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KFG Resources Ltd Q1 2015 Results(Ending July 31st 2015)
Overall it was a pretty good quarter for KFG despite the circumstances. Oil prices down 50% year over year, historic flooding that caused some wells to shut off for 45-60 of the 90 days(See end of June news release). As well, expenses increased because of new staff and new equipment needed for damaged wells, plus a few other things.
- Cash increased almost $100k
- Liabilities went down $75K
- Company made a profit even with half of the revenue from last year
- New leases in Texas signed with wells to drill before year end
- More Mississippi wells to drill
Price: $0.08
Common Shares: 50,584,144
Options/Warrants: 0
Insider Holdings: 16%
Financials
ASSETS
Cash: $1,499,459 (last quarter was $1,401,025)
Accounts Receivable: $291,245
Prepaid Expenses: $12,856
Reclamation Bond: $20,000
Property & Equipment: $932,204
Total Assets: $2,755,764
LIABILITIES
Accounts payable: $453,535
Decommissioning Liability: $243,311
Total Liabilities: $696,846 (last quarter was $765,590)
Sales
Revenue: $506,423( last year this time was $904,409)
Production: 75bopd (same as last year due to shut wells because of flooding)
Productive wells: 23 compared to 21 in 2014
Net Income: $14,563
MD&A Highlights
The Company drilled two wells in February 2015 but they were not on production until late May and June 2015. The Company has sufficient cash reserves to finance its activities for the remainder of its fiscal year. Two new wells being completed in late September 2015 should add cash flow and help lower the overall cost of production. The Company plans to participate in the drilling of two new shallow wells in north central Texas before year end, marking KFG’s entry into Texas.
Revenue from the sale of oil and gas was $395,052 for three months ended July 31, 2015, compared to $788,143 for the three months ended July 31, 2014. The decrease in revenue is a result of a price collapse in oil from $102.40/bbl to $55.33/bbl.
Management fee revenue for the three months ended July 31, 2015 was $111,371 as compared to $116,266 for the three months ended July 31, 2014. The results are comparable between periods.
Lease operating expenses were $115,515 for the three months ended July 31, 2015 compared to $79,144 for the three months ended July 31, 2014. The increase in lease operating expenses is a result of putting two wells back on production that have been shut in because of the wet weather.
General and administrative expenses for three months ended July 31, 2015 were $278,985 compared to $267,460 for the three months ended July 31, 2014. The main increase in costs is a result of hiring new staff.
Liquidity and Capital Resources
The Company’s main sources of liquidity are internally-generated cash flow from its oil and gas operations. Because KFG’s internally-generated cash flow is presently sufficient to fund its overall operating expenses, the Company will not require additional funding from equity capital markets.
KFG had cash at July 31, 2015 of $ 1,499,459. Although oil prices have collapsed, the Company, through the first fiscal quarter ended July 31, 2015, continues to generate positive cash flow. Two recent wells should help continue the trend. The Company will continue to manage its cash resources and will complete its current drilling program. In addition, the Company is increasing its inventory of projects seeking longer term leases.
Outlook
The Company’s cash position going forward will be able to finance all projects internally for the remainder of its fiscal year ending April 30, 2016. Two new wells should help the Company maintain a positive cash position. At this writing, two additional wells are planned in Mississippi this calendar year and one developmental well, weather permitting in Mississippi, as well as shallow wells in north Texas.
KFG logs, core nine feet of oil sand at Third Wilcox
2015-09-23 12:12 MT - News Release
Mr. Robert Kadane reports
KFG REOPENS PRODUCTION AT SPRINGFIELD
KFG Resources Ltd.'s subsidiary, KFG Petroleum Corp., has logged and cored nine feet of oil sand from 4,393 feet to 4,402 feet in the Third Wilcox sand. Production casing has been cemented to 4,600 feet. KFG has a 13-per-cent working interest in the well, the Stockfelt unit No. 1, reverting to a 20.25-per-cent working interest at payout. The company will report initial production tests when available.
KFG's previously announced Drouet Pool Estate well in Franklin county, Mississippi, is being completed at present, and a report on initial production should be available next week. Also, KFG has staked location for its Barnum No. 4 well in Adams county, Mississippi and will be moving in a rig to drill the well to 6,800 feet in approximately three weeks.
© 2015 Canjex Publishing Ltd. All rights reserved.
KFG drills 10 ft of McShane oil sand in Mississippi
2015-09-14 13:45 MT - News Release
Mr. Robert Kadane reports
KFG LOGS NEW FIELD DISCOVERY WELL
KFG Resources Ltd. has logged a new discovery oil well in Franklin county, Mississippi. The company's subsidiary, KFG Petroleum Corp. of Natchez, Miss., drilled the Drouet Poole Estate No. 1 well to a total depth of 6,800 feet and found 10 feet of McShane oil sand from 6,618 feet to 6,628 feet. Production casing has been set for a completion attempt. The company has a 12-per-cent working interest in the well before payout and a 24-per-cent working interest after payout.
In addition, the company is moving in to drill its Second Creek prospect in Adams county, Mississippi. The Stockfelt unit No. 1 will be drilled to a depth of 4,600 feet to test the Third Wilcox formation. KFG has a 15-per-cent working interest in the well, jumping to a 21.5-per-cent working interest at payout. At this writing, it is anticipated that two more wells will be drilled in the program, and those projects will be announced at a later date.
© 2015 Canjex Publishing Ltd. All rights reserved.
KFG Year End Results Ending April 30th 2015
Current Price: $0.08
Common Shares: 50,584,144
Options/Warrants: 0
Insider Holdings: 16%
Before reading the financial results and management discussions below, one must take into consideration that KFG had quite a good year considering the three major setbacks that occurred. Oil production, cash, and management fee's are all up year over year, but the write down of oil assets which every single petroleum company had to do made KFG show a small net loss of less than $100,000. Without the $800,000 write down, KFG would of ended the year with positive net income. Despite this, drilling will move forward next month even at these lower prices, and with several wells to do, odds of production increasing are quite good.
