Hello all: In my opinion, this news is very good. North American Exploration has the capital, it has the ideal farm-in partner, UPR, and most importantly it has the technology. They are going to be very busy over the next two years.
<<The Company has recently completed a Private Placement of its securities for $1,000,000 and is contemplating an infusion of $2,500,000 for exploration with Patroclas Finanz AG, Zug, Switzerland under its Farm-in Agreement with the South Eastern Colorado land owner. Fifty additional wells are scheduled for drilling over the next 24 months.>>
There is life beyond Rother 1 & 2. If it costs @$300K to drill a well, NAE now has enough cash to sink twenty of them in cooperation with UPR.
The technology obviously works, or else why would UPR continue the farm-in agreement? And why would Patroclos come up with an additional $2.5mm?
Our problem as investors in NAE is that we have to respect the rights of UPR regarding the release of information. We may never know what was found in well 1 & 2, but we will see it eventually in our 10-K. BTW, it makes absolutely no sense to declare a tight hole if nothing has been found.
AS for Dr. Stamm taking the reins as CEO, who could be better. His close ties to Patroclos and Zurich Holdings and his excellent relationship with UPR make him the ideal leader for the upcoming drilling campaign. He is a no BS scientist who has an excellent nose for oil.
My concerns:
I would like to know if they are going to maintain a 50/50 relationship with UPR regarding the farm in revenues. This was not clearly established in the PR release dated 12/16/96.
I would also like to know when UPR reimburses NAE for "all exporation costs (@$800K] and 50% of drilling costs". That would give us something called earnings which we all know and love. It would also give us more cash for exploration.
Once, Rother 1 & 2 are completed, I would like to see some realistic earning projections released by NAE. Montgomery's strike me as aggressive. ($16.2mm Ann. earnings with a share price of $8.) We need to start projecting 1997 earnings based on real oil/helium revenues so that we can place a sensible valuation on this company.
Now let's see what happens to the share price. This should be an interesting day.
marty |
