Xun Energy, Inc. (fka XNRG)

[Carsmax177]

IMO, profit is profit, as long as the well was profitable made sense to keep it going. Jerry even mentioned that the well will pump until is not "economically feasible." Quote from his post below and the posts Jerry said if prices drop too low they may quit production and the reason why they quit production:

Thank you MARCO POLO III for your post and questions in Post #3 above.

We have replicated your post below:

Does this mean that you might be looking at abandoning the Rice 15 as well, becuase of its low production? Would this also mean that you will ending or temporary suspending the Oil & Gas Division?

Question #1: Does this mean that you might be looking at abandoning the Rice 15 as well, becuase of its low production?

Response to #1: Typically a company shuts down a well when it becomes uneconomical to produce from the well. Economical can mean net profit after all costs including non cash costs such a depletion and depreciation or net cash flow after all cash expenses are deducted before non cash items such as depletion and depreciation. We plan to continue producing from Rice #15 until the net cash flow become uneconomical.

Question #2: Would this also mean that you will ending or temporary suspending the Oil & Gas Division?

Response to #2: No, the Company does not plan to end or suspend the Oil and Gas Division. We are constantly reviewing oil and gas opportunities. However, that does not mean the Company may not change its business strategy in the future if not successful in the Oil and Gas Division.

DISCLAIMER: SUBJECT TO SAFE HARBOR CLAUSE.


We thank you for your interest, support and faith in the Company.

Respectfully,

Xun Energy, Inc.

Jerry G. Mikolajczyk
President and CEO

Safe Harbor

The statements contained in this post may not be historical fact, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” "projects" or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The Company wishes to caution the reader that its forward-looking statements that are historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon a variety of assumptions relating to the business of the Company, which, although considered reasonable by the Company, may not be realized. Because of the number and range of assumptions underlying the Company’s forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular forward-looking statements may differ substantially from those projected. Consequently, the inclusion of forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized. The Company’s actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. There is no guarantee that the Company will close on the financing or close on the acquisition of the producing oil and gas leases.

Xun Pres Posted: Sunday, August 2, 2015 5:54:17 PM
Thank you fischerman1940 for your post and questions in Post #3 above.

We have replicated your post below:

Dear Jerry,

Congratulations on the 12 deals! Hopefully everything is moving smoothly with them.

Just a couple questions:

1. Has identifying and making the amendment in the operating agreement had any negative effects on any of the deals associated with IXEL?

2. In regards to the deals in progress in column (a) Reselling by XOM, will the fair market value of these deals show up in the balance sheet being XOM is consolidated into Xun Energy? If so, how will the financing of the deals be reflected?

3. Will the deals in column (a) be reflected in the performance chart under purchases on the XOM website?

4. Glad to hear Rice well #15 is back in production. Regarding the Rice Well #15, the water to oil ratio seems to have increased since it was put back into production. Is the high ratio of water to oil anticipated to remain for the duration Rice Well #15 pumps, or is the ratio due to Rice well #15 being only in production for about a year and should reduce as time goes on? Or is the water to oil ratio just because of the geographical location of the well and the amount of rain that fell in the spring?

Thank you for all the work you and the rest of the team are putting in to make XNRG successful. I am of the group of shareholders that Daddyvlo17 mentioned in a post earlier today that believe in you and the XNRG team’s ability to get these deals done and make XNRG successful. Take care and have a wonderful weekend.


Question #1: Has identifying and making the amendment in the operating agreement had any negative effects on any of the deals associated with IXEL?

Response to Question #1: The impact relates only to financial reporting purposes. There is no impact to the sales or operational side of the business.

Question #2 and #3: In regards to the deals in progress in column (a) Reselling by XOM, will the fair market value of these deals show up in the balance sheet being XOM is consolidated into Xun Energy? If so, how will the financing of the deals be reflected?

