HALE’S QUADRUPLE

I had dinner with well-known global economist David Hale the other night, and investment guru James Dale Davidson. The conversation was literally all over the map, settling on Ukraine and Romania as two of the brightest prospects for locating brand-new investment opportunities. And Iraq.

David was particularly excited about a small company listed on the Toronto stock exchange that has just made the first private oil deal in Iraq – more precisely, the Autonomous Region of Iraqi Kurdistan. “I know the company’s principals and have been watching it for some time” David explained. “It’s selling for $7 (Canadian, about US$5.60). This thing is an easy quadruple.”

The company is Heritage Oil Corporation(TSX: HOC), based in Calgary. It has producing oil properties in Oman and Congo-Brazzavile, recently closed a deal for a huge oil and gas filed in Uganda, and will soon be announcing an acquisition in northern Chad. But the Iraq deal is most interesting of all.

That’s because the family of Heritage’s Chairman & CEO, Micael Gulbenkian, started the original Iraq Petroleum Company in the 1920s. Micael’s great-grandfather drilled the first well in Kirkuk in 1927. For decades, the Gulbenkian family helped create the Iraqi oilfields and worked with the Iraqi Oil Ministry. Saddam took everything over in 1972. Now the Gulbenkians are back.

Heritage has formed a joint venture with an Iraqi Kurdish company, Eagle Group, to explore and extract oil reserves in northern Iraq – the most stable part of the country. Nechirvan Barzani, the Prime Minister of the Regional Government of Iraqi Kurdistan, announced the deal.

The rest of Iraq remains closed to investment by foreign oil companies – but Kurdistan walks its own path. Gulbenkian was able to ink the first deal because of his family’s history. David was really pumped about the stock’s upside, but as always, do the Caveat Emptor Tango – check the company out and research it before you place a call to your broker.