Three Setbacks this year:
1) Price of oil which went from $110 to $40 and this is Louisiana Light Sweet Crude
2) Historic flooding in Mississippi which stopped some production and added extra costs
3) Several wild cat wells were dry which not only increased expenses, it added no value
4) KFG's best well Craig 5 did not start pumping until after the fourth quarter ended
Financial Results Ending April 30th 2015
**My Note: All numbers are in US dollars and therefore should be converted to reflect the proper value in Canadian dollars. For example, KFG's cash position of $1.4 million USD is actually worth $1.85 million Canadian dollars as of August 28th 2015. This is essential to do considering the company is listed on a Canadian exchange.**
Producing Wells - 25 (22 in 2014)
Barrels of oil per day average - 96.02 bopd (71.79bopd in 2014) - 25% increase
Average sell price - $46.41 ($101.75 in 2014) - Down by $55.34 or 54%
*Operating cost per barrel average is $18.85 before G&A costs*
*KFG sells it's oil at LLS(Louisiana Light Sweet) pricing which is similar to Brent*
ASSETS
Cash: $1,401,025 - (2014 $1,205,750)
Accounts Receivable: $482,880
Prepaid Expenses: $13,274
Reclamation bond: $20,000
Property and Equipment: $901,766
Total Assets: $2,818,945 - (2014 $3,017,302)
LIABILITIES
Accounts Payable: 527,848
Deposits : $3,988
Decommissioning Liability: $233,754
Total Liabilities: $765,590 - (2014 $879,582)
Assets decreased year over year, but so did Liabilities.
Sales
Oil and Gas - $2,278,425 - (2014 $2,240,754)
Management Fee's - 466,674 - (2014 $419,014)
Total Sales - $2,745,099 - (2014 $2,659,768)
Total - -$84,365 - (2014 $67,467)
Revenue year over year slightly higher due to production increase by a substantial amount. However, selling oil at $46 average in 2015 compared to $101 average in 2015 made a big difference.
Expenses( 2015 - 2014)
Automotive: $96,914 - 71,902 - Increased by $25,012
Bad Debt - 0 - $2,372 - Decreased by $2,372
Depletion - $807,733 - $408,559 - Increased by $399,174 (Write down)
Dry hole & Abandonment - $118,889 - $168,065 - Decreased by $49,176
Exchange Loss - $772 - $4,802 - Decreased by $4,030
Insurance - $114,937 - $106,896 - Increased by $8,041
Lease Operations - $615,761 - $758,738 Decreased by $142,977
Office & Misc - $296,145 - $275,720 Increased by $20,425
Rent - $19,602 - $18,633 Increased by $969
Salaries & Benefits - $758,711 - $776,614 Decreased by $17,903
If you exclude the write down, remaining expenses went down $162,551 year over year. Unfortunately, every petroleum company must write down assets and take it as an expense/loss.
Management Discussion Highlights
Summary of Quarterly Results
The main difference in the last two quarters ended January 31, 2015 and April 30, 2015 were slumping oil prices in the January 31, 2015 quarter and increased depletion and amortization changes because of reserve depletions resulting from increased production, directly affecting earnings.
Liquidity and Capital Resources
The Company’s main sources of liquidity are internally-generated cash flow from its oil and gas operations. Because KFG’s internally-generated cash flow is presently sufficient to fund its overall operating expenses, the Company will not require additional funding from equity capital markets in order to execute on its business strategy for at least the next twelve months. A decline in the prices of natural gas and oil could materially and adversely impact on KFG’s ability to secure partners in drilling projects, with the result that the Company may be forced to scale back its operational activities.
KFG had cash at April 30, 2015 of $1,401,025. Oil production at Fayette is providing positive cash flow and will continue. Also the Company’s new oil revenues will provide a borrowing base in addition to the Fayette development. As of now, the Company plans to expand as cash flow permits. The Company is already experiencing new production from the Craig #5 well and all wells are back on line. During the period January 2015 – April 2015, the Company experienced bad weather and weak pricing. Two wells were drilled in February 2015, but not put on production until May 2015 because of the weather. Also the Craig #2 well and the MacNeil wells have not lined up with expectations.
Fourth Quarter
The quarter ended April 30, 2015 experienced prices at multi-year lows and wells of production that couldn’t be put back on in a timely manner. All wells are producing now but prices have reduced to the low $40 range from $60 in May, June and July 2015.
Outlook
Production at Fayette is stable and has started a slow decline. With the Dale lease back on production and new production coming off the Craig and Parker leases, KFG will have adequate internal cash flow to develop existing leases as well as support several new prospects in the coming months. Unless the price of oil collapses, the Company will generate sufficient capital to fund its requirements throughout 2016 internally.
**My Second Note: The directors Stephen Guido and Robert Kadane might not have large share positions, but they do own interests in several current and future wells. They were paid for this over 2015 and therefore it is in their best interest to make sure that every project is successful for KFG. They are paying for these wells at their own risk.**
From financials:
Included in accounts receivable from co-owners is $18,204 (2014 - $nil) due from Geronimo Corporation, a company controlled by G. Stephen Guido, an officer and Director of the Company and $19,562 (2014 - $nil) from Robert Kadane, Director and officer of the Company.
2015-08-05 12:22 MT - News Release
Mr. Robert Kadane reports
KFG OPERATIONS UPDATE
KFG Resources Ltd.'s drilling program is on hold because of high water above flood stage in the Mississippi River which affects large areas of land -- sometimes many miles away from the river. This circumstance is unprecedented in the last 75 years. The company's program will commence when conditions permit.
The company's production is stable and cash flow was positive during the first quarter of its fiscal year ending July 31, 2015. The company's Barnum No. 3 well in Adams county, Mississippi, has proved to be non-commercial and is producing 10 barrels of oil per day.
As of this date, the company has three new projects and one development well ready to drill. Two additional projects are being assembled. All projects are in Mississippi.
© 2015 Canjex Publishing Ltd. All rights reserved.
Massive insider buying on KFG: https://www.insidertracking.com/company?menu_tickersearch=KFG%2ACA%20%7C%7C%20KFG%20Resources
There's only 50,584,144 common shares with no options or warrants.
