RE: October 2017 - Letter to Shareholders
Dear Shareholders:
The purpose of this monthly letter is to bring BNP shareholders up to date, on issues and news, since the last letter.
- The following is a summary of activities over the past month:
- Met with our management team on Friday, October 20, 2017, in Calgary. This included our funding agent, our nominee for upstream oil and gas, and our power generation team. We had good discussions regarding plans going forward and funding.
- Our agent continues to work on funding of a $160 million debt financing package. This remarkable and talented gentleman, has been doing this type of work for 2 years now, and has developed a real “rolodex” of financial contacts. He is optimistic these days, as he has other deals closing in November-December. We are one of his few Canadian clients.
- Once the debt is raised, I will start working on getting the accounting caught up, hold an AGM, with the goal of getting the shares trading again.
- I have developed 4 possible catalyst transactions to work towards raising $160 million US in equity, which would reduce the debt equity ratio to 1:1.
- A large debt financing package will be sufficient to purchase cash flow producing, oil properties, and provide $12 million towards our pipeline, power generation and transmission (PPGT) pre-feasibility project.
- Prepared the organizational chart for the new business, as well as a list of the 5 proposed directors. Each director will own shares in the company. The board of director nominees, currently hold approximately 50% of the shares, in BNP Resources.
- I will start having discussions with those holding outstanding invoices. We plan on issuing shares at $0.10 each to settle the working capital deficiency. This could take the outstanding shares up to 75 -80 million, from the current 64 million, but offers creditors a chance to benefit in the upside of the business, while reducing our liabilities.
- Our November management meeting will be held in Calgary, over the US Thanksgiving holiday, to finalize applications for the loan and review the business plans.
- Business development activities:
- Looking at one oil development project in the NWT, in an under explored region near Norman Wells. Longer term (10 year) development opportunity, requiring expertise in exploration geology, with potential for elephant discoveries.
- Starting to work on opportunities in the downstream industry, where new technologies can be applied to an older industry.
- Looking at downstream retail distribution opportunities, to build our refining brand. Medium term opportunity (5 year).
Oil prices are holding steady in the $54.07 US level for WTI crude. The oil markets are still well supplied with Libya and Nigeria bringing production back on line. At 1 million barrels per day, Libya has brought back the majority of undamaged production. More extensive engineering and construction will be required to increase production beyond current rates. I don’t expect oil prices to break $55 WTI, due to the fact that global oil markets, are generally well supplied. In the NYC area, low gasoline prices are increasing demand, with more people driving.
My New Years resolution for 2018 is to get the shares trading again, at the ten cent level, and start putting a few Albertans back to work. I also hope to improve the zero valuation for BNP shares in your accounts, due to the lack of trading. Initially the shares may trade in the five cent range, prior to stabilizing at 10 cents. The average cost of shares exchanged for debt over the years is 10 cents, so I expect that there could be a lot of trading activity within that range. I’ll be handling the investor relations role initially and hope to attend the 2019 Prospectors and Developers conferences in Vancouver and Toronto, held in late 2018 and early 2019. I hope to see some of our shareholders there. We will have a booth to explain how our new power plant and power lines, will positively impact the Yellowknife mining business, and improve the economics of all existing mines. The Calgary Petroleum Club (CPC) has completed their renovations and is now open for business again, which will help improve the local Calgary economy. Many a deal will be done, over a meal and drinks, at the CPC.
I’ve decided to write a book on my BNP turn around experience, once we’ve raised the debt, equity and are trading again. The book could be called “Corporate Turn Around Guide – How to Rebuild a Small Junior Company from Scratch, After Being Delisted from the Stock Exchange, With No Money, and turn it into a Billion Dollar Dividend Paying Enterprise”. Still some work to be done, but I must continue with the positive thinking.