have this double-barreled (well, triple-barreled actually) mix of properties which are not only here and abroad, but are serving markets here and abroad. Even Galveston Bay alone, however, would make the stock investment-worthy. As was mentioned already, Galveston is expected to be producing between 500 and 600 barrels per day by the end of the year. That translates into annualized revenue of about $20 million. Not bad for an $80 million organization with $26 million in assets on the books and only $15 million in liabilities. It seems like most small oil companies of this size and ilk are upside down with their balance sheets. Not Hydrocarb though. We touched on it above, but it merits detailing now… there’s an amazing amount of oil left waiting in previously-abandoned wells. Enterprising companies using updated technology are buying these properties for a song and showing a great ROI on their investment. The math just makes sense now, and these nickel-and-dime wells can really add up for a small-but-brilliant company. Of course, with $29 billion worth of recoverable oil in Namibia, there’s no doubt about the potential long-term reward on the horizon. You read the preliminary reports regarding the Namibia concession - the prospect looks good. And, the advent of the African oil industry underscores the long-term potential for this stock. Africa is not generally thought of as a major oil and gas producing continent, only yielding around 10% of the world’s annual supply. The pace of output is growing much faster there than anywhere else in the world right now, however, so oil investors looking for explosive growth really should be looking closely at the continent. Just to put Africa’s oil industry’s growth in perspective, in the year 2000 the continent was sitting on an estimated 70 billion barrels of proven oil reserves, and roughly 60 billion barrels (equivalent) of gas. Now - after exploration companies have earnestly started looking for it - Africa is believed to be home to about 120 billion barrels of oil, and roughly 100 billion barrels of gas. You have to believe there’s more to be found too, and you know as more and more is found, more and more majors are going to take notice. There’s still an enormous amount of room for Africa to become a major global exporter. Yet… …. with as much potential as Africa has to become a major exporter, it may have even more potential as a consumer of the very oil and gas found there. Downstream energy consultant CITAC recently published a forecast suggesting demand for refined oil in Africa will grow 40% between now and 2020. That’s consumption of 4.3 million barrels per day, up from 2008’s typical consumption of 3 million barrels per day. This translates into annual consumption growth of 3% for Africa versus just the 1% annual growth predicted by the International Energy Agency for the rest of the world for the same timeframe. As for what it all means to Hydrocarb, on a very basic level it suggests the company is on the right track in the right place at the right time. On a bigger-picture level, it establishes the possibility of an acquisition. The more Hydrocarb develops the Namibia prospect, the more potential suitors may be interested. Again, there’s an estimated 295 billion barrels at the Owambo property. Someone’s going to take notice. Why Now? We've got a handful of reasons why a newcomer would want to scoop up some HECC now, one of which is the freakishly cold winter temperatures the U.S. experienced in early 2014. Don't jump to the wrong conclusion; the greater demand for energy this winter (for the purpose of producing more heat) isn't the bullish undertow here. See, Galveston Bay went through an unusually rough winter this year. It was the first time in about a century the freeze line fell 50 miles south of its normal latitude, reaching the Galveston Bay area and causing the region's oil production to drop significantly. This crimped production meant crimped revenue, and the lull did show up on Hydrocarb's quarterly statements for that timeframe. The ground has been good and thawed for a few months now, however, allowing production and therefore revenue to reach normal levels again beginning last quarter. The return to "normal" could mean investors return to the stock. Regardless of the rekindled oil production in Galveston Bay, there's another urgent matter for anyone thinking about taking on an HECC position - it's soon going to be featured on "New to The Street". "New to The Street" is a television program that presents new and young companies to the market. In fact, the air-date for the show’s look at HECC was announced just yesterday. The first of a series of interviews with Hydrocarb’s Chairman, Kent Watts, will be aired on the ION Network in the New York market at 7 am EDT on Monday, August 4th. It's the kind of publicity which could really light a fire under the stock, kind of like flipping a light switch, sending it higher in a hurry and then continuing to send it higher as more portions of the interview with Watts are aired. Regardless of when the next segments are shown, by this time Monday, thousands and thousands more investors are going to know about Hydrocarb Energy. If you wait until next week to get in, you may be fighting with all of them for your piece of this pie. Potential catalyst #3: There’s a likelihood HECC shares are going to graduate to the NASDAQ exchange soon, making it eligible for purchase by a wider swath of funds and asset managers. The bottom line is, one way or another the rest of the market is soon going to learn about the growth opportunity with Hydrocarb Energy. Timing may prove to be everything. The usual caveats apply, of course - never risk more on a speculative idea than you can afford to lose, do your additional due diligence to fully understand the potential risks and rewards, and be sure to discuss it with a financial professional familiar with your particular situation. If you've read everything above though, you should have a pretty good idea of why we like it. And again, we can’t stress enough how catalytic Monday’s television coverage of the company’s efforts could be for the stock. It’s the first time anyone here can remember a micro cap being featured like this on TV. There’s no telling what kind of interest it will have generated by Monday’s opening bell, which basically means if you want in, you may want to get in today because there's apt to be a rush on Monday.