Haney, Kevin
Insider's Relationship to Issuer as Filed with Regulator: 3 - 10% Security Holder of Issuer
TransactionDate Transaction Nature # or value acquiredor disposed of Price AccountBalance
Security Type: Common Shares (Direct Ownership)
Jul 17/15 10 - Acquisition in the public market 16,000 $0.095 6,000,000
Jul 17/15 10 - Acquisition in the public market 20,000 $0.090 5,984,000
Jul 17/15 10 - Acquisition in the public market 2,000 $0.085 5,964,000
Jul 14/15 10 - Acquisition in the public market 2,500 $0.090 5,962,000
Jul 6/15 10 - Acquisition in the public market 3,000 $0.100 5,959,500
Jun 29/15 10 - Acquisition in the public market 10,000 $0.090 5,929,500
Jul 6/15 10 - Acquisition in the public market 10,000 $0.085 5,956,500
Jul 6/15 10 - Acquisition in the public market 17,000 $0.080 5,946,500
May 27/15 10 - Disposition in the public market -71,500 $0.100 5,919,500
Apr 23/15 10 - Acquisition in the public market 1,500 $0.110 5,991,000
Apr 23/15 10 - Acquisition in the public market 1,000 $0.105 5,989,500
Apr 22/15 10 - Acquisition in the public market 500 $0.090 5,988,500
Apr 22/15 10 - Acquisition in the public market 2,000 $0.085 5,988,000
Apr 2/15 10 - Acquisition in the public market 1,000 $0.100 5,986,000
Apr 2/15 10 - Acquisition in the public market 5,000 $0.090 5,985,000
Mar 26/15 10 - Acquisition in the public market 5,000 $0.080 5,980,000
Mar 24/15 10 - Acquisition in the public market 2,500 $0.080 5,975,000
Mar 20/15 10 - Acquisition in the public market 5,000 $0.085 5,972,500
Mar 13/15 10 - Acquisition in the public market 7,500 $0.080 5,967,500
Mar 11/15 10 - Acquisition in the public market 5,000 $0.085 5,960,000
Mar 5/15 10 - Acquisition in the public market 2,000 $0.080 5,955,000
Mar 5/15 10 - Acquisition in the public market 13,000 $0.090 5,953,000
Mar 4/15 10 - Acquisition in the public market 10,000 $0.090 5,940,000
Feb 27/15 10 - Acquisition in the public market 5,000 $0.080 5,930,000
Feb 12/15 10 - Acquisition in the public market 3,000 $0.105 5,925,000
Feb 12/15 10 - Acquisition in the public market 2,000 $0.100 5,922,000
Feb 10/15 10 - Acquisition in the public market 5,000 $0.105 5,920,000
Feb 9/15 10 - Acquisition in the public market 5,000 $0.105 5,915,000
Feb 5/15 10 - Acquisition in the public market 5,000 $0.105 5,910,000
Feb 2/15 10 - Acquisition in the public market 1,000 $0.125 5,905,000
Feb 2/15 10 - Acquisition in the public market 4,000 $0.120 5,904,000
Feb 2/15 10 - Acquisition in the public market 2,000 $0.125 5,900,000
Feb 1/15 10 - Acquisition in the public market 23,000 $0.120 5,883,000
Feb 2/15 10 - Acquisition in the public market 15,000 $0.110 5,898,000
Jan 30/15 10 - Acquisition in the public market 9,000 $0.095 5,860,000
Jan 30/15 11 - Acquisition carried out privately 1,000 $0.090 5,851,000
Jan 28/15 10 - Acquisition in the public market 5,000 $0.095 5,850,000
Jan 21/15 10 - Acquisition in the public market 5,000 $0.090 5,845,000
Jan 20/15 10 - Acquisition in the public market 10,000 $0.090 5,840,000
See more at: https://www.insidertracking.com/company?menu_tickersearch=KFG%2ACA%20%7C%7C%20KFG%20Resources#sthash.tetB2xlO.dpuf
KFG Financial Comparison Chart (Audited Annual Financials From 2008 to 2015)
I made this financial comparison show everyone where KFG is after years of gains and setbacks. It's been a long journey, but after much trial and error, this company has finally found the best way to grow itself. Despite low oil prices and weather trying to stop the company, this just won't happen. KFG is now a self sufficient oil junior and is more than capable of doubling or tripling its production on a yearly basis. This will inevitably increase revenue, cash position and net income which could lead to a dividend, share buyback or even takeover of the company. Please see below for a break down of every Audited Year End financial report.
KFG Year End Results in 2008
- Cash: $2.66M, Total Assets: $2.96M, Total Debt: $553K
- Revenue: $798K, Net Loss For The Year: -$64K
- Shares Outstanding: 30,874,646
- This was before the global crisis. KFG was trading around $0.15c and still raising money. Total was 25 million shares which is half of the entire O/S right now and a major cash injection. However this was done at a lower price.
KFG Year End Results in 2009
- Cash:$1.62M, Total Assets: $2.33M, Total Debt: $156K
- Revenue: $645K, Net Loss For The Year: $456K
- Shares Outstanding: 42,147,311
- Additional Funds Raised
KFG Year End Results in 2010
- Cash: $304K, Total Assets: $1.84M, Total Debt: $640K
- Revenue: $997K, Net Loss For The Year: -$1.4M
- Shares Outstanding: 47,786,580
- Additional Funds Raised
KFG Year End Results in 2011
- Cash: $1.03M, Total Assets: $2.94M, Total Debt: $834K
- Revenue: $2.9M, Net Income For The Year: $832K
- Shares Outstanding: 50,480,644
- This was a milestone year because KFG hit a string of wells(Fayette) that helped them recover from the financial crisis. Some assets were also sold and funds raised as well. The stock went back to the teen price range this year.
- Additional Funds Raised.
KFG Year End Results in 2012
- Cash: $637K, Total Assets: $2.43M, Total Debt: $439K
- Revenue: $3.5M, Net Loss For The Year: $144K
- Shares Outstanding: 50,559,191
- Despite the record profit, KFG took a major risk this year and unfortunately lost. Drilling a 100% interest Tuscaloosa well which cost the company over $1 million USD and it did not work out. This is why KFG’s strategy changed from solo wells to JV wells in multiple areas.
KFG Year End Results in 2013
- Cash: 861K, Total Assets: $2.5M, Total Debt: $430K
- Revenue: $3.05M, Net Income For The Year: $76K
- Shares Outstanding: 50,584,144(Some shares cancelled and this is the current share structure.
- This was the year where KFG started to diversify into multiple wells rather than just rely on the 9 Fayette and do a couple 100% interest wells.
KFG Year end Results in 2014
- Cash: $1.21M, Total Assets: $3.02M, Total Debt: $880K
- Revenue: $2.7M, Net Income For The Year: $67K
- Shares Outstanding: 50,584,144
- The reason why revenue went down this quarter was due to the fact that the 9 Fayette wells paid out from 75% to 59%, along with additional costs from doing other wells. However, new production was put in place to replace the lost paid out production from Fayette.
- Debt increase is based strictly on deposits from partners, not bank or payables.
KFG Results after 9 months in 2015
- Cash: $2.134M, Total Assets: $3.7M, Tot Debt: $1.07M
- Revenue: $2.27M, Net Income After 9 Months: $493K
- Shares Outstanding: 50,584,144
- If the price of oil didn’t drop 60% and weather didn’t hamper KFG’s operations (as stated in their last news release), net income would be close to $1 million USD right now. Regardless, this has not stopped KFG’s growth plans. Five to seven wells have been announced for the summer drill campaign and the company can only go forward from here.
