Remote loca­tions of Brazil’s Ama­zon have poten­tially large untapped oil and gas reserves, but lack of ade­quate infra­struc­ture to explore these resources have pre­vented suc­cess … until now. Oil and gas com­pany HRT Par­tic­i­pações em Petróleo S.A. has dis­patched more than 1,000 work­ers to dig exploratory oil wells in the region.

Brian Hicks, co-manager of the Global Resources Fund (PSPFX), recently embarked on a research trip to Rio de Janeiro to visit HRT’s head­quar­ters and oper­a­tions. He was kind enough to sit down with us to share sights and sounds from his trip.

Q. Why are these trips important?

A. Our invest­ment team trav­els thou­sands of miles around the world every year to find new invest­ment oppor­tu­ni­ties for our share­hold­ers. We also do our due dili­gence on indi­vid­ual invest­ments, par­tic­u­larly when it is one of our larger hold­ings, such as emerg­ing oil and gas com­pany HRT Par­tic­i­pações em Petróleo S.A.

This was the first time I vis­ited the company’s oper­a­tions in Brazil. I wanted to dis­cuss the progress with senior man­age­ment and see first­hand how the oper­a­tions have developed.

The trip under­scored the chal­lenges a resource com­pany faces when it sets up oper­a­tions in an envi­ron­men­tally sen­si­tive area. The first leg of my trip was to take a red-eye from our San Anto­nio, Texas head­quar­ters to Rio de Janeiro to dis­cuss fun­da­men­tals with exec­u­tives in their cor­po­rate offices. From there, I took another red-eye to Man­aus aboard a small air­craft which brought me to a land­ing strip where I jumped on a heli­copter to fly over the dense for­est of the Ama­zon. This was the only way to reach the var­i­ous drill sites to meet with tech­ni­cal personnel.

Q. What logis­ti­cal chal­lenges has the com­pany overcome?

A. The Solimões Basin is located deep within a remote sec­tion of the rain­for­est near the Ama­zon River, and HRT has had to haul in every­thing needed to develop and drill for oil by heli­copter or boat, includ­ing sup­plies, equip­ment and per­son­nel. They’ve also built liv­ing quar­ters for about 1,000 peo­ple who work in round-the-clock shifts tap­ping deep, rich oil and liq­uid zones.

Although this is a higher risk ven­ture, the pay­off may be big—HRT esti­mates there may be 541 mil­lion of bar­rels of oil equiv­a­lent (boe) of con­tin­gent resources. Daily pro­duc­tion could reach 50,000 boe by 2014. The company’s suc­cess hinges on its abil­ity to drill, but we’re excited about its prospects. Con­sid­er­ing the company’s small mar­ket cap­i­tal­iza­tion, pro­duc­tive wells could have a mean­ing­ful impact on the bot­tom line.

I’m con­fi­dent in the company’s abil­ity to pro­duce. Dur­ing my time in Brazil, I met sev­eral tal­ented indi­vid­u­als who hold PhDs, have expe­ri­ence work­ing in this area of the Ama­zon and many have worked for Petro Bras, the largest oil com­pany in Brazil. Tak­ing these trips, see­ing these oper­a­tions and spend­ing time with these expe­ri­enced peo­ple helps us under­stand the mag­ni­tude of HRT’s potential.

Q. What’s unique about the Global Resources Fund’s invest­ment in HRT?

A. We rec­og­nized the poten­tial in HRT early on. I’m proud that U.S. Global Investors was the only pub­licly traded, open-end mutual fund involved in the seed invest­ment phase, mean­ing we pro­vided a por­tion of the cap­i­tal for the com­pany to get its oper­a­tions off the ground, before it pro­duced any resources, and before the com­pany went public.

Q. Why is this impor­tant to shareholders?

A. With the col­lec­tive knowl­edge of resources, geol­ogy, min­ing finance and the asso­ci­ated risks, our invest­ment team has a long his­tory of iden­ti­fy­ing and invest­ing in these oppor­tu­ni­ties. We’re will­ing to deploy cap­i­tal and patiently wait for results. Our team can be nim­ble, find­ing remote areas of the mar­ket which may offer tremen­dous growth. For Global Resources Fund investors, this is a com­pet­i­tive advan­tage and dif­fer­en­ti­at­ing fac­tor, allow­ing us to his­tor­i­cally gen­er­ate alpha over the index.

Watch the video as Brian shares footage from the Ama­zon site.

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., and a Toronto, Canada native, which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure. The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories. Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.” He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies. Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications. Read more from the author/contributor here.

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