Response to Question #2 and #3: Each physical commodity trade is its own operating entity as it depends upon the partners involved and their contribution to the operating entity of which XOM will be a partner and in most, if not all cases, the administrating party. It would depend upon the JV structure as to whether or not the JV is consolidated at 100% or at JV partnership interest by XOM. Balance sheet items are of asset or liability nature and it would depend if XOM contributes an asset, such as cash, or is liable for a debt. There could be accounts receivable or a trade payable depending, or both, if the transaction straddles a reporting one period end and the next reporting period. For example, we accept the product before the period end and have not paid for it until into the next reporting period. By virtue of the accounting policies and procedures including US GAAP, the Company would record the purchase of the product at cost as inventory with a liability of the product to the supplier at cost. If the Exit buyer accepts the product at the same time as the Company accepted the product, then per our policies, the Company would invoice for the product before the period end and if the invoice was paid by the Exit Buyer in the subsequent reporting period, the Company would record the Accounts Receivable from the Exit Buyer and record the offsetting book entry as Revenue for the Company for the period with the product purchase as a cost of goods and a liability to the supplier. These are called timing differences in accounting.

Question #4 and #5: Glad to hear Rice well #15 is back in production. Regarding the Rice Well #15, the water to oil ratio seems to have increased since it was put back into production. Is the high ratio of water to oil anticipated to remain for the duration Rice Well #15 pumps, or is the ratio due to Rice well #15 being only in production for about a year and should reduce as time goes on? Or is the water to oil ratio just because of the geographical location of the well and the amount of rain that fell in the spring?

Response to Question #4 and #5: The water ratio to oil is not predictable along with any production is not predictable. The production of water and oil can change at a moment’s notice and the ratio between water and oil can change without notice or predictability. What is predictable is that every oil well has a decline curve associated with it and we can confirm that the production of oil is declining. We monitor the production of oil and water and compare it to the cost of production to the revenue generated. With a decline in crude oil prices recently, there is a risk that Rice #15 could become uneconomical due to the lower crude oil price and not the decline of oil production.

Question #6: Or is the water to oil ratio just because of the geographical location of the well and the amount of rain that fell in the spring?

Response to Question #6: The water that is produced is brine water that is normally found with the oil deposit. It is not fresh water or surface water. Each load of waste water is tested before treated. Should the salt ratio change or drop due to fresh water leakage or seepage, we would be immediately notified by the water treatment facility. The well was completed to meet all Pennsylvania rigorous standards so that surface water does not flow or seep into the well bore or into the oil deposit. The oil deposit itself is below the fresh water aquifers in the geographical region.

DISCLAIMER: SUBJECT TO SAFE HARBOR CLAUSE.

We thank you for your interest, support and faith in the Company.

Respectfully,

Xun Energy, Inc.

Jerry G. Mikolajczyk
President and CEO

Safe Harbor

The statements contained in this post may not be historical fact, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” "projects" or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The Company wishes to caution the reader that its forward-looking statements that are historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon a variety of assumptions relating to the business of the Company, which, although considered reasonable by the Company, may not be realized. Because of the number and range of assumptions underlying the Company’s forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular forward-looking statements may differ substantially from those projected. Consequently, the inclusion of forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized. The Company’s actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. There is no guarantee that the Company will close on the financing or close on the acquisition of the producing oil and gas leases.

Xun Pres Posted: Saturday, September 5, 2015 1:37:21 PM
Thank you Callen for your post and questions in Post #1 above.

We have replicated your post below:

Jerry:

Please update your shareholders as to current status of operations.

Regards

Question #1: Please update your shareholders as to current status of operations.

Response #1: As of September 5, 2015, we provide the following updates:

Administration

Quarterly reports for November 30, 2014 and February 28, 2015 are with the auditors. On July 8, 2015, the Company put the reviews on a temporary hold as the shareholders of Idria Xun Enterprises Limited are amending the FINANCING AND PROFIT SHARING AGREEMENT (F&PSA) dated December 17, 2014 which will affect the consolidated financial statements. The F&PSA has been rescinded and replaced with a LICENSING AND OPERATING AGREEMENT subject to execution by the respective shareholders.