News: KFG to drill 5-7 wells this summer
KFG Resources restarts production at all wells
2015-06-29 11:33 MT - News Release
Mr. Robert Kadane reports
KFG OPERATIONS UPDATE
KFG Resources Ltd.'s subsidiary KFG Petroleum Corp.'s Craig No. 5 well, which was put on production in May, 2015, in Adams county, Mississippi, continues to produce 100 barrels of oil per day water free. The company has a 21.5-per-cent (16.025-per-cent net) interest in the well. The Barnum No. 3 well is still undergoing production testing, although results to date are disappointing. KFG's interest in the Barnum well is 9 per cent (6.75 per cent net).
The price of crude oil in May was $60.50, bringing all production back into positive territory. All production is finally back on-line after the wettest five months in memory. A few wells were down periodically in KFG's fiscal third quarter ending Jan. 31, 2015, and in the company's last fiscal quarter ending April 30, 2015. The last well that was down is back on production this week. Weather conditions made it extremely hard to get wells back on-line in a timely fashion.
The company's drilling program should be under way in about 30 days. It is anticipated, at present, that there will be five exploratory wells, and one or two development wells in the program.
© 2015 Canjex Publishing Ltd. All rights reserved.
New article on KFG Resources from PennyStockExperts:
http://pennystockexperts.com/attractive-smart-and-relatively-wealthy-oil-operator-seeks-your-attention/
Attractive, Smart, and Relatively Wealthy Oil Operator Seeks Your Attention
Let’s face it, mainstream financial media has trained investors to think shale plays like Bakken, Eagle Ford, Marcellus et al. are the only game in town.
Now I’m no T. Boone Pickens, but I know they’re ignoring more than a few proven oil fields.
Disregarding conventional projects in favor of shale could continue to be a costly mistake for investors and operators alike moving forward.
Like a moth to a flame…
After harnessing the power of horizontal drilling, the oil industry was drawn toward hydraulic fracturing and shale like a moth to a flame. As a whole, it abandoned conventional shallow prospects, historically its bread and butter, and flew directly toward the orange yellowish glow of this newer (dare I say sexier) more controversial technique.
Easy money leads to oversupply.
Thanks to an era of easy money and $100 per barrel pricing, banks, brokers, and their clients lent to just about anyone willing to borrow. Therefore, oil operators took the money. And I guess they had to, those fancy horizontal wells don’t come cheap, each one can cost over $10 million.
As you can imagine… the bills start adding up quickly.
Thousands of wells would never have been drilled if cash from operating activities were the only funds available. Levering up ruled the day! Even sub-par outfits were able to borrow, borrow, and borrow some more, betting they could pay back lenders after oil prices continued rising.
Long story short, drilling successes contributed to an oversupplied market (we’ll save the other factoids for another day), and lots of bettors got it wrong. Nearly all shale projects need at least $60 WTI to break even, some would argue much higher, so many oil companies are now facing a life and death situation.
If we break the industry down into three groups, here’s my interpretation:
1) Those who got burned flying too close to the orange yellowish glow [bankrupt]
2) Those who levered up and are forced to run faster to stay ahead of debt collectors [borderline delinquent]
3) Those who operated during the boom expecting a bust someday [healthy, strong, and control destiny]
Which of the three would you be attracted to?
Simplicity is back in fashion.
With enough time, what’s old always seems to become new again. Conservative, conventional operators like KFG Resources (CVE: KFG) (OTCMKTS: KFGRF) and its CEO Robert A. Kadane now look like the smartest guys in the room. Bob, as he prefers to be called, has first-hand experience spanning forty years. As a youngster he watched, learned, and then helped his dad manage a small fleet of drilling rigs back when oil was 40 cents a barrel. Maybe you’ve heard or know about guys who run around in Armani suits calling themselves “oil man”? You’ll see them more frequently during the boom times
… well that’s not Bob!
Granted, marketing and promotion aren’t his strong points, just look at KFG’s website. Rough around the edges, maybe, but Bob understands the oil business and knows how to run a tight ship, and that’s most important for KFG’s long-term success. Looking for proof of concept? Prime Energy (NASDAQ: PNRG) is a $135 million dollar exchange listed company Bob built and ultimately sold before starting his next venture… KFG Resources.
KFG controls its own destiny…
With help from his team, including G. Stephen Guido of Shamrock Drilling, Bob and KFG Resources have time to think wisely and make strategic moves aimed at creating shareholder value. Unlike many of its peers, whom are weighed down by debt or already bankrupt, KFG Resources controls its own destiny.
While the industry was chasing the latest and greatest shale play(s), bidding up prices, KFG Resources stayed true to what it knows best, low-cost high return conventional opportunities, primarily in Mississippi and Louisiana.
Hold it… “Low cost high return”? Isn’t that what everyone is looking for, the kind of deal you only hear about from pitchmen, too good to be true type stuff.
Well, yes and no, please stay with me.
Hitting it where they ain’t!
To use a baseball analogy: drilling one of those fancy $10 million dollar horizontal wells into the Eagle Ford or Bakken is equivalent to swinging for the fence. You either hit a homerun or strikeout, there isn’t much room in between, success or failure.
Hitting homeruns are great! But the oil business can be less forgiving than MLB when it comes to strikeouts. Therefore, every winning baseball team (or portfolio of oil assets) needs players who get on base 30-40% of the time, and keep dry holes (strikeouts) to a minimum.
Occasionally, KFG Resources will hit a homerun, like it did recently with Craig #5, this well paid back its initial investment in just 8 weeks! But singles and doubles are also in its game plan. Inevitably, dry holes will and have occurred, but with drilling costs under $350,000 (less than 4% of a horizontal), KFG Resources should always be able to take another swing at its best geological targets.
I can assure you, Wall Street and Bay Street are overlooking KFG Resources because of its small stature, but to me that’s part of its appeal. In my experience, independent investors improve their odds of success and make more money by hitting it where the professional analysts aren’t— then selling to them at a premium later.
Bottom Line: With proved crude oil reserves of 247 million barrels, as of Dec. 2010, Mississippi exhibits strong potential for the development of oil and gas reserves. KFG Resources manages risk by working with loyal partners who co-invest; it maintains a 10%-59% interest in 26 producing wells. Additionally, it earns monthly revenue per well as operator and servicer. Finally, the metrics work, Craig #5 cost approximately $300,000 to complete, so for $65k (KFG’s 21% stake) it added 20 barrels of oil per day>>> roughly $438,000 in annual revenue at $60 per barrel>>> for KFG’s $65,000 investment! Obviously, that discovery wouldn’t move the needle for Exxon Mobil, but it’s a homerun for KFG, and with any luck it expects to hit a few more like Craig #5 this summer.
