Storm Cat. See ya later. You really should have talked with Scott Zimmerman. Great stock. At any rate here's another great CBM company.
EXTRAORDINARY COALBED METHANE OPPORTUNITY-OVER 1 TRILLION CUBIC FEET POTENTIAL
Ride the coattails of 50 accredited investors purchasing $13 million of stock on January 13, 2005 and one of the largest multinational resource companies in the world that signed a letter of intent in December 2004 to JV and who will commit an additional $ 20 million for development. Company has not been on anyone's radar screen. There are TEN KEY reasons listed below of why to consider this Company.
The Company is BPI Industries (TSX-V: BPR U.S. symbol: BPITF).
BPI is an independent natural gas exploration and development company. The Company's focus is on developing and expanding its Coalbed Methane assets in the Illinois Basin. The Company represents a unique opportunity to invest in the development, production and growth of Coalbed Methane in the Illinois Basin.
BPI is developing one of the largest coalbed methane portfolios in the potentially rich Illinois Basin, with a total of 423,000 acres of coalbed methane rights ("CBM acreage") divided into five major properties. The company has the first producing project in the basin, generating 1.2 MCF per day from 29 operating wells. Wells tapping other seams should be online shortly, while 2005 will see drilling activity of 4 to 8 wells per month (close to 100 total). Pipeline crosses all projects, enabling cheaper transport and richer sales margins. High-profile venture partners are coming onboard. Management believes its properties contain more than 1 TRILLION CUBIC FEET of recoverable gas. Immediate goals include acquiring additional CBM acreage (800,000 CBM acreage under negotiation now) and more precisely delineating the existing resource.
Over the last couple years, the Company has grown its CBM acreage almost ten-fold from 43,000 acres to over 423,000 acres today making this one of the largest CBM projects in the U.S. The Gas Research Institute estimates that the Illinois Basin contains gross reserves of approximately 21 trillion cubic feet ("TCF") of natural gas. bpi-industries.com
*****WHY BPI Industries and WHY NOW?
1) Here is the KEY:
The Company believes the potential exists for recoverable reserves exceeding 1 TCF of natural gas from its existing CBM acreage. Why is this key? I estimate that a TCF could equate to a market cap value of anywhere from approximately $ 750 million to $ 1 billion depending on several factors including the price of natural gas. The company's current market cap is approximately $ 73 million. In addition, the Company is in negotiations to acquire an additional 800,000 of CBM acreage, which will only add to the above potential TCF (KEY). Does the Company have a competitive advantage to accomplish the acquisition of additional acreage? Read on.
2) Another KEY:
The Company can acquire additional CBM acreage for as low as $ 1 to $ 2 per acre (some parts are higher) in the Illinois Basin versus for example CBM acreage in the Powder River Basin that costs $ 100+ per acre. This is a substantial competitive advantage operating in the Illinois Basin.
In addition, since the Company is the largest CBM player in the Illinois Basin they have a competitive advantage (being the only producer in the Basin) with Illinois landowners who many times negotiate and receive up to 20% in royalty fees upon production. In addition, differentiating the Company within the Illinois Basin is the fact that it is currently is the only company commercially producing in-seam gas (for landowners this is very important).
3) Another KEY:
There are TWO major gas pipelines that cross ALL of the Company's CBM acres, providing a ready access to markets for future gas production. This is yet another competitive advantage since the Company is able to get its gas production to market in a very cost-effective manner.
4) Another KEY:
The location of the Company's CBM acreage puts it in close proximity to the second highest priced gas market in the US. Therefore the Company's gas marketing contracts net the Company a premium for its gas sales. I've heard as high as 12% higher.
