A MUST READ: ** JACK WHEELER'S SPEECH TO SHAREHOLDERS **
Annual Shareholders Meeting Remarks
By
Jack E. Wheeler, Chairman, President & CEO
Shareholders; Guests; Ladies and Gentlemen:
I would like to welcome you to Cotton Valley Resources? last Shareholders Meeting. My name is Jack E. Wheeler and I am the Chairman, President and CEO of Cotton Valley. After your vote today, our new Corporate Name is now Aspen Group Resources Corporation. I would like to say though that much more than just the name has changed. Aspen Group Resources brings with it a change in Corporate Philosophy, a change in the Fundamental Mission of the Company, a change in Operating Strategy, and as you have seen, a change in the Economic Fortunes of our Company and our Investors. With the name change, we add a new Corporate Identity to the era of growth and success we began more than 4 _ years ago with a vision and the founding of Crown Partners and which we are continuing with the merger with Cotton Valley Resources Corporation in the Summer of 1999.
I stand before you today and say to each of you that we feel we have come a long way toward accomplishing the goals sat forth in our original corporate vision. We believed it was possible to build a successful, profitable Oil and Gas Company through acquisitions and then the exploitation of these Properties which is contrary to the industry and economic trends of the more traditional, and riskier, means of exploration. We believed it was possible to limit certain economic and industry risks inherent in the energy industry and maximize our return by broadly diversifying our Properties and Holdings both geographically and geologically. We believed we could control other risks of the business and enhance our earnings by spreading our Ownership Interest among a large number of Wells and distributing our value among many Wells rather than concentrating value in a few. We believed we could attract Investors, Public and Private, with this steady, conservative, and profitable Business Philosophy and Plan, and with their help, grow this Company into a major power in the Oil and Gas Industry.
All of the things we originally believed we could accomplish, we have found to be true. We have and continue to be in the process of achieving each of them. In 1996, Crown Partners made its first acquisition which was from SMR Property Management consisting of 223 Oil and Gas Wells located primarily in Oklahoma and Texas. Through exploitation of existing industry and economic conditions and trends, Crown added significant reserves and cash flow to its portfolio without the risk of exploratory drilling. In fact, we have been commercially successful on 58 of 59 Wells since our beginning including 18 of 18 last year and already I am proud to report we are Four (4) for Four (4) in this Millenium. Aspen Group Resources continues this strategy today. We are currently evaluating nine drilling proposals offsetting our present production.
On September 16, 1999, prior to the merger with East Wood Equity Venture, Cotton Valley Resources had less than Ten (10) Producing Oil or Gas Wells. Aspen Group Resources today has approximately 500 Producing Oil and Gas Properties located in Alabama, Arkansas, California, Louisiana, Mississippi, Montana, Oklahoma, Texas and Wyoming. These Properties produce oil and gas from geological strata ranging in depth from 2,500 feet to 24,000 feet. Through broad geographic and geological diversification, Aspen Group limits the risks associated with a concentration of producing assets in any one area and can benefit by variances in the oil and gas markets from one area to another.
Among the 500 Producing Properties we hold title to, Aspen Group Resources percentage of ownership interest ranges from 1% to 100%. By spreading our ownership interest over a large number of wells and limiting the percentage ownership interest proportionate to the reserves in each well, the Company is less affected by the loss of production or increases in costs of production from any Individual Well or Group of Wells.
As our Shareholders and Investors have become acquainted with my Staff, our Business Strategy and our Business Plan, we have seen them once again begin to be enthusiastic Buyers of our Company?s Stock. Additionally, as we have met with Brokers, Analysts, and Investment Bankers all across North America, we have been gratified by the reception we have received and their desire to help us continue our success. Based on these experiences, we are confident we can meet any requirement we may have for additional capital and we will continue to investigate different means of capital formation.
We believe this vision that began with the formation of Crown Partners will soon pay even larger dividends. With the carefully considered steps we have taken since the inception of our Company in 1996, the validation of our methods by our success to date and with the culmination of the steps taken here today, we believe Aspen Group Resources Corporation is prepared to exceed the greatest expectations for success reach of even our original dreams. The success I can report today has been the conceptualization of our vision. We are committed to the continuation of this Business Plan and Strategy.
I would now like to discuss the accomplishments and success enjoyed by our Shareholders for the first Five Months our Business Plan and Strategy has been applied to Cotton Valley.
I felt our first task, upon assuming Management of Cotton Valley, was to implement our extensive Planning, Forecasting, and Budgeting Model as the bedrock of our Management Philosophy. This Model allows us to carefully plan our growth and to make certain we always have the ability to fund it. The discipline our Model provides runs across each of our operating and spending categories. The Process includes a cost avoidance / cost reduction program which has as its purpose to drive down and minimize our general and administrative expenses while freeing up capital necessary for acquisitions, mergers and the development of reserves. During our first five months at Cotton Valley, we were able to cut general and administrative costs by more than $1 million annually from the prior historical average, reduce the size of our administrative staff and significantly reduce the debt. Peter Lucas, our Vice President and Chief Financial Officer, a CPA with more than 20 years experience in Tax and Securities is responsible for overseeing this effort. Our Comptroller, Connie Garrett, who comes to us with more than 30 years of oil and gas industry experience, complements him.
Your Company has experienced its first Two Consecutive Profitable Quarters after suffering continuous losses for the first Five Years of its existence. The Company?s Net Earnings for the first Two Quarters, the First Half of our Fiscal Year 2000, exceeds the entire value of the Proved Producing Reserves of Cotton Valley on September 16, 1999, the day prior to our merger.
