RE: What does Nag haveyou missed another bad point youcan. NAG has loaned KBC 400G of it's own limited cash and we don't even know if KBC can pay them back. Why is it not known if NAG will be paid back by KBC? FIrst of all KBC tried to raise money not long ago. They first offered 20mil shares at 5 cents/share with no takers then they reduced the share price offering to 2.5cents and increased the shares issued to 40mil shares. KBC managed to raise 113K from that offering, only 10% of the PP was filled. Shows how much interest there was in KBC. Also KBC owes 500G to some debenture holders that have a court order for immediate payment. So as far as we know these debenture holders could seize KBC and it's assets at any time. In one of KBC press release, they noted that the KBC borrowed the money from NAG in december to secure the San Joaquin oil exploration project. Here is an overview on KBC San Juaquin joint venture in a nutshell.
KBC is in a joint venture with Chevron, California oil and gas and Nomad Hydrocarbons. The deal was made with Nomad Hydrocarbons where KBC paid for Nomads costs for the first four wells for KBC to earn 6.25% of the project and in turn received Nomads(6,25%) cut of any revenues from production. Therefore KBC was going to receive 12.5% of any oil produced from the first four wells until Nomad repaid NAG for Nomads cost of the drilling operations. Then once Nomad paid KBC back for the drilling costs of the well then KBC percentage would go back to 6.25%. Sounds like a sweetheart deal for Nomad as they got KBC to pay for the first four wells with the option to pay KBC back for the cost of drilling the wells and in essence earn back 6.25% of any production. So I imagine if all of the wells were to be dry then Nomad would of just walked away without paying a cent for the cost of the wells. I should point out that the first four wells have been drilled and as of the last update from KBC the first well is in production at a reduced rate of 52 barrels of oil per day, wells #2 and #3 were dry and well #4 has been cased but no production #s have been released. So we don't know if Nomad Hydrocarbons is going to pay KBC back, although the first well is in production at 52 barrels per day granted at a restricted flow rate, lets just say that once they open up the well at full production that they end up producing 100barrels of oil per day from the first well, which I highly doubt oil production will increase that much, but for arguments sake lets say it's 100 barrels per day. If Nomad doesn't pay back the cost of drilling then KBC will receive gross revenue of 12 barrels of oil per day or 12% of production. Now lets say that they get 50$ per barrel for the oil, so the gross revenue from well #1 is 12% or 12bbls/day x 50$/bbl x 365 days per year = $219,000/per year. So 219G would be gross yearly revenue from well #1, then you have to subtract the costs of production ie workovers and production shut down for maintenance etc. I don't know how much the production cost per year will be but it is safe to say that it will reduce the gross yearly revenue by quite a bit. Keep in mind that if Nomad pays KBC back the the gross revenue would be halved to 109G.
So the revenue from the first well will be approximately the same as a skilled workers annual salary in Nomad doesn't option back, if Nomad does pay KBC back then the revenue would equal a full time Tim Hortons Salary, hardly the revenue required to run an oil business let alone repay NAGs 400g and the debenture holders 550g. In other words if KBC goes down so does NAG. OUCH. IMHO
GLTA
MM