Samson Oil & Gas Limited (SSN – AMEX)

Dear Bottarelli Research Member,

The events of this week will be spoken about for decades.

Monday through Wednesday, the major market averages dropped precipitously lower – as continued bank failures petrified the financial markets. But then on Thursday and Friday, the Federal Reserve decided to provide loans to financial institutions to buy asset-backed commercial paper. And not to be outdone, the Securities and Exchange Commission banned short-selling on 799 financial shares through October 2^nd. As a result, we witnessed a powerful 800-point upside move over two days. The volatility was off the charts.

In our weekly strategy sessions, Bryan and I discussed how the Fed has known about these concerning situations for a long time. Just look at the quote from Ben Bernanke in Bryan’s section below. This quote tells you everything you need to know.

It bewilders us to think that a strategic protection plan was not placed into action long before these crippling events have un-wound. And if the Fed didn’t know about this situation, then they should be fired on the spot for their colossal stupidity.

As you know, I’ve spoken about the Fed’s “lip service” month after month in our weekly Bottarelli Research Small Caps bulletins, and now I’m confident that you understand exactly what I’ve been referring to. It takes extraordinary events, like the ones we’ve seen this week, to get any action plans in motion. These plans need to take place much, much sooner. I’m a proud American, as I’m sure many of you are too. But the lies, the greed, the horrendous lending, and the colossal losses from so-called “financial professionals” have gone too far. Perhaps we need some sort of policy that holds people accountable for their destructive actions? I would be the first in line to support a proposal like that – because it would single-handedly eliminate the devastating market conditions that we’ve endured for most of the 2008 investing year.

But let’s get back to the topic of small-cap stocks, because I have a very unique play for you this week. The timing here is key, because profiting off today’s play will happen no matter if the major market averages are up +300 one day or down -300 the next. You see, this little company’s upside move will be driven by the completion schedule of their natural gas field that should be finalized within the next 30 days.

This Australian-based oil and gas company is holding extensive development and exploration acreage in the United States, and they’ve been doing extensive seismic mapping in regions rich with natural gas, with specific emphasis on a project in Sweetwater County, Wyoming called the “Rubicon Unit.” They already have an agreement in place with Devon Energy (DVN – NYSE), and according to my research, we’ll hear a lot of powerful information on this project as the drills begin to turn.

Now, you probably already know that there have been significant developments in the Vermilion region 40 miles east of this gem’s acreage. But just as a refresher, this company is currently exploring regions where major players like Cabot Oil & Gas (COG – NYSE), Marathon Oil (MRO – NYSE), and Hess Corp. (HESS – NYSE) are operating. And don’t forget about our own small-cap picks NOG and BEXP. They each have exposure to this powerful region as well. But folks, this Bakken oil discovery is just too explosive to ignore. Therefore, I want to own as much exposure as possible – especially now when the market conditions are dropping the price valuations of companies operating in this region to ridiculously low levels.

You see, I have been monitoring this little player for over eight months, watching every move they make. And I must tell you, the time to get positioned has arrived. After all, they are about to do the final drilling and casing on another project called the “Sabretooth” located in Brazoria County, Texas. This well alone could hold proved recoverable reserves between 12 and 17 BCFE, offering plenty of upside potential on news that could break at anytime.

Here’s why the timing is so important…

This company cannot classify (or confirm) any of the preliminary gas flows that were indicated during their seismic mapping studies until they bring this new well online and streamline its operation. Therefore, the current stock price does not account for any of their new wells. But that’ll change very soon.

You see, the company expected to begin their drill work around September 18^th, but the string of recent hurricanes delayed the work from occurring. Now that the storms have passed, it’s time to move. It will take approximately seven days to prepare the well for testing, and once they prove out what lies beneath the ground, you’ll see a move from “known reserves” to “proven” reserves. This is a very big difference! And if my due diligence is correct, this will undoubtedly move the stock price aggressively higher.

My plan today is to get you positioned in this company before this up-stroke occurs. In fact, I expect a double on today’s pick very quickly. Therefore, I will give you explicit instructions on how to play this stock. So buckle up and get ready for some quick profits!

The company is called Samson Oil & Gas Limited (SSN – AMEX), and the shares are a buy under $1.20.

