OFF TOPIC for Steve:
I got out of this one ages ago. with a profit no less, but here you go Steve.
Mercantile International Petroleum Inc -
Mercantile International focuses on recovery program
Mercantile International Petroleum Inc MPT.UShares issued 42,521,4421998-12-17 close $0.01Friday Apr 23 1999Mr. G.H. Bowman reports Since the previous information memorandum dated March 4, 1999, Mercantile International Petroleum has been focused on the recovery program for the company, specifically engaged on three fronts: reduction of overheads and dealing with certain trade creditors, a solicitation campaign for industry partners as referred to in that memorandum, and the development of a plan to increase revenue from Peru and Colombia. As a result of actions taken since the beginning of 1999 to reduce overheads, the operations in Peru and Colombia are currently cash flow positive. The Cayman Islands head office which was opened last fall, where senior executives of the company were based, has been relocated to the quarters of Cayman counsel for the maintenance of its legal domicile. The Lima office is in the process of being relocated and shrunk with regard to personnel. The size and location of the Bogota office is currently being reviewed. The chief executive officer, together with the general managers of Peru, Colombia and Burma, as well as some technical personnel, have had 50 per cent salary deferrals imposed. Any free cash flow, besides that needed for maintenance of production, is being applied to pay down key accounts payable outstanding prior to the end of 1998. As a result of a solicitation effort to identify and secure potential industry partners for Mercantile's operations in Colombia and Peru, referred to in the previous information memorandum, the company has made contact with several companies which are in the process of completing technical due diligence. Current net interest production rates are being maintained at approximately 2,200 barrels per day, from Colombia (800 barrels per day) and Peru (1,400 barrels per day). This compares with approximately 2,870 barrels per day, from Colombia (500 barrels per day) and Peru (2,370 barrels per day) before El Nino struck in December 1997. The company has identified opportunities to rehabilitate a multitude of shut-in wells in Peru through workover or recompletion. This rehabilitation activity could take place over a 12-month period, resulting in a more than doubling of the total Peruvian gross (100 per cent) production, for an estimated cost of approximately $3-million (U.S.). The company has also identified a number of opportunities on ready to drill prospects in Colombia and Peru. However, any of the aforementioned activities would have to be financed through external means. The company is continuing its efforts to develop a gas power project to generate electricity, using gas related to existing wells in Block III. Based on a small sample set of nine wells tested out of over 200 wells (less than 5 per cent of the total existing wells in Block III in the fall of 1998, approximately 12.5 million cubic feet per day of deliverability was ascertained from three wells. Mercantile is considering a proposal from a local utility to supply gas from these wells to it, as well as other gas that could be brought onstream through recompletion of other wells. Mercantile still expects to stabilize the financial condition of the company some time during the second quarter of 1999, with a report to be presented to the debenture holders and the shareholders of the company for the annual meeting to be held some time during the fourth week of June 1999. (c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com |
