Financial Press: Scout Set to Solve Big Oil’s Biggest Problem

Scout Exploration (OTCQB:SCXN - News) is now moving to commercialize a technology that will help the world’s largest oil companies dramatically reduce the threat of oil spills.

At stake: billions of dollars, energy security, and some of the most important and environmentally sensitive regions of our planet.

The Opportunity

Scout, a publicly traded company, gives the average investor an opportunity to participate in the financially lucrative energy future. With a market cap well below 10 million dollars, this venture class company is on track to quickly emerge as a leader in the oil services sector, with their system the IDS Oil Spill First Response System.

The Decade’s Hot Sector

Investors have consistently found outstanding investment opportunities in the oil service sector.

Take the two leading oil service companies.

Schlumberger (NYSE:SLB - News) shares have more than tripled in the last decade. And Halliburton (NYSE:HAL - News) shares have risen from less than $10 to recent highs of $50 per share.

But the real winners have been in the tiny companies that help oil companies out.

Take a look at Tenaris (NYSE:TS - News). It’s a company that makes tubes used in oil drilling. Its shares have soared from less than $4 to an all time high of more than $72.

Tenaris isn’t alone in making its investors rich off helping oil companies.

There’s also drilling service and equipment provider Weatherford International (NYSE:WFT - News). Its shares have climbed from less than $2 to as high as $50.

Again, there are plenty more of them just like these.

For example, Oceaneering (NYSE:OII - News) helps oil companies find and develop offshore oil. Its shares have risen from a low of $3.25 to a high of $55.00.

Then there’s Carbo Ceramics (NYSE:CRR - News). It helps make the solutions used in “fracking” to unlock oil and gas trapped underground. Its shares have risen from lows of $12 to a recent high $160.

There are dozens more just like these throughout the oil service sector.

Cost of Oil Spills: Tens of Billions

$40 Billion—the reported cost of the BP Gulf Coast oil spill, to date.

But the nominal cost of cleaning up a hydrocarbon disaster only reflects a part of the damages, longer term.

Degradation of marine environments, loss of wildlife diversity, destruction of fisheries and livelihoods… these factors may not enter into the equation until years or decades after an incident.

Add to that the increased regulatory scrutiny following an event, new legislation, higher insurance costs, dropping share price, litigation costs, fines and fees, and consumer backlash and it’s clear—the damage from one spill spreads faster than a slick over rough seas.

Some 20 years ago, the cost of cleaning up the Exxon Valdez spill reached a nominal $3.8 billion. Yet more than 20 years later, lawsuits persist.

Big Oil Can’t Afford Another BP Type Spill

In calculating the true cost of the British Petroleum Deepwater Horizon Spill, American researchers include the following:

405,000 people and 100,000 businesses made claims for damages, potentially $25 billion in total.BP paid $713 million for lost taxes to various states.Oyster beds decimated by as much as 50% could take up to 10 years to recover.70% of consumers polled expressed concern over Gulf Seafood contamination, and 23% reported reducing consumption due to safety concerns.Oxford Economics pegged damage to Gulf Coast Tourism at between 7 and 23 billion dollars.Wildlife destruction amounted to 6,045 bids, 609 marine turtles, and over 100 sea mammals. Many carcasses were simply never recovered and dolphin fatalities related to the spill may be 50 times greater than the number of carcasses recovered.Over 1,000 miles of shoreline were heavily or moderately oiled at the spill’s peak.Over 88,000 square miles closed to commercial and sport fishing—an area equivalent to the sate of Utah.Oil covered approximately 40,000 square miles of the Gulf

Scouts IDS early response system can shrink the scale of oil spill damages by getting to and stopping the rapid spread of an oil spill much faster, compared to current methods. The savings will be measured in the billions of dollars.

Massive Stakes

Here are some of the worst oil spills in history:

The Exxon Valdez
The Exxon Valdez oil spill in Prince William Sound, Alaska was the largest oil spill in U.S. waters. Approximately 250,000 barrels of oil spilled into the ocean. Despite attempts to use dispersing agents and oil skimming ships, a large amount of the oil washed ashore in the Sound and in nearby islands. The public was appalled by the damage to the pristine wilderness in an Alaska. They demanded a thorough and costly cleanup, beach by beach. In addition, valuable Alaskan fishing waters were heavily polluted.

Exxon paid more than $3.8 billion in clean up and damage costs and $500 million in punitive damages; lawsuits against the oil giant proceeded for 20 years following the accident. Exxon was originally ordered to pay $5 billion in punitive damages, but that the figure was successfully reduced through a series of appeals that brought the case all the way to the U.S. Supreme Court. More costly than these explicit pay outs, however, was the loss to Exxon in terms of its reputation in the marketplace. Exxon now ships its oil through a subsidiary which uses a different name in the hopes of avoiding further damage to the Exxon brand if there is another accident in the future.

