I met with the President of Fox, Don Holding, for a couple of hours on Thursday, Dec. 29,1999. I was impressed with him. He is very professional, suit and tie, extremely friendly, open and down-to-earth. He definitely has the "pedal to the metal". He's intensely focused on moving this company forward and quickly. This company is trading well below it's net asset value of .60/share.
The discussion opened with Don explaining that several strategic initiatives have recently occurred that have significantly changed the course of the company going forward:
1) Debt has been reduced by $2M to approx. 8 months of cashflow. There are no principle repayments due on the debt in 2000 giving them the ability to internally finance their plans in 2000.
2) They acquired Petrohawk Energy, gaining 180 BOE, and enabling the company to exit 1999 at approx. 450 BOE.
3) In the 4th quarter they drilled 8 wells at 51% interest including one successful horizontal oil well, two completed oil and gas wells.
4) They are currently optimizing another 8 wells which has increased production.
5) They improved their hedged position on gas from $1.85 MCF to $3.01/MCF as of Nov. 1, 1999 and $3.20/MCF commencing Nov. 1,2000 for two years.
6) Improved CFPS projection to .12/share for the year 2000.
7) The Trans-Canada Pipeline 21 year gas contract expired Oct. 31, 1999. They will achieve a big increase in revenue due to the change in the spot market price over the years.
8) They expect to drill 25 wells and rework approx. 15 additional wells in 2000.
9) They project a doubling of production by in 2000 to 1000 BOE through drilling and a producing property acquisition.
10) Net Asset Value Per Share is estimated to be .60/share based on $20 WTI and $2.75/MCF. Both are quite a bit higher at this point in time.
11) They have approximately 14,000 net undeveloped acres of land for upside.
12) An aggressive IR campaign will commence near the end of January in Western Canada. The focus will be on brokers and analysts.
Sorry about the delay, I've been really busy and out of town. I'm preparing two more posts, one focusing on the numbers and the other on the properties. |
