| Hello everyone. This is a stock that I put on my watchlist when it started to get action last June. Interesting junior in that it keeps growing it's cash position and production through some private partners that are paying for all the company wells. Interests are initially small but then double after the wells pay out. Recently the company completed a 5 well drill program and already announced a 4 well program coming shortly. Information below is based on their last quarterly financial results and management discussion. I think this will be one of the few oil juniors that will survive during the downturn and get lots of attention once other competitors go bankrupt.
K= Thousands
2012 Overall Profit: $73K
2013 Overal Profit: $67K
2014: Profit after 2 quarters: $612K
Symbol US: KFGRF CDN: KFG
Price: $0.08
Common Shares: 50,581,144
Insider Holdings: 16%
Financials ending October 31st 2014:
Assets
Cash: $ 1,836,298
Receivables: $403,296
Prepaid Expenses: $32,380
Reclamation Bond: $20,000
Property & Equipment: $1,222,247
Total Assets: $3,514,221
Liabilities
Accounts Payable: $726,247
Deposits from Co-Owners: $38,373
Total Liabilities: $764,620
Management Discussion and Analysis Highlights
The Company is a small independent energy company engaged in the development of onshore oil and gas reserves with activities concentrated in Concordia and Catahoula Parishes, Louisiana, Adams, Jefferson, and Wilkinson Counties, Mississippi and Comanche County, Kansas.
Overall the Company has recovered from giving up 25% of its interested in the Fayette Field wells at payout. Currently, with the MacNeil wells and Craig wells at payout, revenues are on a growth pattern again. The Company was able to grow just utilizing cash flow. Several new projects are in the pipeline and the Craig #3 well will payout in the next few months increasing that revenue stream. KFG will have no problems financing growth through its internal cash flow throughout the remainder of its fiscal year ending April 30, 2015. In addition, the Barnum #2 well is on production as of mid September 2014. The Craig #4 well was recently completed as a dryhole. With the Company’s current cash position and a quick ratio of 2.5, theCompany is in a good position to weather the current collapse in oil prices from about $84 in October 2014 to around $55 - $60/bbl at this writing and will still show positive cashflow. The Company’s operating cost per bbl is currently $18.85/bbl.
The Company reported net income of $611,881 for the six months ended October 31, 2014 compared to net income of $238,365 for the six months ended October 31, 2013, with the increase in net income a result less operating expenses plus better prices for oil and new oil from the Craig and McNeil bases due to increased working interest in the wells as well as total overhead charges remaining virtually unchanged.
The Company reported net income of $151,781 for the three months ended October 31, 2014 compared to net income of $124,840 for the three months ended October 31, 2013, with the increase in net income a result less operating expenses plus new oil from the Craig and McNeil bases due to increased working interest in the wells.
During the quarter ended October 31, 2014, the Barnum #2 well was completed producing in excess of 100 BOPD. The Company has a 9% working interest in that well jumping to 16% at payout. The Company plans to offset that well in February 2015 as well as drill two new prospects. Gross income from oil sales increased 15% in spite of declining prices.
Outlook
Production at Fayette is stable and has started a slow decline. With the Dale lease back on production and new production coming off the Craig and Parker leases, KFG will have adequate internal cash flow to develop existing leases as well as support several new prospects in the coming months. Unless the price of oil collapses, the Company will generate sufficient capital to fund its requirements throughout 2014 internally. The Company’s outlook for the next six months is positive. With a current ratio of 2.97, KFG is well positioned to proper during this period of much lower oil prices. At this writing, no projects will be put off or delayed. The Company anticipates its 2015 drilling program starting in February 2015.
Share Capital
The total number of shares outstanding as at October 31, 2014 and December 22, 2014, is 50,584,144. As of October 31, 2014 and December 22, 2014, there were no stock options or warrants outstanding. |
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