Dear Investors and friends,

I am writing to tell you about what I believe is one of the most dramatic opportunities created by the recent stock market collapse. What I have to say to you today is a big reversal from my advice in my December 2007 issue when I told my subscribers to anticipate a selling climax and a major buying opportunity. The ensuing year’s history-making corporate collapses have now driven share prices so low that, by virtually every market metric, the majority of equities are at extreme-value, absolute bottom of the market indicating lows. When share prices are this discounted, the only thing we have left to fear is fear itself. So for the record I want to emphasize that I believe a historic buying opportunity has arrived and the time to aggressively act is now!

The finite details of why the collapse (and buying opportunity) occurred will be a matter of debate for years to come. Suffice to say that prices have been driven lower by massive waves of forced selling. More important is that, as our more seasoned readers will recall, similar opportunities have been created in the past. Emotionally investors feel the same: terrified, depressed and for most of us the overwhelming urge is to do nothing; but to wait and hope... I am not going to do this and I think a little historical perspective will more than justify why. So let’s first talk about other periods when the market was nearly as bad as this current market environment; that is, 1982 and 1987.

Déjà vu: 1982 Remember? In 1982 America’s unemployment was double digits; the economy was crushed. Consumer Price Inflation had rocketed to 14% while our country’s carmakers faced bankruptcy. FED chairman Paul Volker set short term interest rates at an astounding 21% in what turned out to be a successful effort to smother runaway stagflation. In the United Kingdom, unemployment rose to above 3 million for the first time since the 1930s. In reaction, gold began its excruciating descent from almost $1000 to just above $200. The stock market, like today, had all but collapsed.

Huge profits in a horrible market… So where were the fortunes made? Two great examples are at the forefront: Goliath and Golden Sceptre. They had the makings of super success stories and both rocketed between 1981 and 1983 from $0.40 to above $30 to reap huge profits for their early investors.

Each rose, despite the horrible economic conditions, over 7,000 percent!

Another company which provided huge rewards for investors was Corona resources. Between 1981 and 1983 its shares rose from $1.10 to $61!

The crash of 1987 (didn’t stop people from making millions)
Fast forward five years to the Crash of 87. The Dow had experienced its largest one day drop since 1929. Billions worth of investments were wiped out. Yet shortly after that market disaster many recall the fantastic rise of the Eskay Creek companies. That was only two years later! At their center was Consolidated Stikine.

Stikine’s share price rise was even more explosive: 10 cents to over $70 – an astounding 73,000 percent!

Most people were just trying to survive after the crash of 87, while some investors made fortunes.

The opportunity is now.
So what does that have to do with today? Well for one, times are easily as tough, in fact the latest headlines talk of unemployment being the highest since, yes, that’s right, 1982. And yes, like 1982, the stock market has crashed and it seems like virtually all investors have been crushed. Instead of inflation, this time the boogeyman is deflation. Similar to 1982, the world’s governments and Central Banks have finally recognized “the big risk” and are doing everything possible (including spending trillions) to eliminate it.

So what is my idea? Like 1982 and 1987, many stocks are down as much as 95%. We can buy exploration and development opportunities for next to nothing. But the real question is which ones have the greatest chance of rising that magic 1000% or more?

My four golden rules for finding hugely profitable investments in bear markets: From my experience the road to success in this business is finding great businesses: the ones that can make huge profits and grow dramatically even in today’s economic environment. But how can we be sure?

First: We need to prove what we see is true. That means our stock opportunity must have studies and endorsements of sophisticated engineers and professionals with impeccable credentials. All the better if it has a blue-chip big brother spending millions to develop its projects.

Second: We need to know the actual costs, and to be safe, they better be profitable at even lower prices than today’s.

Third: Great management is essential – it must have a serious track record, that is one of developing large projects.

Fourth: We need to know an approximate time line and that its shares are a bargain. There needs to be ongoing activity that will lead to recognition of its growth – no use having a great business if it’s going to take too long to develop.

So this brings me back to the title and what from my experience is an incredible opportunity as it more than fulfills these four golden rules:

“The greater the crisis the greater the opportunity”.

Golden Rule one: Make sure it’s real: As crude oil has collapsed and with it seems just about everything else, I take comfort in reading the work of Colorado based Gustavson and Associates, an engineering firm relied on by the IRS, oil majors such as Chevron and Shell and even the World Bank. (You can read about them at www.gustavson.com). “Gustavson has tabled a startling report on Manas Petroleum’s Albania project it’s a must read and I urge you to call me so I can send it to you. It establishes the even now extremely economic parameters for the project’s 3 billion barrel prospects. In early December as oil prices crashed below $50, oil major Santos said it would commit to phase two of Manas Petroleum’s Kyrgyz light oil project. This multimillion dollar project also has another highly respected engineering firm’s (RPS Scott Pickford) stamp on it. (I can send you that too) I think the combined opinions of Santos, Gustavson and RPS Scott Pickford more than establish how very real this opportunity is. There is more. Call me and I will send it to you. ”

Golden Rule two: Exceptionally economic, even at today’s low prices? In this research, Gustavson estimates that the cost of production for any deep oil developed from its 3 billion barrel light oil resource to be a mere $2 per barrel! That is a long way off the current oil price of $39 and I challenge you to find a junior with the potential to produce oil as profitably. Add to this the extremely robust economics indicated by Scott Pickford and I think we have a winner.

