Little Joe --
I cannot quote a particular UP news release or anything directly coming from any company spokesperson about a land deal. The company would never say anything about that until such a deal had been completed, IMHO. However, going all the way back to UP's Conference Call, January, l998, there have been references to the "leverage" that UP gets from 300,000+ acres of leases. During that call the possibility was presented that there might be 15 or 16 Jonah-type fields within that acreage.
And in emails I have sent to the Company I have asked if selling off some of the property might be a practical way to raise some real cash. In the replies I received I was never given a direct YES; however, inferences were made that I thought might mean that, specifically a reference to the Conference Call.
And there are a couple of examples of how companies are trying to raise capital by selling land with producing wells and proven reserves. Western Gas Resources, for example has been trying since December, l998, to sell its 11-12% stake in Jonah. I haven't seen anything that shows they've been successful, though.
And Pennaco (now PNO on the AMEX) late last year entered into a joint venture with CMS Oil and Gas whereby Pennaco received $28,000,000 and CMS got 50% of Pennaco acreage leases in the Powder River Basin (northeastern Wyoming, southeastern Montana). Pennaco also got access to pipelines and compression in the deal. By giving up half the pie Pennaco got cash and the immediate ability to drill hundreds of the shallow coal-bed-methane wells. Pennaco has gone from about $1.50, where RIS bought several million shares, to a high of $8.50.
If UP could duplicate the Pennaco/CMS venture by selling off, say, its Jonah wells (and the possibility of 40-acre spacing down the way), and raise the cash to fully fund developing of Mesa and Stewart Point, etc., by all means, UP, go for it!
Gerry Atwater |