I’m very serious when I say that this play could explode quickly. In fact, right after you buy your shares on Monday morning, I want you to turn around and immediately place a sell order 100% above your purchase price. This tactic will stop any broker from lending shares out to be shorted. At the same time, if the shares shoot higher, your pre-programmed sell price will automatically trigger and your profits will get locked in. We will also follow up with a “take profits” update mid-week. But whatever you do, please make sure to sell your position at 100% gains. Buy SSN under $1.20 and place a “good until canceled” sell order at $2.40.

UPDATES

American Capital (ACAS – NASDAQ): Last week’s pick has already traded as high as 34% above our entry price! As I mentioned, lending practices will dramatically change, and this week we’ve certainly seen this idea unfold. And now, ACAS’s director John A. Koskinen has been appointed to serve as the non-executive Chairman of Freddie Mac. This will only strengthen my outlook for ACAS going forward. With their deep pockets, this is truly the time for them to shine. I know things looked bleak on Monday, but with a 30% gain in hand (plus a strong dividend) I think we’ll see a 50% gain in short order. If we do achieve a 50% return, take HALF of your position off the table. Hold/Sell half at 50%.

Gran Tierra Energy (GTE – AMEX): The GTE share price has now moved back to where we first recommended it. World oil prices have fallen (for now), giving all of us the opportunity to pick up companies that will thrive. GTE will be one of them. Also keep in mind that they have no debt, which comes in especially handy in times such as these. Hold.

Sociedad Quimica y Minera (SQM – NYSE): As I mentioned before, people must eat, and with the huge number of people migrating into South American countries, SQM will benefit. Also keep in mind that SQM is also the world’s largest lithium producer as well as a huge fertilizer play. Buy/Hold.

Dendreon Corporation (DNDN – NASDAQ): Going into their critical October FDA meeting, DNDN still represents a speculative play with great potential. If the trials go the way DNDN is expecting, Provenge will be on the fast-track to a blockbuster drug. Speculative hold.

PowerShares Agriculture (DBA – AMEX): The theme here remains the same. I hate to sound like a broken record, but folks, food is a staple. Going long this vehicle will be one of the most prudent moves you’ll ever make (right along with the others we have been talking about for the last several weeks). Buy/Hold.

Before handing things over to Bryan, I have to tell you, these are trying times. I know just how hard it is to step up to the plate in volatile markets like this, but we have been giving you some of the finest companies that you’ll ever be able to pick up on the cheap. Just like top traders admit in the book “New Market Wizards,” buying great companies in times of panic selling have resulted in some of the biggest winners in the history of Wall Street. Unless the world is coming to an end (which of course it’s not), we firmly believe that using this weakness to your advantage will result in tremendous winners.

Until next week, be sure to give thanks for the abundance in your life.

Sincerely,

“Troubles in the sub-prime sector seem unlikely to seriously spill over to the broader economy or the financial system.”

- Federal Reserve Chairman Ben Bernanke, June 5^th 2007 during a speech from Cape Town, South Africa

Mark speaks about “lip service” in his commentary above. The quote above, from Ben Bernanke, is a classic example of what he’s talking about.

Ben Bernanke was fielding questions about the effects of sub-prime lending for over 15 months. Perhaps even longer. And until this week, he has taken no action to help solve the problem. In my view, this will go down as the most grossly negligent financial assessment in the history of the Federal Reserve. And in that spirit, I’d like to address two quick “personal notes” before getting into this week’s newest small-cap pick.

PERSONAL NOTE #1: These are truly extraordinary times – ones which will be talked about for decades to come. And throughout this financial crisis, I wanted to take a quick moment to thank you for being a part of Bottarelli Research. You see, I’m honored that you’re part of our elite trading group, and I’m fully dedicated to helping you survive and prosper during these difficult market conditions. In that spirit, I simply wanted to express my appreciation that you’re a member of our group. I’m glad you’re with me.

That’s why I’d like to start off today’s alert by adding yet another protective position. But unlike some of our recent protective plays, we’re actually going to be add call options on the Currency Shares Euro Trust (FXE – NYSE).

The thinking here is simple. As I study the effects of our current credit crisis, it’s clear that the Fed will be forced to print more U.S. dollars. Now, simple supply and demand tells you that more U.S. dollars flooding the market will devalue them compared to other currencies. Therefore, the big threat is that other nations holding substantial U.S. dollars will dump them – and most likely flow into other currencies (notably the Euro). This move, which looks almost inevitable, will offer a boost to the Euro over the next 3-6 months. Therefore, the protective play for today is getting positioned to profit off a coming up-tick in the FXE, which is a fund that seeks to reflect the price of the Euro.