*Disclosure: author is establishing a long position in KFG Resources
KFG's Craig No. 5 well flows 98 bopd
2015-04-27 13:36 MT - News Release
Mr. Robert Kadane reports
KFG OPERATIONS UPDATE
KFG Resources Ltd.'s subsidiary, KFG Petroleum Corp., and its partners have completed the Craig No. 5 well in Adams county, Mississippi, flowing 98 barrels of oil per day, no water, on an eight-64th choke, with flowing tubing pressure of 300 pounds per square inch. The company has a 21.5-per-cent working interest in the well. Barnum No. 3 completion operations are under way. Additionally KFG is gearing up for an active summer in Mississippi with several new projects.
© 2015 Canjex Publishing Ltd. All rights reserved.
Last quarter KFG was producing at 105bopd. Including this well, the company will be closer to 130bopd since their declines are almost non-existent. Barnum 3 should add some good production, Craig 3 pays out in June, and the next several wells should give KFG the potential to double it's last quarter production numbers.
New Institution buying KFG Resources. http://dearbornpartners.com/ based out of Chicago. See the breakdown below:
Ownership - Summary : KFG Resources LtdMost Recent
Macro: Energy Free Float: 42,372,902 Filing Status:
Current Period - 14.29 %
Mid: Energy Free Float % O/S: 84% 31-Mar-2015 - 28.57 %
Micro: Oil & Gas (Exploration & Production) Shares Outstanding: 50,584,144 31-Dec-2014 - 0.00 %
Ticker: KFG-V Exchange: TSX Venture Exchange Market Cap ($MM): 3501631.000000
Investor Type
Investor Type Investors % O/S Pos Val ($MM)
Investment Managers 1 0.44 225,000 0.02
Brokerage Firms 0 0.00 0 0.00
Strategic Entities 6 16.23 8,211,242 0.59
Holding Companies 0 0.00 0 0.00
Corporations 0 0.00 0 0.00
Individuals 6 16.23 8,211,242 0.59
Government Agency 0 0.00 0 0.00
Total - All Holders 7 16.68 8,436,242 0.61
Insider Filings (As Reported)
Insider 5 16.39 8,290,900 0.00
Investor Style
Investor Style Investors % O/S Pos Val ($MM)
Core Growth 1 0.44 225,000 0.02
Location:Metro Area
Location Investors % O/S Pos Val ($MM)
Chicago & Suburbs 1 0.44 225,000 0.02
Location:Global Region
Location Investors % O/S Pos Val ($MM)
N. America 7 16.68 8,436,242 0.61
Location:Country
Location Investors % O/S Pos Val ($MM)
Canada 3 11.94 6,041,000 0.48
United States 4 4.74 2,395,242 0.13
Rotation
Rotation Investors % O/S Pos Val ($MM)
Buys 2 12.28 6,211,000 0.49
Buy-Ins 1 0.44 225,000 0.02
Position Increase 1 11.83 5,986,000 0.48
Sells 1 2.00 1,009,502 0.07
Sell-Outs 0 0.00 0 0.00
Position Decrease 1 2.00 1,009,502 0.07
No Change 4 2.40 1,215,740 0.04
Turnover
Turnover Percentage
High 0.00
Mod 0.00
Low 14.27
Concentration
Concentration
Percentage
All 16.68
Top Ten Investors
Investor Name % O/S Pos Pos Chg % Pos Chg Filing Date Filing Type Equity Assets ($MM) Investor Type Country
Haney (Kevin) 11.83 5,986,000 6,000 0.10 02-Apr-2015 Canadian Insider Data 0.49 Strategic Entities Canada
Guido (G Stephen) 2.01 1,018,740 0 0.00 16-Aug-2013 Proxy-CA 0.03 Strategic Entities United States
Kadane (Robert Andrews) 2.00 1,009,502 -50,000 -4.72 20-Feb-2015 Canadian Insider Data 0.07 Strategic Entities United States
Dearborn Partners L.L.C. 0.44 225,000 225,000 100.00 31-Mar-2015 13F 1,147.57 Investment Managers United States
Kadane (Elizabeth Jean) 0.28 142,000 0 0.00 16-Aug-2013 Proxy-CA 0.00 Strategic Entities United States
Raftery (Michael P) 0.09 45,000 0 0.00 16-Aug-2013 Proxy-CA 0.00 Strategic Entities Canada
Pople (Keith N) 0.02 10,000 0 0.00 16-Aug-2013 Proxy-CA 0.00 Strategic Entities Canada
Source: Thomson Financial
KFG Q3 Results Ending January 31st 2015
Note: All numbers are in US Dollars which means there should be a 20% conversion to accommodate the TSXV listed security.
Price: $0.075
Common Shares: 50,584,144
Insider Holdings: 17% or just over 8.5 million shares as per SEDI
Assets
Cash: $2,133,800 (Q2 Cash: $1,836,298) (Q1 Cash: $1,133,429) – almost 100% increase from Q1 to Q3
Accounts Receivable: $238,843
Prepaid Expenses: $39,428
Reclamation bond: $20,000
Property and Equipment: $1,250,967
Total Assets: $3,693,038
Liabilities
Accounts Payable: $464,480
Deposits from co-owners: $598,351
Total Liabilities: $1,062,831
Revenue After 9 Months
Oil and Gas: $1,938,528
Management Fee’s: $330,010
Net Income: $492,487
EPS: $0.01
My Note: Even though revenue went down due to the 50% decline in oil prices, KFG was still able to add cash to the company treasury and continue drilling despite 3 dry wells back to back. Without the two events, earnings would have been much higher for the quarter. As well, with every new producing well KFG puts online, management fee revenue will also increase on a monthly basis.
MD&A Highlights
For the nine months ended January 31, 2015, the Company had cash flow from oil and gas production of $1,469,120, compared to $1,116,992 for the nine months ended January 31, 2014. Oil production increased from 77.51 BOPD to 105.06 BOPD, and gas production decreased 1.19 MCF per day. The average price of gas increased $0.38 per MCF and the average price of crude oil decreased $15.05 per bbl when comparing the nine months ended January 31, 2015 and January 31, 2014.
