Harken Energy Corporation (HEC) Message Board

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Gold/Mining/Energy : Harken Energy Corporation (HEC)

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To: Rod Copeland who wrote (2277)	12/22/1997 9:35:00 PM
From: John S. Sturges	Read Replies (2) of 5504

A few thoughts on that 5% interest. The details are that ENCAP is run by Gary Petersen a Board member of HEC and he is very savvy. But, his 5% is only good till he has made a compounded rate of 25% and then HEC can pay him out in full either in cash or stock. There is no way to evaluate any of the fields on this basis as ENCAP only gets 5% of the returns until the target return is reached. Of more importance is that this type of financing is very, very cheap for HEC. Why do it? You do it because you believe in the management, you expect to be paid out in stock, very likely 3,000,000shrs at $10shr on $25 million invested and HEC doesn't have to bring in any other partners because they need the cash to drill. In other words, Gary Petersen doesn't want the company to share the large upside to others if it doesn't have to. I believe we should read this as a very bullish show of faith investing $25 million of a $480 million fund into one place. Best regards, John

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