What is the primary industry Arcon is going to focus on?
Anything that is in the petrochemical industry, e.g. oil, natural gas, gasoline, marine and aviation fuels. This is totally different from the old Midland structure: a shareholder won't need to be concerned about whether we are looking at any casinos, no orange juice, no popcorn, nothing that is not directly related to either the upstream or downstream segments of the petrochemical industry. It's what we know and what we do. Speaking specifically of the Bob West field, there are risks as are always associated with any drilling venture, but they are managed risks within the domain of our experience and have a high reward potential, in the $300 to $500 million range.
Do you have a current business plan?
We have a pro-forma business plan on the Octane division only at this time, and we have recently expanded the Exploration and Production division and have potentially one more acquisition, so a more encompassing business plan is expected end of February, most likely close to the 28th.
What are the near-term objectives?
Our objective is two-fold: get the Octane plant up and running full production second quarter for the Octane division and close and re-work one of the existing wellbores in the Bob West field for the Exploration and Production (E&P) division, also a second quarter project.
What are the long-term objectives?
A shareholder should really look at holding the shares for the next year. The next 90 days are just the first step for acquiring assets and getting into position in both of these divisions. Bear in mind that we have proprietary rights in 134 countries and the United States for the octane enhancer in the gasoline industry and would expect that upon getting the first plant operational, a shareholder could expect a significant growth of the company. With respect to the Bob West field, it is one of the most remarkable fields in the United States with Arcon being basically the only non-NYSE company operating there. We expect some good revenues in the second half of the year, but in the mind of us as officers and directors of the company, our year is really going to begin taking off beginning July 1998 and a shareholder should really look at a year from then until June 1999.
We have made some money in 1997 and don't have to sell stock to keep our doors open, however with the magnitude of these two projects we are looking to raise some equity. We have some institutions that have basically offered 80% financing for 20% equity. What we are seeking to do is raise between 10 to 15 million dollars to do what we want to accomplish. Obviously, any time you sell shares it dilutes the company, but any equity we are looking to raise will be in the preferred, not in the common shares. The preferred has approximately 500,000 shares that have a year hold on them and another 300,000 are convertible to common in October '98, however they are being offered to high-profile industry type people who don't need to sell their shares. These people are not exactly institutional, but could probably best be described as individuals who have a very high net worth.
How much hard assets do you have in the company at this time?
The patents are evaluated at $15 million. As such, if we tried to sell them we might get $50 million, we might get $3 million. We have another $1.2 million in paid up capital and assets. The balance sheet shows $16.2 million in paid up capital and assets with $112,000 in liabilities as of December. It is not current, we are looking a little better than that at this point. |