Overall, the Company has recovered from giving up 25% of its interested in the Fayette Field wells at payout. Currently, with the MacNeil wells and Craig wells at payout, revenues are on a growth pattern again. The Company was able to grow just utilizing cash flow. Several new projects are in the pipeline and the Craig #3 well will payout in the next few months, increasing that revenue stream. KFG will have no problems financing growth through its internal cash flow throughout the remainder of its fiscal year ending April 30, 2015. In addition, the Barnum #2 well is on production as of mid September 2014. The Craig #4 well was recently completed as a dryhole. With the Company’s current cash position, the Company is in a good position to weather the current collapse in oil prices from about $84 in October 2014 to around $55 - $60/bbl at this writing and will still show positive cashflow. The Company’s operating cost per bbl is currently $18.85/bbl. Currently, the Company has two wells awaiting completion drilled in February 2015 – both in Adams county. The Barnum #3 well encountered the main field zone in the Parker sand at 6,400’. The Company has a 9% working interest in the well converting to a 20.55% working interest at payout. The Craig #5 well encountered the main pay zone at 1,300’ and an additional oil zone at 10,214’. The Company has a 21.5% working interest in this well. With $2,133,800 in cash, the Company is well positioned to weather the current price collapse in crude oil. KFG has a current ratio of 2.27 to 1.
During the quarter ended January 31, 2015, the Company saw a major price collapse in the price of crude oil resulting in revenues of $446,746 compared to the prior quarter’s revenue in excess of $800,000. Greatly lower costs during the period allowed the Company to limit its losses compared to the corresponding quarter ending January 31, 2014. With its cash position and lack of debt, the Company is well positioned and is not planning to cut back its exploration and development.
The Company’s main sources of liquidity are internally-generated cash flow from its oil and gas operations. Because KFG’s internally-generated cash flow is presently sufficient to fund its overall operating expenses, the Company will not require additional funding from equity capital markets in order to execute on its business strategy. A decline in the prices of natural gas and oil, could materially and adversely impact on KFG’s ability to secure partners in drilling projects, with the result that the Company may be forced to scale back its operational activities.
KFG had cash at January 31, 2015 of $2,133,800. Oil production at Fayette is providing positive cash flow and will continue to do just that. As of now, the Company plans to expand as cash flow permits. The Company is experiencing new cash flow from the Craig #1 and #2 wells, and the MacNeil #2 and #3 wells as well as having the Dale lease back on line. Also in the quarter, the Craig #3 well was completed; producing 50 BOPD and the Barnum #2 well was completed and is now producing to 80 BOPD. In addition, the Craig #1 and #2 and the MacNeil #2 and #3 have paid out causing the Company’s revenue from those wells to more than double. Even at current prices, the Company is producing positive cash flow.
In January and February 2015, the Company drilled 4 wells. Two dry holes in Franklin County, MS where the Company’s exposure was limited to 10% in each dry hole and two development wells – the Craig #5 and the Barnum #3 that are still awaiting completion due to bad weather. In the Craig #5 well, the Company has a 21.5 % working interest and it is expected to be a large source of new revenue once completed and on production. There are no plans at present to curtail the Company’s programs.
The Company is not contemplating any other transactions which have not already been disclosed. The Company continues to look at other property acquisitions and to seek joint venture partners on its properties on a regular basis.
Share Capital
The total number of shares outstanding as at January 31, 2015 and March 27, 2015, is 50,584,144. As of January 31, 2015 and March 27, 2015, there were no stock options or warrants outstanding.
Outlook
Production at Fayette is stable and has started a slow decline. With the Dale lease back on production and new production coming off the Craig and Parker leases, KFG will have adequate internal cash flow to develop existing leases as well as support several new prospects in the coming months. The Company’s outlook for the next twelve months is positive. With a current ratio of 2.27, KFG is well positioned to prosper during this period of much lower oil prices. In January and February 2015, KFG drilled 4 wells – two shallow dry holes in Franklin, Co. MS and two successful development wells in Adams Co. MS – the Barnum #3 and the Craig #5. Both wells are waiting on completion. Five new projects are in various stages of completion and are expected to be ready to drill by early summer. There is also development still to be done on the Barnum and Craig leases.
KFG shuts down Barnum, Craig operations on bad weather
2015-03-09 13:34 MT - News Release
Mr. Robert Kadane reports
KFG OPERATIONS UPDATE
KFG Resources Ltd.'s subsidiary's latest two wells -- the KFG Petroleum Corp. Barnum No. 3 and the Craig No. 5 -- are still awaiting completion. Rain, snow and ice in the past three weeks have shut down field operations. A further report will be issued when dry weather permits operations to continue. The company plans a late spring and summer drilling program with four new projects currently and two potential development wells, depending on offset well performance, all in Mississippi.
© 2015 Canjex Publishing Ltd. All rights reserved.
KFG Resources cases Barnum No. 3 well
2015-02-23 14:05 MT - News Release
Mr. Robert Kadane reports
KFG REPORTS STATUS OF MISSISSIPPI DRILLING PROGRAM
KFG Resources Ltd.'s subsidiary, KFG Petroleum Corp. of Natchez, Miss., has set production casing in its Barnum No. 3 well logging several potential oil zones in the well. A completion attempt will be made in the Parker sand at 6,415 feet (the producing zone in the Barnum No. 2 well). The company has a 9-per-cent working interest in the well until payout and a 20.5-per-cent interest thereafter.
In addition, the company has run production casing in its Craig No. 5 well to 6,400 feet to test the Benbrook sand at 6,214 feet. The producing sand on the Craig lease, the second Wilcox sand at 4,348 feet, was also present and productive significantly expanding oil reserves on the lease. KFG has a 21.5-per-cent working interest in the Craig No. 5 well. As the wells are perforated and put on production a report will follow. The company also drilled two wildcats, both dry holes, in Franklin county, Mississippi, the Seale No. 1 and the Wall No. 1, both 4,600-foot shallow dry holes. The company had a 10-per-cent working interest in both wells.
© 2015 Canjex Publishing Ltd. All rights reserved.
KFG REPORTS STATUS OF MISSISSIPPI WILCOX DRILLING PROGRAM
KFG Resources Ltd.'s subsidiary, KFG Petroleum Corp. of Natchez, Miss., has resumed its Wilcox shallow drilling program. The company is moving in on the Wall No. 1, a 4,600-foot Wilcox test, to be followed by the Seale No. 1, another 4,600-foot Wilcox test. Both wells are wildcats in Franklin county, Mississippi. KFG has a 10-per-cent working interest in both wells and, if successful, will jump to a 21.5-per-cent working interest after payout.
Also, the company is staking location to offset its Barnum No. 2 well in Adams county, Mississippi, a 6,700-foot Wilcox test. The Barnum No. 2 well has already produced 10,000 barrels, and has settled down to a rate of 70 barrels of oil per day. The Barnum No. 3 well will be drilled as weather permits, probably in early February. KFG has a 9-per-cent working interest in the Barnum lease, increasing to a 20.5-per-cent working interest at payout.