The Ixtoc I Spill
The 1979 Ixtoc I Spill is an interesting case because the circumstances are extremely similar to BP's Deepwater Horizon. Just as with Deepwater Horizon, Ixtoc I was being drilled when it suffered a catastrophic wellhead blowout. Oil and gas fumes flowing out of the well exploded, causing a fire on the drilling platform and leading to its collapse.

The flow of oil from the Ixtoc I well could not be fully stopped until nine months later, after a relief well was drilled. Before it was capped, the well released approximately 3,500,000 million barrels of oil. This makes it the largest accidental oil spill in history. This oil spill is exceeded only by the intentional spilling of around 8,000,000 barrels of oil into the Persian Gulf by the Iraqi army in an attempt to discourage an American seaborne invasion in the 1991 Gulf War.

A final accounting of the total cost of the Ixtoc I oil spill and its cleanup could not be found, however, an economic impact study conducted for the U.S. Bureau of Land Management speculates that the spill was probably the most expensive oil spill in history at the time. Backing this assertion, the report cites cost figures which would indicate a total cost estimate of approximately $1 billion for the lost oil, well capping operations, cleanup efforts and pending damage claims. Notably, these costs were significantly less than those of the Exxon Valdez because less of the oil washed up on shore. Also, oil spills tend to be less expensive outside of U.S. waters, because the U.S. political climate is such that citizens demand extraordinary measures to repair damage to fishing waters and to coastal environments - as well as reparations for the damage caused.

Those are just the big oil spills. There are dozens and dozens more.

Consider this. Just a few weeks before the BP Horizon spill took over the headlines, an accident in the Port Arthur, Texas released 462,000 gallons of oil into the water. Only about 10 per cent of the oil was successfully recovered. The rest was dispersed in the surrounding waters.

That “small” just isn’t news. Sills like that happen all the time. Between 1976 and today there have been 25 major oil spills and nearly 100 smaller oil spills.

All of them have been enormously costly. But they don’t have to be so costly. And that’s why Scout Exploration intends to make future spills virtually non-news events.

Scout Has the Billion Dollar Solution

An innovative oil spill remediation technology, the IDS Oil Spill First Response System has been under development by IDS Offshore Inc. at the Canadian National Research Council Institute for Ocean Technology, St John’s, Newfoundland since 2008.

The system leverages existing infrastructure and training, and provides significant advantages in oil spill remediation because the Unmanned Spill Response Vessels (USRV) are engineered for deployment from the air.

Time to spill is the critical factor in slowing or stopping oil spill spread.

The IDS Oil-Spill Response System minimizes critical time to first response, representing an order of magnitude advantage over current methods.

For example, an oil spill that would take nearly four days to reach by current, ship-deployment methods could be reached within four hours by air, amounting to a dramatic reduction in spill spread.

Deployed from strategic air bases by aircraft, with continent-wide coverage of ocean and inland waters, the IDS system significantly reduces critical time to initial containment, and minimizes oil spill spread more effectively than anything currently available, and forms a continent-wide, rapid-response oil spill safety net.

Response Ready

USRV modules compatible with existing transport aircraft systems are stored at key locations, ready-to-load for deployment to spill locations, day or night, anywhere.

Speed

Air-deployment systems for front-line military, naval, coast guard and commercial operations put required equipment and resources where needed, quickly. Using these same techniques it is possible to put more oil-spill response equipment into action, more quickly than previously imaginable.

Scale & Flexibility

With multiple USRV in various configurations stationed at key air bases, overwhelming multi-layered containment becomes possible. USRV configurations will include deep-sea at-source containment, coastal barrier containment, and fresh or inland waterway containment.

Continental Response Network

Based at strategic locations, the IDS Oil Spill Response system forms a coastal safety net to provide a national or continental network of first response oil spill containment technology. Using existing naval and/or coast guard facilities, along with commercial locations, the IDS system offers wide area mitigation to significantly reduce ecological damage and economic impact of oil spill incidents.

Technical Partners

The IDS Oil Spill Response System has been developed in close cooperation with industry and government to date, and we expect continuing interest from these sectors as the project moves through public market funding and development.

Three of Scout’s Most Compelling Attributes

In the end, Scout Exploration is a really simple and straightforward story any investor will quickly understand during the next major oil spill.

SCXP #1: Oil spills can cost as much as $40 Billion or More

SCXP #2: The potential of Scout Exploration is absolutely massive with the potential for a global coastline protection network

SCXP #3: It is a ground floor investment opportunity — Scout Exploration is currently valued at less than $10 million, but that could change quickly once the crowd learns about this exceptional opportunity.

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