April 15, 2014
On behalf of the Board of Directors and management of Bakken Resources, Inc. we would like to take this opportunity to thank the shareholders for their support this past year.
We are happy to report significant developments on several fronts over the past year.
•Increase in well activity.
Over the past year, we had a total of 14 wells come into production on our acreage. Currently, we have based on the available information, 47 producing wells in the Williston Basin of North Dakota, and 15 additional wells which are either being permitted, are drilling, or are on confidential status. Please visit our website at www.bakkenresourcesinc.com and click on the “Well Activity” tab for a full listing of our wells. This listing also contains the NDIC number for each well, allowing the user to obtain additional well information from the NDIC site (www.dmr.nd.gov/oilgas–note that some information requires a paid subscription).
•Increase in gross revenues.
Gross revenues for the fiscal year ending December 31, 2013 were approximately $3.9 million, representin a 130% increase in gross revenues for the year ending December 31, 2012 (approximately $1.7 million).
•The Company is debt-free.
In August 2013, we prepaid the entire balance of our primary debt obligation. The prepayment occurred 5-1/2 years prior to the stated maturity date of the debt.
•Sale of mineral assets.
In February 2014, we announced the sale of 767 +/-net mineral acres in McKenzie County, North Dakota. The property sold for $10,250 per net mineral acre for a total of $7,871,248. BRI retains a two percent (2%) royalty on the sold assets. The sold assets were purchased by BRI in November 2010 for an aggregate amount of $1,535,000. Without factoring in the royalties we expect to continue to receive as a result of the retained 2% royalties, the sale represents an over 500% cash return on sale based on our initial investment.
Some other items of note for this past year were:
•Our receipt of DTC approval for the electronic trading of BRI's common stock.
•Completion of a full mineral title review and report of our mineral acreage.
•Completion of initial well analysis of our working interest in Archer County, Texas. The well in Archer County that we have a 17% working interest has suspended production pending further geologic analysis on potential further downhole drilling opportunities.
•Completion of lease review and coordination and negotiation of various lease addendums and/or extensions.
•Launched a new website that we believe provides accurate, streamlined and pertinent information in an understandable fashion to our shareholders and the investing public.
•Initial development of enhanced oil-recovery technology programs, including a collaboration with Applied Geotech, Inc.
•Successful release of prior suspended royalty payments (totaling approximately $1.2 million). With respect to our current 1,100 net mineral acre holdings in the Duck Lake region of Montana, our acreage went off lease in September 2013,and we are currently looking at potential opportunities to commercially exploit this asset.
In December 2013, following trial in held in Superior Court located in Spokane, Washington, the Washington Court issued findings of fact and conclusions of law stating that the plaintiffs in this the Washington case (i.e. Allan Holms and Roil Energy, LLC) did not have an interest in our mineral assets. Final judgment in the Washington case is currently pending the completion of various post-trial briefs and hearings, but final judgment is expected to be issued in late April or early May 2014. We are pleased with the Washington Court’s findings of fact and conclusions of law as they pertain to the Company.
Some of you may have also received a notice from plaintiffs representing a minority class of investors that have filed suit against the Company alleging the Company’s breach of certain provision relating to registration rights agreement(s) (Case No. A-13-675280-B, filed in the District Court of the State of Nevada for Clark County). We dispute the allegations of the plaintiffs in this case and intend to vigorously defend this lawsuit.
We encourage all of you to read our Annual Report and our other public filings carefully for detailed information about our company. The Board and management are committed to engaging in activities that will enhance shareholder value, and we expect that to be a focus in the coming months. The Company continues to evaluate additional potential mineral or lease acquisitions to increase its assets and potential oil and gas reserves. As always, we welcome constructive input from our valued shareholders. All of us at Bakken Resources, Inc. appreciate your continued support and look forward to continued success in 2014.
Val M. Holms
CEO Bakken Resource