© 2015 Canjex Publishing Ltd. All rights reserved.
KFG Resources earns $611,881 in fiscal H1 2014
2014-12-30 12:56 MT - News Release
Mr. Robert Kadane reports
KFG LOGS SOLID FIRST HALF FISCAL 2014
KFG Resources Ltd.'s subsidiary, KFG Petroleum Corp. of Natchez, Miss., had revenue from the sale of oil and gas of $1,491,772 for the six months ended Oct. 31, 2014, compared with $1,129,981 for the six months ended Oct. 31, 2013. Management fee income was $220,523 for the period, compared with $211,028 for the corresponding six-month period in 2013. The company reported net income of $611,881 for the six months ended Oct. 31, 2014, compared with $238,365 for the comparable 2013 period. The company had cash on hand of $1,836,298 with total liabilities of $764,620. Current assets were $2,271,974. The company's operating costs per barrel for the six-month period ending Oct. 31, 2014, were $18.85 per barrel. Free cash flow for the period was $991,000 after all expenses.
Operationally, the Craig No. 4 well had oil shows but it was not considered commercial. KFG's drilling program for calendar 2015 will be unaffected by the decline in oil prices to date. KFG anticipates drilling activity to resume in February, 2015, with the drilling of three wells, starting with offsetting the company's Barnum Mp. 2 well in Adams county, Mississippi, and continuing with two shallow wildcats in Franklin county, Mississippi.
© 2014 Canjex Publishing Ltd. All rights reserved.
KFG Earns $612,000 on $1.7 million revenue
KFG Q2 Results Ending October 31st 2014:
Assets
Cash: $ 1,836,298 ($0.036c in cash compared to $1.14 million in July 2014)
Receivables: $403,296
Prepaid Expenses: $32,380
Reclamation Bond: $20,000
Property & Equipment: $1,222,247
Total Assets: $3,514,221
Liabilities
Accounts Payable: $726,247
Deposits from Co-Owners: $38,373
Total Liabilities: $764,620
Revenue after 6 months (2 Profitable Quarters)
Oil and gas: $1,491,772
Management Fees: $22,523
Total Revenue: $1,712,295
Total Costs: $1,100,414
Net Income: $611,881 (Net Income was $238,365 in 2013)
EPS= $611,881 / 50,584,11 = $0.012c
Wells in production: 25
Average production in Q2: 104bopd (75bopd was Q1, increase of 29bopd of 28%)
Average Price: $101 per bbl - LLS(Louisiana Light Sweet oil, premium to WTI)
COST per barrel - $18.85/bbl
Management Discussion and Analysis Highlights
The Company is a small independent energy company engaged in the development of onshore oil and gas reserves with activities concentrated in Concordia and Catahoula Parishes, Louisiana, Adams, Jefferson, and Wilkinson Counties, Mississippi and Comanche County, Kansas.
Overall the Company has recovered from giving up 25% of its interested in the Fayette Field wells at payout. Currently, with the MacNeil wells and Craig wells at payout, revenues are on a growth pattern again. The Company was able to grow just utilizing cash flow. Several new projects are in the pipeline and the Craig #3 well will payout in the next few months increasing that revenue stream. KFG will have no problems financing growth through its internal cash flow throughout the remainder of its fiscal year ending April 30, 2015. In addition, the Barnum #2 well is on production as of mid September 2014. The Craig #4 well was recently completed as a dryhole. With the Company’s current cash position and a quick ratio of 2.5, the Company is in a good position to weather the current collapse in oil prices from about $84 in October 2014 to around $55 - $60/bbl at this writing and will still show positive cashflow. The Company’s operating cost per bbl is currently $18.85/bbl.
The Company reported net income of $611,881 for the six months ended October 31, 2014 compared to net income of $238,365 for the six months ended October 31, 2013, with the increase in net income a result less operating expenses plus better prices for oil and new oil from the Craig and McNeil bases due to increased working interest in the wells as well as total overhead charges remaining virtually unchanged.
The Company reported net income of $151,781 for the three months ended October 31, 2014 compared to net income of $124,840 for the three months ended October 31, 2013, with the increase in net income a result less operating expenses plus new oil from the Craig and McNeil bases due to increased working interest in the wells.
( Barnum 2 likely reduced our net income this quarter as this was an expensive well)
During the quarter ended October 31, 2014, the Barnum #2 well was completed producing in excess of 100 BOPD. The Company has a 9% working interest in that well jumping to 16% at payout. The Company plans to offset that well in February 2015 as well as drill two new prospects. Gross income from oil sales increased 15% in spite of declining prices.
Outlook
Production at Fayette is stable and has started a slow decline. With the Dale lease back on production and new production coming off the Craig and Parker leases, KFG will have adequate internal cash flow to develop existing leases as well as support several new prospects in the coming months. Unless the price of oil collapses, the Company will generate sufficient capital to fund its requirements throughout 2014 internally. The Company’s outlook for the next six months is positive. With a current ratio of 2.97, KFG is well positioned to proper during this period of much lower oil prices. At this writing, no projects will be put off or delayed. The Company anticipates its 2015 drilling program starting in February 2015.
Share Capital
The total number of shares outstanding as at October 31, 2014 and December 22, 2014, is 50,584,144. As of October 31, 2014 and December 22, 2014, there were no stock options or warrants outstanding.
(My Notes)
Wells that are approved and still need to be drilled next year:
Fayette Well - Announced September 11th 2014
Seale Well - Announced November 5th 2014
Wall 1 Well - Announced November 5th 2014
Barnum 3 Well - Announced November 5th 2014
Wall 2 Well - Approved through Mississippi Legislature, to be announced soon
Jones Flower Well - Approved through Mississippi Legislature, to be announced soon
Craig 3 and Barnum will pay out soon which will add instant production to KFG.
This report is based on KFG's 2014 reults and does not have anything included between May 2014 until now. That means (4 wells that paid out in June, Craig 3 well + new reservoir in July, Q1 profit of $460,000 or $0.01c EPS, Barnum 2 well of 140bopd). The $0.19c NAV is exactly the same as their audited annual financials + 51-101 report that came out at the end of August(ending April 30th 2014). Then the company still has 3 wells to drill in the next 6 weeks, 2 wells in the start of 2015, and likely more after that.
Additional Insider Buying & Stock Price Near 52 Week High
The insider buying continues while the stock price flirts with the 53 week high and could break the 6 year resistance level of $0.15c. With 3 wells being worked on as we speak, positive results from all of them should drive the price well into the 20 cent range.