The May 31, 2015 fiscal year end financial report is in progress and pending the completion of the November 30, 2014 and February 28, 2015 quarterly reports.

Oil and Gas Division

Rice #15 is temporally shut in due to the operations becoming uneconomical at the low WTI crude oil prices.

Xun Oil Marketing Division

Orders

The Xun Oil Marketing Division (XOM) is very active with several suppliers, funders and buyers working on over a dozen orders that are in play. We have dispelled with some of the joint ventures partners formed over the latter part of 2014, beginning of 2015 and are working with a new joint venture partner, JV0015. This new partnership is proving to be productive by focusing on eliminating the intermediaries and negotiating directly with the exit buyer. These orders are broken down into two categories, (a) reselling products after purchase and (b) facilitating either the purchase or the sale of products. Due to confidentiality agreements with the parties, the Company is restricted from disclosing the parties or the pricing of the orders. However, we can disclose that 8 orders are for the reselling of products and 6 orders are for facilitating the orders. Table 1 below provides details of the 14 orders in play at the time of writing. The orders are in various stages of being completed and closing. Depending on shipping distances and times or location of product, a closing could happen quickly or could take over 30 days from the Proof Of Financing (POF).

DISCLAIMER: THESE ORDERS ARE FLUID IN NATURE AND HAVE MANY VARIABLES THAT MAY REQUIRE REWORKING DURING THE PERIOD OF NEGOTIATION IN ORDER TO REACH A MUTUALLY BENEFICIAL TRANSACTION. ANY DISRUPTION IN THE PROCESS MAY CAUSE THE ORDER TO BE DELAYED OR CANCELLED, AS WE HAVE ENCOUNTERED NUMEROUS TIMES SINCE THE BOARD ACTUATED XOM. A TYPICAL ORDER FROM START TO CLOSE MAY TAKE FROM A COUPLE OF WEEKS TO SEVERAL WEEKS FOR A SUCCESSFUL CLOSE. EACH ORDER WHERE A BUYER OR SELLER IS NEW TO XOM MAY REQUIRE MANY HOURS TO BE CONSUMED IN DUE DILIGENCE, AS DUE DILIGENCE INVOLVES INTERNATIONAL COMMUNICATIONS, TRANSLATIONS, AND VETTING OF MANY DOCUMENTS. ONCE PARTIES TO AN ORDER REACH A PRELIMINARY CONSENSUS, MANY MORE HOURS ARE NEEDED TO DRAFT AND CIRCULATE DOCUMENTS BEFORE FINAL AGREEMENTS ARE READY FOR SIGNATORY AND NOTARIZATION.

Below are transactions that XOM have in process as of September 5, 2015:



DISCLAIMER: THERE ARE NO ASSURANCES THAT THE COMPANY WILL BE ABLE TO CLOSE ON ANY OF THE PHYSICAL COMMODITY TRADES, WHETHER AS A RESELLER OR FACILITATOR. THERE ARE NO ASSURANCES THAT SHOULD THE COMPANY CLOSE ON A PHYSICAL COMMODITY TRADE, WHETHER AS A RESELLER OR FACILITATOR, THAT IT WILL BE PROFITABLE.

DISCLAIMER: SUBJECT TO SAFE HARBOR CLAUSE.

We thank you for your interest, support and faith in the Company.

Respectfully,

Xun Energy, Inc.

Jerry G. Mikolajczyk
President and CEO

Safe Harbor

The statements contained in this post may not be historical fact, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” "projects" or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The Company wishes to caution the reader that its forward-looking statements that are historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon a variety of assumptions relating to the business of the Company, which, although considered reasonable by the Company, may not be realized. Because of the number and range of assumptions underlying the Company’s forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular forward-looking statements may differ substantially from those projected. Consequently, the inclusion of forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized. The Company’s actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. There is no guarantee that the Company will close on the financing or close on the acquisition of the producing oil and gas leases.