"Do you agree that the BV is at least $9M (off the 10Q)?"
I honestly do not know. It is not necessarily true because it is stated in the 10Q. There are so many different methods of valuing oil reserves that it could be a far lower number or right on. This is where management's credibility comes in.
If you look back at all of the previous press releases issued and claims made by Oilex management regarding acquisitions and production, you will see that Oilex does not have a very credible track record. As an example, take the Geronimo Reserves deal. Oilex claimed it had purchased (note: purchase, not an option to purchase) Geronimo for $15,000,000. It claimed that Geronimo had 500,000,000 million barrels of oil and 4 « trillion cubic feet of gas in reserves. To my knowledge, Oilex has never issued a press release stating that the deal was dead. There have been opinions by posters to this thread that the deal is on "hold". Of course, the whole concept is ludicrous. If Geronimo really had those kinds of reserves, EXXON, CHEVRON, MOBIL, etc. would be willing to pay BILLIONS for it.
Check back to the production levels that the company has been projecting since late 1995, and then compare what was actually produced. I believe that you will find that the actual production levels have been far less than what was projected. I do not mean less by a statistically small number, but less by an enormous amount. You could check with Eric Maggard on this point, as he is very knowledgeable on this matter.
It appears to me that the cost to the company of raising $1,100,000 was an additional $550,000. It appears that all of the money was ultimately raised through the sale of common stock causing significant dilution of shareholder interest. Therein lies the relevancy of my questions. If the company has all of these recoverable reserves, why would it have to resort to such an expensive financing scheme? It seems to me that someone would be eager to lend money to Oilex on the basis of these assets (if the evaluation is accurate) at a far more advantageous rate. Therefore, one has to ask what is the reason for this type of finance? In addition, we have seen statements to the effect that Mr. Burditt has been putting millions of dollars of his own money into Oilex and that without his further contributions the company would not survive. If that is true, then why do the apparently expensive debenture financing? Moreover, if the new wells at Big Foot are so successful, then why not let production from the first pay for the second, and so forth?
I find OFW's post regarding the financial statement quite relevant. If the $1,100,000 financing from the debenture was received by Oilex as indicated by the 10Q, then where did the cash go? We know that they were not drilling wells in Big Foot in September of 1997. The 10Q shows a cash balance of $25,271. Where is balance of the $1,100,000?
If you do not see the relevance of these questions given the past credibility problems of the company, that is your choice. However, I believe that many others do see the need for the answers to questions of this nature. My guess is that we will see an increase in the authorized number of shares in the near future. |