5) Another KEY January 13, 2005:
The Company is not being recommended by any major newsletter. Thus the Company has been under the radar screen. However, because of the January 13, 2005 successful equity offering for $ 13 million among only 50 investors (average investment $ 260,000 per investor!!) this could change. This is extremely impressive since these are most likely sophisticated investors who probably did extensive due diligence. Thus investors can now ride the coattails of such investors with an investment in the Company. In addition, the largest oil and gas investment bankers in Texas, Sanders Morris and Harris assisted the Company in this transaction. Imagine the due diligence this company did on BPI. By the way, the equity offering at $ 1.25 U.S. per share with half warrant at $ 1.50 U.S. per share was oversubscribed beyond the originally contemplated US$10 million. bpi-industries.com This potential change was indicated in December 2004 by James G. Azlein, President "BPI's growth story is still largely unknown within the investment community. We believe that as we now start to raise awareness of the results and potential within BPI, we will be able to unlock the exceptional value in the Company."
6) Another KEY December 2004:
"There's no question. BPI is the largest CBM player in the Illinois Basin. The next 12 months will see the execution of a very aggressive development and drilling schedule. BPI has just today signed a Letter of Intent to enter into a Joint Venture with one of the largest multinational resource companies in the world." James G. Azlein, President of BPI Industries Inc., December 2004 One of the largest multinational resource companies in the world !!!!! This adds tremendous creditability to the Company and its CBM acreage.
wallstreetreporter.com
Once again investors can ride the coattails of one of the largest multinational resource companies in the world. bpi-industries.com
In addition it was stated in the press release, "The International Partner has experience and expertise in coalbed methane development and is currently utilizing and developing innovative drilling techniques that BPI believes are at the forefront of the CBM industry. The letter of intent outlines the basic structure for a 50/50 Joint Venture in all of BPI's Illinois Basin Projects except for the Delta Project and the Illinois Mine Gas LLC projects. The structure calls for a staged investment and development program that will be funded 100% by the International Partner with a total investment of US$20,000,000 over a maximum period of 24 months. From the date of the letter of intent through February 28, 2005 the parties have agreed to negotiate in good faith, complete due diligence, and seek to finalize and sign definitive joint venture agreements before January 31, 2005." Note that January 31, 2005 is almost here!
IMO the January 13, 2005 successful equity placement enhances the probability of this transaction being finalized. This was indicated in the January 13, 2005 press release:
"In addition to the an aggressive drilling schedule for the upcoming year, management is excited and optimistic about successfully completing its current discussions with its potential joint venture partner as well as opportunities to further expand its footprint in the basin." IMO the Company's greatest strength is the terms of the current financing of possibly $ 33 million ($ 13 million equity plus $ 20 million from one of the largest multinational resource companies in the world), Just brilliant! A couple of other CBM public companies have recently done "toxic" debt financings. Just crazy!
7) Another KEY:
The Company uses Halliburton Energy (the world's largest oil & gas services company) and Sproule Associates as part of their management team. There are no better firms in this country. In addition, they hired a former Halliburton Energy employee with extensive Illinois basin expertise. See BPI Expands and Strengthens Its Technical Team bpi-industries.com in addition the Company has an excellent advisory board with extensive CBM expertise.
8) Another Key the timing is right:
As stated in the January 13, 2005 press release it is an opportune time since the Company, with the recent positive events, is on the verge of a transformation: "The successful completion of this financing marks the beginning of BPI's transformation into a fully fledged exploration and production company. We are pleased with the receptivity of investors to our development strategy for BPI's Illinois Basin CBM assets. The capital raised will allow us to aggressively pursue the drilling opportunities on our current projects which have the potential to build meaningful values for our shareholders," said James Azlein, President and CEO
9) Another KEY:
"We expect to initiate production from 15 in-seam wells at the Delta Project and 6 mine gas wells at the Illinois Mine Gas Project any time now. The Company is anticipating both an aggressive testing program and drilling schedule of 4 to 8 wells per month in 2005. Close to 100 wells in 2005. The Jericho Project, the first producing project in the Illinois Basin, currently has a total of 34 wells, 29 of which are in production. Current production is approximately 1.2MMCF per day from one of three potentially productive coal seams, which underlie this project. Permeability from Jericho data seems to indicate commercial viability for the other projects also. The economics on the Jericho Project look very favorable. The website has a model using 40 mcf/d per well and a $4/mcf realized gas price, the payback per well of drilling, completion and infrastructure costs is 1.55 years. This is excellent and since natural gas is north of $ 6.20 the payback is probably sooner.