Almost Five (500) Hundred Producing Oil and Gas Properties and an equivalent number of offset locations have been added to Aspen Group Resources Inventory which can be conservatively valued at up to than $100 Million. What our Shareholders have seen is an increase of almost $100 million over the net worth of Cotton Valley prior to the acquisition of East Wood Equity Venture effective July 1, 1999. I am proud to report that we have drilled and completed Four (4) of the Thirty (30) Increased Density Wells the Company plans to drill in 2000 and are in the process of completing Four (4) Acquisitions.
Management has identified and begun negotiations on Seven (7) Acquisition Candidates which are estimated to cost approximately $20 Million with a potential future value to Aspen Group of more than $100 Million. We will be ably assisted in these negotiations by Sam Hammons, our Vice President and General Counsel, an Oil and Gas Attorney with over 25 years experience in the Industry who can not be with us today because of a prior scheduled meeting in Washington D.C.
The debt burden inherited from previous management has been significantly reduced. I am also proud to report that on February 25TH, we executed a Global Settlement Agreement with Palisades Asset Holding Company, L.L.C. which relieves Aspen Group Resources of any future liability related to their prior claims against Cotton Valley. Fixed operating costs have been reduced and economizing efforts continue.
I believe you will agree that this is quite a record of accomplishment after only Five Months work by the new Management of Aspen Group Resources. You may correctly ask: How do we keep this up? How do we build on this record?
Our Business Strategy for the remainder of 2000 and on into 2001 is as follows:
Complete the remaining Twenty-Six (26) Increased Density Wells scheduled in 2000, drill up to 50 more in 2001 and begin development of the Means Queen Property in Andrews County, Texas. We are scheduled to have closed all of the four acquisitions within the next week which we will be reporting in the immediate future and with the Shareholder approval given today, we will begin negotiations with Mr. Farrell Kahn this afternoon and I believe we will be able to consummate the acquisition of the other Fifty (50%) Percent of East Wood Equity Venture within this week. We are also targeting to be able to close on Five of the Seven Acquisitions currently in negotiation. Ron Mercer, our Executive Vice President and Chief Operating Officer, has been responsible for the evaluation of new properties considered for acquisition and for planning, developing and managing the most economical, efficient and profitable means of producing our Oil and Gas Reserves. I am extremely blessed to have someone as talented, experienced and knowledgeable as Ron to be my friend and know that the Shareholders are safe having Ron managing our assets.
In the future, it is our goal to be able to utilize Aspen Group?s equity and cash flow from these acquired properties to fund at least 75% of all acquisitions. It is important for the Company to obtain a minimum 25% Annual Growth Rate in Net Cash Flow Per Share as a fair measure for our Shareholders to gauge our success.
We must continue the planning cycle begun in 1999 and 2000 for 2001 and beyond. We must continue to pursue additional investment banking relationships to further enhance Aspen Group?s ability to grow rapidly and take advantage of merger and acquisition opportunities and we must explore all new opportunities for capital formation available to the Company.
Most importantly, we must continue to work to MAXIMIZE SHAREHOLDER VALUE.
As you can see, we are already well into our Strategic Plan for 2000 and we are hard at work planning and budgeting for 2001 and beyond. One of the most important, and often the most misunderstood, jobs for the Management Team of a publicly owned company is communicating with Shareholders and Investment Professionals. Aspen Group Resources is committed to timely, meaningful and above all, accurate communication with our Shareholders, Stock Brokers, Analysts and Fund Managers. You have already seen the start of our commitment.
Aspen Group Resources new website: www.asrgc.com is operational and all traffic from our old website: www.cottonvalley.com will be transferred to our new web site. We have discovered that for many of our Shareholders this is the best means of communication. We are preparing and disseminating news announcements and required SEC filings in a timely fashion and including them in our web site. We have also got a toll free telephone number which is 1-877-504-8500 for our Shareholders to call.
We have an Investor Relations Professional, Mike Branch, our Director of Communications who is a Member of the Senior Management Team, on staff to answer Shareholder and Investment Professional questions. I also have as a confidant and advisor, Mr. Roger Shelley who brings over Thirty (30) Years of Investor Relations experience and contacts to our Team.
Additionally, we are planning Broker and Shareholder Meetings in many of the major cities and areas of Aspen Group Resources Stock concentration in North America in order to keep all of you better informed on the success of the Company. This speech will be included in the web site and there will be a Post-Shareholder Meeting Report available to any of the Shareholders who were unable to attend.
I hope that I have given you an idea of Aspen Group Resources Corporation?s Corporate Philosophy and my vision of the future of our Company. We believe we have the best Plan, the best Business Model, and have assembled the best Team of Professionals available in the Oil and Gas industry in order for Aspen Group Resources Corporation Shareholders to be successful. We believe that our strategy of acquisitions and exploitation of existing properties and reserves rather than exploration of unproven areas is right for our Company us and right for our Shareholders. We believe that the timing and our ability to take advantage of industry and economic conditions is right. We believe we are approaching the capital markets at the right time with the right message to create the capital we need to grow. We believe that our attitude of commitment and disclosure to our Shareholders is right for all of us. I hope you agree. The success of Aspen Group Resources Corporation depends on this vision, its execution and our Staff of Professionals. I believe our success is assured.
Thank you, for attending Aspen Group Resources Corporations First Annual Shareholders Meeting.
Sincerely,
Jack E. Wheeler
Chairman, President and Chief Executive Officer
Aspen Group Resources Corporation |