As you can see from the chart above, the FXE bottomed out in mid-September under the $140.00 level, and now it’s getting set up to bounce back up above $155.00. Let’s play this bounce using March calls. Here’s the protective play…

PROTECTIVE PLAY: Buy the FXE March 152 calls (FXE CV) at or under $2.50, good for the week.

PERSONAL NOTE #2: Despite the recent “rescue” events of the Fed and the Treasury, I still want to stress the importance of protecting and preserving your wealth in times like these. First and foremost, that means not maintaining any bank accounts over the FDIC insured limit of $100,000. If you DO maintain multiple accounts over $100,000 at any single bank, it’s imperative that you have these accounts structured in a way that has every cent fully insured by the FDIC.

The FDIC pamphlet states that “deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.”

I spent a great deal of time over the last few weeks studying how you can properly structure accounts to have all of your money fully guaranteed. And here’s the one single resource that I found infinitely useful: The “edie” calculator on the FDIC Web site.

Simply plug your accounts into this calculator, and it’ll show you exactly what is FDIC insured and what is not FDIC insured. Then, you can easily correct any un-insured monies in a way that protects everything that you have deposited (by adding beneficiaries, re-structuring account “language,” and things like that). It’s truly a wonderful tool, and I urge you to use it if you fear that any of your money is exposed. Financial planners will charge you tens of thousands of dollars for this information (trust me, I’ve seen them do it!), but I’m showing you how to do it yourself for free.

On that note, let’s get into this week’s pick.

Based in Perth, Australia, Samson Oil & Gas (SSN – AMEX) has proved and probable reserves of 494,200 barrels of oil and 36,936 million cubic feet of gas. But as Mark mentioned above, these figures could drastically change over the next 10 to 14 days.

You see, on Wednesday September 10^th, Samson announced that they’ve finalized drilling on their Sabretooth well located in Brazoria County, Texas. Now that the casing and cementing operations have been completed, that means that drilling can begin. And in fact, a drilling rig was demobilized on September 5^th to run the necessary completion tubing. These operations are expected to begin on September 18^th, and they are projected to take approximately 7 days.

At the end of this time period, Samson estimates that they’ll confirm proved recoverable reserves associated with the discovery between 12 and 17 BCFE, which could amount anywhere between $6.2 million and $7.4 million (utilizing current NYMEX forward pricing forecasts). When these figures are confirmed and announced, shares of SSN could be in for quite a powerful upside pop. And quite simply, that’s the profit opportunity surrounding today’s newest small-cap play.

Now, as a basic company description, SSN engages in the exploration, development, and production of oil and gas properties in the United States – with various levels of ownership in the following properties:

100% Working Interest

• Brown’s Ranch project, consisting of 12,000 acres.
• Greens Canyon Gas Field, consisting of 1,200 acres.

50% Working Interest

• Baxter Shale Oil project.
• Codell Sandstone Wet Gas project.
• Hawk Springs project.
• Niobrara Formation Oil project.
• Gold Coast Coal Bed Methane project.

37.5% Working Interest

• Amber Field, consisting of 6,000 acres in Oklahoma.

34.5% Working Interest

• North Stockyard project, consisting of 3,303 acres.

25% Working Interest

• South Goose Lake prospect, consisting of 2,480 acres.

21% Working Interest

• Jonah Field, located in the northern part of the Green River Basin.

18.2% Working Interest

• Look Out Wash Field, located in the Washakie Basin.

From a chart perspective, the stock has been all over the map. Shares hit a new 52-week high on January 22^nd, 2008 at $19.90. But eight months later, shares have now hit a new 52-week low at $1.01 on September 15^th.

With powerful news expected to come out within the next week, buying this low looks to be a smart and savvy move. Therefore, as a pure news-driven play, let’s follow Mark’s guidelines and buy shares of SSN under $1.20. Then, immediately issue a sell order at $2.40. That way, you’ll lock in a fast 100% winner!

PLAY: Buy shares of Samson Oil & Gas Limited (SSN – AMEX) at or under $1.20, good for the week. Immediately place a “good until canceled” sell order at $2.40.

Sincerely,