As if not already enough, Manas recently acquired a significant deep light oil discovery – and not in some despotic no-mans land (like Somalia) or in the incredibly expensive to produce Arctic or deep Atlantic . This oil discovery is onshore, right in the heart of civilized Europe.

The timing for investors on the lookout for bargains could not have been better as Manas announced its acquisition of two blocks containing an actual deep oil discovery (by Occidental Petroleum) right as the stock market crashed. These blocks are adjacent to Manas’ original Albania blocks. The announcement, as one would expect, was completely ignored, except by savvy investors on the lookout for exceptional opportunities. We know the light oil is definitely there. It is expected that the program will be farmed out and appraisal wells drilled beginning later this year. These are giant wells right in the heart of Europe that will be of historic importance to the region’s energy security. Knowing this I doubt Manas will remain a little known oil company by then.

In fact one of Manas’ partners, Santos, recently decided to spend millions more on one of the company’s projects even though oil had dropped below $50 per barrel. That was despite the fact that all around the world oil projects were being put on hold, but for Manas the opposite was true. Santos would only invest more money if the economics were extremely compelling. Therein is more evidence as to this incredible opportunity.

Golden Rule number three: The best management. This brings us to Manas Management. Manas CEO, Dr. Thomas Flottmann, used to be the Chief Structural advisor for Santos. He advised Santos regarding which exploration projects to pursue and how to maximize production. Prior to this he was the principal structural advisor to CRA, now called RioTinto; one of the world’s largest resource companies. While Manas’ partners Santos Plus Petrol (and another smaller but highly successful company Geopark) are managing its Central Asian and South American projects, Albania is under Dr. Flottmann’s direction. Also recently joining Manas as a director is Dr. Richard Schenz, the former CEO of OMV, Central Europe’s largest oil producer. The Albania project also has on its team top exploration managers from Shell, OMV and Occidental Petroleum. Knowing this, there is now no question that our first, second and third rules are more than fulfilled by Manas.

“The company’s projects clearly have excellent economics in the current environment; Manas has the solid endorsement of highly respected (arms length) professionals and its management is arguably among the world’s best.”

Golden Rule number four: Timing is everything. But what about the third rule regarding timing? Well, Santos and Manas have already put out a joint news release saying we should expect drilling to begin imminently. Some of the wells they plan to drill are within several miles of already producing fields. An earlier discovery on a prospect similar to what they are drilling (Minbulak) produced over 15,000 barrels of oil per day. That kind of potential is logical, as why else would a major like Santos quietly continue to spend millions of dollars on Manas’ project?

Manas has 25% of these wells and I think they alone are capable of dramatically moving its share price. But what about Albania and its $2 oil? Some of its prospects are shallow, that is around 3,000 feet deep, while the Occidental discovery where the company plans to drill appraisal wells later this year is considerably deeper.

Manas is in talks with potential partners on the Occidental discovery and all eyes will be on it when the company announces when it will start drilling wells to appraise the discovery. What do I expect? Consider that Continental Europe’s largest onshore oilfield is only a few miles away. Also consider that another smaller field, which like Occidental’s is deep, is about 20 miles south. When that field was discovered the first well blew out like Spindle-Top – It ran wild for two years at a rate of over 10,000 barrels of oil per day!

“When the first deep light oil discovery was made it blew out like Spindle Top and ran wild for more than two years”

So Manas fulfills Golden Rule 4: the very critical timing requirement

Why buy now? Yet another plus is that Manas shares are incredibly cheap courtesy of the recent market crash. Manas Petroleum’s market capitalization is currently less than what is being spent just to develop just its Central Asian project! Never mind its other four giant projects. To me that means its shares are bargain priced now. Knowing that Manas is entering its most exciting phase tells me it is an opportunity that is unlikely to last.

Remember Stikine and Golden Sceptre and the fortunes made right in the midst of the stock market’s and the American economy’s darkest hours.

Space is limited and what I have just written is just a sketch of what I think is a fantastic opportunity. What I write is logical, and as is necessary, ignores the nervousness of the times. (We prefer to follow Warren Buffet’s advice and are bullish when everyone is afraid and are afraid when everyone is bullish.) Buffet truly feels this is “one of the great buying opportunities of our lifetime.” In addition, recent Bloomberg data confirms that there is more cash available to buy stocks now than at any time in almost two decades. It is only a matter of time before some of this massive $8.8 trillion cash pile re-enters the equity market driving it substantially higher. It happened in 1982 and in 1987. You don’t want to be left behind!

Clearly you will need to know more before you invest. But I think from here it is also clear that Manas has the people and projects to make it a success and that the timing could not be better. So please give me a call so I can send you more information. I think the more you know the more convinced you will be.

Very truly yours,

 

Kevin McKnight,
President
Undiscovered Equities,Inc
1-808-404-8982