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STOCK RESEARCH: BECO Ticker: BECO Exchange: OTC:BB Company Name: BOYD ENERGY CORP. Street/Suite: 1000 BALLPARK WAY., #211 City/State: ARLINGTON, TX 76011 Phone: 817-469-8118 CEO: BOYD BRANCH Descr. of Bus: This is an oil company that doesn't drill for oil. They reclaim oil that is currently being taken out of the ground by pump-jacks at a more economical and therefore substantially lower cost. But first a little background - formerly a private company, BECO came out of a reverse merger two and a half years ago (they are not a startup company). They went public in April, 1998 and in a nutshell, have a new strategy, and the associated proprietary technology, to extend the economic productive life of stripper oil wells for their own use. Patents are unnecessary in their scenario, so competition is a non-issue. They've been in the R&D phase for the past two years and are now ready to go into production. Generally speaking, a stripper oil well is a well whose economic productive life has matured and is currently producing very little oil (less than 10 barrels a day). Currently in Texas and Oklahoma combined there are approximately 200,000 stripper wells. Over 85% of existing wells in Texas are considered stripper wells. BECO manufactures an ELD (Electronic Lifting Device) for their own proprietary use, meaning they are not in the business of selling their technology and they are not a manufacturing company. BECO operates a wholly owned, 17,000 sq. ft. manufacturing facility in Fort Worth, Texas. They make it and install it for their own uses - it's a completely internally integrated (no middleman) operation. BECO uses an electronic lifting device (ELD) that lifts the oil through cups in a bore hole rather than vacuuming it out with a pump-jack. The ELD is controlled by a Programmable Logic Controller (PLC) which allows the unit to function unattended. Here's the main point - the total cost to operate a well would be approx. $4 per barrel lifting costs as opposed to $11-13 for traditional pump-jack operated wells (for example, electricity for a pump-jack alone is $200-$300 a month, the ELD is $20-25.) The economics are simple - if oil is $12-14 (with a lifting cost of $11-13) a barrel, the pump-jack operator is not making money. BECO, at $4 a barrel lifting cost, is substantially increasing the profit potential. Pump-jacks are no longer needed and along with tubing, would be sold to generate additional cash since they would have significant cash value. All of this gives the company an "unfair advantage" over operators using traditional production methods. In order for the company to be a prominent player in the industry, they only need to acquire 2,000 wells (1% of the stripper wells in Texas & Oklahoma). This means that the company would be a producer of 5-6,000 barrels a day (2-3 barrels a day per well). Even at todays $14 a barrel price that's $2,000,000 gross per month once stage one is fully in place. Currently, the price of oil is very much now in BECO's favor. Key points: 1) basically BECO is a roll-up (consolidation) of the stripper well industry (which is a consolidation of mom and pop operations); 2) the company has arranged for the capital to implement the business plan thereby executing the roll-up; 3) the company is a beneficiary of timing. BECO is acquiring stripper well properties and with oil-well prices soft (around $14 a barrel) it works in the company's favor because they are getting a better buy because current prices are non-economical for a traditional pump-jack operator. Additionally, BECO owns its own operations company, which allows the company to handle its own field operations. Contracting with expensive outside service providers would no longer be necessary. Most of the problems found for stripper wells would be eliminated, i.e. parted sucker rods, tubing, or excessive salt water. This would greatly eliminate a significant operational risk and the associated repair costs. Gaffney, Cline ("the" internationally recognized industry authority) will be doing all engineering reserve reports for all property acquisitions. Michel T. Halbouty (internationally known geologist and petroleum engineer) is the technical Advisor for reserves and property acquisitions. Basically it's a win now/win later scenario regardless of oil prices. If oil prices go up - more profit to the bottom line, if down - the leases can be acquired for substantially less. The proved recoverable reserves that will accumulate on the books will be significant. Approx. Shareholder information: (per transfer agent - 6/2/98) Shares Issued: 8,935,107 (Total) - 5,716,638 (restricted shares) - 1,318,469 (closely held by insiders - per I.R.) Free/Trad. Float: 1,900,000 (approx.) Stock Price: Currently 1.43-1.62 /(since April - 1.94(high), 1.37(low) Transfer Agent: Signature Stock Transfer, Inc. Phone#: 972- 788-4193 Contact: Jason Impending News: The company is arranging major, permanent financing which will totally fund the acquisitions necessary to implement their business plan. Impending announcements are forthcoming. Lease acquisitions. Sec filing: Currently a non-reporting issuer. However, once BECO achieves the equity for a small-cap listing, a Form 10 will be filed. Management intends to have this accomplished by year end. Website: boydenergy.com Disclaimer: The above information was obtained from the company. Richard | ||||||||||||||
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