Bailouts, price dilution, and damaged trust. Where do I begin? When I took on this opportunity to write about Stormhold Energy Ltd., the oil and gas industry, and the struggles involved,Â I never thought the industry could sink opportunities over trained feelings. Well,Â I was wrong…
Over the last number of years, we have seen bailouts in this industry, over paying for assets and adjusted stock prices that are so far offside they are next to criminal. I would rather not name the companies involved, but you should be able to figure out the transactions I will refer to once you recognize the capital in question.
I have found in the elite Calgary oil and gas circles that if you are part of the â€œgroupâ€ then you are part of the corruption. I have noticed, yet stayed away from, what I call â€œinfluenced market transactionsâ€ due to the fact that they are ridiculously offside. having worked for the Federal Correctional Services, I would rather be on this side of the fence than the other. I have found that more inside information is translated and exchanged within Calgaryâ€™s elite group of oil and gas executives than any other industry I have touched. Selling assets far above market conditions for reasons discussed only over a glass of red or a bottleÂ of scotch may seem alright to most, yet this group ensures they walk all over shareholders while they fill the pockets of the already extremely wealthy.
Let me start by saying NDAâ€™s (non-disclosure agreements) in the oil patch are completely useless and not worth the paper they are written on. Looking at our files, we have over 40 â€œsigned NDAâ€™sâ€ and only a handful have been honored by the companies in our surrounding area. As I mentioned in my last monthâ€™s article, Stormhold Energy Ltd. was in negotiations with major players in our AMI (area of mutual interest) to acquire our assets, data, technical information, and in two cases, our technical TEAM.
Unfortunately for us, this group â€œsignedâ€ our NDA and moved on, and then they purchased land in our area, right beside our acreage, and drilled even though our NDA eliminated them from doing so. Today, they are in the midst of a very large study in the area, and I assume the results of the study will engulf them in a strategic drilling program, which we created three years ago.
In numerous cases, making promises that are outright lies are common in our industry. The amount of blow bags in this industry makes me literally sick to my stomach. Drilling commitments and JV (joint venture) agreements that are never met are out of control to say the least. The days of trusting people over a handshake are gone. If companies do not have extremely tight legal agreements and a lot of cash to back the agreements in court, companies of our size have no recourse. It was just yesterday I discussed this with our team. If our pockets were only deep enough, we would employ more counsel than we currently have and go after the soft hand shake crooks that steal data, step on credibility, and hope for failure so they can take the credit of othersâ€™ hard work.
Again, just to touch on the firms that influence market conditions, dilute shareholder equity, and over pay for companies over a splash of red, there are too many to name. But then again, paying over $250,000 per flowing barrel to help out your buddy/CEO who cannot do it himself is standard in our industry and apparently in central Alberta.
Transparency, is a foul word yet used frequently in the oil and gas industry. Unfortunately, only a few mean it.
Having said that, we continue to push forward and JV with companies that fit our business model and shareholder mandate. We have three independent reports that have calculated our resources of light, sweet crude, so we push on. Keep in mind, the calculations below are on one zone, and we currently control 18 prospective zones. Once we complete the other 18 zones of resource potentially independently, the numbers are staggering:
Stormhold Energy Ltd. has certainly had its fair share of obstacles and challenges, yet we continue to create opportunities while surrounding ourselves with good people. Looking back, we remain positive while raising capital, strengthening our balance sheet, and building relationships.
Although oil prices have remained stable, market conditions continue to make it difficult to raise development capital let alone exploration capital.
Please follow my next article when I will touch on raising capital as a â€œstartupâ€ energy company in a market that only finances recognized people and repeatable strategic business plans. Raising capital â€œat the woodâ€.