Source: Christian DeHaemer, Wealth Daily (5/16/11)
"The future of Kenya is golden. . .or, I should say, black."
That said, a man of ambition can't just sit—he must do. In time, the bad alcohol and endless heat eats away at a person's mind. They start to dream. They dream the kind of fevered, desperate dreams one can only have on the equator.
And so, men who were once known for their diligence and polish borrow money from their friends and go in search of the headwaters of the Nile. Or they believe the local tales of an El Dorado are more than true, and that it's just over the next hill. . .or perhaps they go in search of a legend who disappeared up the Congo.
Heart of Darkness
This hasn't happened to me yet. I am in a world of expensive suits and omelets made to order.
The Kenya I found on arrival was a blue-sky, puffy-cloud wonder. It reminds me of Cuba or Vietnam. All is verdant, bucolic and alive. It is truly a beautiful place worthy of its glossy travel brochures. But I'm not here to see rainforests, elephants, or rhinos. . .one can only marvel at so many giraffes before they turn into a grotesque cow.
No, I seek perhaps the greatest treasure known to modern man: Oil.
No More Gas
Kenya—like the rest of the world—seeks power. It needs electricity to run its businesses and gasoline to move its people. In the past five years, the capital city of Nairobi has increased its electricity consumption by 53.9%. In the past year alone, the country saw the cost of its oil imports rise 30%.
As I write this, there is a gasoline shortage due to insufficient infrastructure and poor management. The price has spiked and people are waiting in lines that go for blocks. But the shortage is more a sign of success than it is of failure—Kenya is now the sixth biggest economy in Africa.
According to today's Business Daily, the economy expanded from 1.45 trillion shillings in 2005 to 2.2 trillion shillings last year. (The hotel exchange rate is 82 shillings to 1 U.S dollar). According to a recent poll, 71% of Kenya's CEOs are "very confident" about their growth prospects in the next 12 months. The port of Mombasa is struggling to expand and keep up with the surge in cargo ships.
The politics of the country is historically tribal. That said, the president can hold only two five-year terms, and power has peacefully changed a number of times since independence in 1963.
There are 40 million people living here who speak English and Swahili. Business is growing and oil companies from around the world are flocking here to invest. The government is far from perfect, but Kenyans generally are a hardworking people with dreams for their children. The merchant class is successful, and it has been plying its trade for thousands of years.
Today, Kenya has two products—agriculture and tourism. Exports hit an all-time high in the March quarter of 43.8 billion shillings. And within the next few years, it will have petroleum.
You see, Kenya is not only the ancestral home of President Obama. . .the country is also located on the southern end of the East African Rift. The Rift was formed from the breaking apart of two tectonic plates when, some 65 million years ago, what is now Saudi Arabia broke away from East Africa.
Ever wonder why the Horn of Africa—Somalia, Ethiopia and Kenya—are kinda sticking out into the Indian Ocean? Or how if you move them up in your mind, they would fit nicely on the Arabian Peninsula?
This is because they aren't part of the African tectonic plate; they comprise a small chunk of continent that broke off from the Arabian plate and crushed into Africa. And geologists believe that the same oil found under Saudi Arabia and Yemen is also to be found under East Africa.
In about an hour, I'm going to walk over to the East African Oil Conference and hear the oil minister speak. He is under a lot of pressure due to the gasoline shortages. It will be interesting to hear what he has to say. He will be followed by other experts in the field, including speakers from Shell and Tullow.
I expect them to say the future of Kenyan oil independence is at hand.
Right now, Kenya imports all of its oil. But after looking at a number of maps and seismic reports from about five different small cap wildcatters—and reading one 70-page report from a top hydrocarbon firm—the future of Kenya is golden. . .or, I should say, black.
Some of these companies will go from under US$1–US$10 when they hit oil. Perhaps many of these companies will. Right now, I'm the only guy talking about oil in the East African Rift (just as I was the only guy talking about Mongolia last year) and, for the record, the Mongolian stock exchange was the best performing market in dollar terms in 2010. You don't get this stuff on CNN.
When Barron's, Jim Cramer and the rest of the slackers start talking about African oil, I want you to have your investments in place and be ready to sell to them at a huge profit.
Keep an eye out for my free report—or get the buys as they are issued.
Talk to you soon,
Christian DeHaemer Editor, Wealth Daily
Black Gold: Into the Heart of Darkness—Seeking Oil Profits