A Newsletter Stock Tip.....Referred me to this company, Since joining Stockhouse I have learned much that I did not know about the world of investing. Geology wise, I am there in a substantial way, however this is a whole new world to me. So as was advised by some Stockhouse friends, I am doing some DD on volume leader for the day (so far). My question is, what will it take to get this stock off the ground ? They just released very good news, they have excellent proven reserves and some cash flow. I don't own any shares as yet. I am looking for some guidance here.....
Project Overview
Five of the Company’s six projects lie in the Cherokee Basin located in southeastern Kansas and northeastern Oklahoma. Historically, the basin has been a prolific oil and gas producing area. Admiral Bay holds a 100% working interest and has operations in all of its projects in Kansas. All of Admiral Bay’s producing projects have their own tap into the main inter-state system with significant unused take-away capacity.
In May, 2010, the Company’s Lenders advised the Company they were in default of their loan covenants and initiated foreclosure proceedings on the Shiloh, Mound Valley, Thayer, Devon, Santa Rita and Swordfish Projects. The Company will retain the Ft. Scott Project which was purchased in of 2008 and 25% of the Revloc Project in Pennsylvania. Gasrock and Mid-Town Capital will retain a five percent override under the Ft. Scott Project and a warrant for 17.5% of the current outstanding shares in Admiral Bay.
Assuming the foreclosure is successfully completed, the Company will at that point be debt free with approximately 50 MCFGPD production but with little ability to expand drilling or recomplete wells and improve production. Therefore the Company’s future may be uncertain until it can assess it assets and determine the marketability of those assets.
FT. SCOTT PROJECT - Cherokee Basin
The Ft. Scott Project is located in Bourbon County, west of the town of Ft. Scott, Kansas. The project targets both the shallow unconventional Pennsylvanian coals and the conventional sandstone reservoirs of the Cherokee Group at depths of 350 to 550 feet (100 to 170 meters). The project has approximately 39,000 acres with limited term,28 producing or SI wellbores and a SWD well. As reported by Norwest Questa Engineering Corporation in their reserve report as at July 31, 2009, based on forecast prices and costs, the project has Proven Developed (PD) plus Proven Undeveloped (PUD) reserves of 4.2 BCF, Probable Reserves of 2.3 Bcf and Possible Reserves of BCF for a 3P total of 5.9 BCF, net of royalties.
REVLOC PROJECT - Appalachian Basin
The Revloc Project is located in the southern central part of Cambria County, Pennsylvania. The approximately 13,100 net acre project lies on the eastern most edge of the Appalachian Basin and targets coals of the Pennsylvania Alleghany and Pottsville groups. There are approximately five to seven coals of two to seven feet (0.6 to 2 meters) thick. The state of Pennsylvania has reported gas content of the coals to be in excess of 450 scf/ton (standard cubic feet per ton). There are several pipelines that either pass through or are adjacent to the present acreage, with current gas prices being at a premium to NYMEX spot price. The coals are found from 250 to 1,400 feet (75 to 425 meters).
In July 2007, the Company farmed out a 25% working interest in its Revloc Project to a private company (the "Farmee"). The Farmee earned a 25% working interest and an 82.5% net revenue interest by paying $1,000,000 (approximately $250/acre). The Farmee paid 100% of the cost to drill and case seven test wells along with 100% of the cost to core and analyze all the coals in four of the seven wells. Upon running casing on the seventh well, the Farmee had 60 days in which to exercise an option to purchase an additional 25% to 50% of the working interest for an additional $1,000,000 to $2,000,000, respectively. Farmee elected to purchase an additional 25% working interest and now had 50% working interest in the Revloc Project. Admiral Bay remains the operator. The Company will retain a 25% working interest after the foreclosure discussed above.
As reported by Norwest Questa Engineering Corporation in their reserve report as at July 31, 2009, based on forecast prices and costs, the project has Possible Reserves of BCF, net of royalties.