10) Final KEY:
IMO the Company has a very conservative balance sheet (no long term debt) and has been extremely prudent in its overhead incurred to date. The quarterly financial disclosures are on par with a fully reporting U.S. company. Perhaps better. They are just excellent. They track project expenditures and disclose salaries paid to officers. I have heard that they wish to seek a U.S. listing, either NASDAQ or AMEX. IMO the financials will enhance their chances. See financials here: bpi-industries.com
Company has one of the best CBM company websites:
BPI Industries Inc.
Suite 910, 510 Burrard Street
Vancouver BC Canada V6C 3A8
Phone:604 685-8688
Toll Free:1-800-803-3204
Fax:604 683-1797
Email:info@bpi-industries.com
Website: bpi-industries.com
Where discussed: stockhouse.com
Canadian Quote
stockhouse.com
Quote in U.S. Dollars
stockhouse.com
Shares Outstanding after January, 2005 placement: 40,733,003
Trading history--note low trading volume:
finance.yahoo.com
U.S. symbol: BPITF
Five project summary: bpi-industries.com
Management, Directors and Advisory Board
bpi-industries.com
News releases: bpi-industries.com
Key model showing proforma income from Jericho Project 43,000 acres
bpi-industries.com
Key article to read regarding the company--Wall Street Reporter Magazine
Interview with James G. Azlein, President of BPI Industries Inc., December 2004 "Our primary function as management of BPI is simple; increase shareholder equity."
wallstreetreporter.com
The above information is meant for any due diligence performed. This situation would be considered high-risk high-reward. Please do your own due diligence.
*****Why coalbed methane? Why now? U.S. Natural Gas Crisis
The investment thesis for investing in a coalbed methane company such as BPI:
"North American natural gas markets face a supply crunch that can be met in the near term only by increasing production from unconventional deposits. Production of natural gas from conventional sources in Western Canada and the lower 48 states has peaked, and faces a gradual decline, even as the growth in demand continues. AS A RESULT, NORTH AMERICAN COMPANIES WILL NEED TO EXPLOIT UNCONVENTIONAL SOURCES, SUCH AS COALBED METHANE." Gwyn Morgan, CEO EnCana Corporation
"First the energy sector in general and the natural gas sector in particular are likely to remain two of the strongest investment themes for the foreseeable future. Natural gas prices have been very strong and look to be trending higher." James G. Azlein, President of BPI Industries Inc
Matt Simmons' investment bank, Simmons and Company International, is considered the most reputable and reliable energy investment bank in the world.
When asked if there is a solution to the impending natural gas crisis, Simmons responded:
"I don't think there is one. The solution is to pray. Under the best of circumstances, if all prayers are answered there will be no crisis for maybe two years. After that it's a certainty."
Go listen to this interview or read the excellent book---he believes building multi-billion LGN terminals is absurd because of long term limited supply of world NG and expense involved in transporting and storing. I guess they also make great terrorist targets and no one wants them in their backyard.
High Noon for Natural Gas: The New Energy Crisis
Darley, Julian
click on real player
financialsense.com
Other Reasons:
1) There is no OPEC to solve the North America natural gas supply problem 2) Problem will last for Years since LNG supplies only a tiny portion of US supply and there is no way to ramp up for years. 3) Natural Gas demand by new power plants coming online is skyrocketing-this was a result of a 1998 government report that forecasted ample supply of natural gas for years to come 4) all the reasons listed in the best interview and analysis I've ever seen: An Interview with Andrew Weissman by Bill Powers, Editor Canadian Energy Viewpoint January 4, 2004
financialsense.com
2) The government's national natural gas policy is to hope for warm winter weather and cool summers. This is doomed !
3) Warren Buffett moved on the area in 2001 and now controls approximately 8% of the US natural gas pipelines
Bottom line is there is no solution to solve the North America natural gas supply problem. This is the reason to focus on this area for investment. |