Haney, Kevin
Insider's Relationship to Issuer: 3 - 10% Security Holder of Issuer
Transaction
Date Transaction Nature # or value acquired
or disposed of Price Account
Balance
Security Type: Common Shares (Direct Ownership)
Nov 14/14 10 - Acquisition in the public market 60,000 $0.130 5,690,000
Nov 14/14 10 - Acquisition in the public market 150,000 $0.135 5,630,000
Nov 14/14 10 - Acquisition in the public market 15,000 $0.125 5,480,000
Nov 7/14 10 - Acquisition in the public market 25,000 $0.105 5,465,000
Nov 6/14 10 - Acquisition in the public market 15,000 $0.115 5,440,000
Nov 5/14 10 - Acquisition in the public market 20,000 $0.115 5,425,000
Nov 4/14 10 - Acquisition in the public market 35,000 $0.125 5,405,000
Nov 4/14 10 - Acquisition in the public market 5,000 $0.120 5,370,000
Oct 29/14 10 - Acquisition in the public market 40,000 $0.130 5,365,000
Oct 27/14 10 - Acquisition in the public market 55,000 $0.130 5,325,000
Oct 27/14 10 - Acquisition in the public market 80,000 $0.120 5,270,000
Oct 24/14 10 - Acquisition in the public market 50,000 $0.090 5,190,000
Oct 21/14 10 - Acquisition in the public market 40,000 $0.085 5,140,000
Oct 14/14 00 - Opening Balance-Initial SEDI Report
Good insider buying this week:
As of 11:59pm ET November 7th, 2014
FilingDate TransactionDate Insider Name OwnershipType Securities Nature of transaction # or value acquired or disposed of Price
Nov 7/14 Nov 7/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 25,000 $0.105
Nov 6/14 Nov 6/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 15,000 $0.115
Nov 5/14 Nov 5/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 20,000 $0.115
Nov 4/14 Nov 4/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 35,000 $0.125
Nov 4/14 Nov 4/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 5,000 $0.120
Oct 29/14 Oct 29/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 40,000 $0.130
Oct 27/14 Oct 27/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 55,000 $0.130
Oct 27/14 Oct 27/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 80,000 $0.120
Oct 25/14 Oct 24/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 50,000 $0.090
Oct 23/14 Oct 21/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 40,000 $0.085
Oct 23/14 Oct 14/14 Haney, Kevin Direct Ownership Common Shares 00 - Opening Balance-Initial SEDI Report 5,100,000
KFG Q2 earnings estimate
In regards to the news release today it states KFG is producing at slightly under 100bopd, so I would guess around 98bopd. Now I am not too sure as to why the number is so much lower than what was posted on the website on November 1st. Is it possible that a couple wells were shut down between Sunday-Tuesday? maybe. But either way, since we know production increased in Q2, lets redo the estimated quarterly results. I have a confirmed LLS number for August and we have the last price for September before the drop, lets use those as well.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=F003075773&f=M =====> $98.31 was the average price in August for LLS
http://www.petroleumnewsbakken.com/pntruncate/501597498.shtml ======> LLS was trading at $96.29 October 2nd, so September average should be at least $96
October prices dropped, but LLS is always around Brent, lets use $84 for this month
$98.31 + $96 + $84 = $92.77 or lets say $93, which is what I calculated as an average for Q2 in my previous post.
$93(per barrel average) X98BOPD X 90(Days in Q2) = $820,260 in oil revenues for the second quarter(estimate)
Then we add $120,000 for management fee's which puts us at $940,260 total revenue. Again lets use the $500,000 in expenses since it's higher than Q1 and might be due to extra costs from Craig 3 and Barnum 2.
$940,260 - $500,000 = $440,260 net income (estimate)
I'm pretty sure KFG will earn around $400,000 to $500,000 for the first 3 quarters, then in Q4 all the payouts and new wells will add significant revenue. $0.04-0.05c EPS for 2015 isstill an achievable target.
- 3 wells confirmed to do soon
- 2 wells to pay out and given their current numbers, it's an extra 20-25bopd from Craig 3 and Barnum 2
- The Franklin wells are in a new area, so results could be anywhere and could very well add new zones to
drill from.
KFG Resources to drill three wells in Wilcox
2014-11-05 07:42 MT - News Release
Mr. Robert Kadane reports
KFG REPORTS STATUS OF MISSISSIPPI WILCOX DRILLING PROGRAM
KFG Resources Ltd.'s subsidiary, KFG Petroleum Corp. of Natchez, Miss., has three projects that are drill ready before year-end 2014. In Adams county, Mississippi, the Craig No. 4, a southwest offset to the Craig No. 3 producer, will be drilled to 6,500 feet to test all Wilcox zones of interest. In Franklin county, Mississippi, the Seale No. 1, a 4,500-foot Wilcox test, and the Wall No. 1, a 4,600-foot Wilcox test, will evaluate two new areas of interest where the company has accumulated an acreage postion.
In February, 2015, in Adams county, the Barnum No. 3, a west offset to the company's Barnum No. 2 well, currently averaging close to 120 barrels of oil per day, will be drilled to a depth of 7,000 feet, testing several Wilcox zones that have produced in the immediate area. This well will be followed by additional development in Franklin county, Mississippi.
In each of the above cases, KFG will have a 10-per-cent working interest, converting to a 21.5-per-cent interest following payout of a successful project, except for the Barnum well, where the company's interest is 9 per cent.
Current net daily production is slightly under 100 barrels of oil per day before payout of the Craig No. 3 or the Barnum No. 2 wells anticipated during the first half of calendar 2015 even if the Craig No. 4 is successful.
© 2014 Canjex Publishing Ltd. All rights reserved.
Sorry everyone, an error was pointed out to me and I confirmed it. KFG shows a 74.9% working interest in Fayette, but only 59.4% of it is NET to them. So below are the re-calucations which are still good regardless.
Using the current numbers that were updated today on the website, here is what KFG's wells are producing as a whole and the net back to KFG. Fayette does not state a number, but if you look back at other financial statements, it shows production at a constant 110-120bopd from the 9 wells. For this chart I'm only using the lower amount.
Wells(name) Total Production KFG's WI(net) KFG's Cut(bopd)
9 Fayette 110bopd 59.4% 65.5bopd
2 Macneil 50bopd 20.5% 10bopd
3 Parker 90bopd 10% 9bopd
3 Craig 165bopd 21.5% & 10% 30bopd
1 Barnum 140bopd 9% 13bopd
1 Dale 25bopd 17% 4bopd
1 Miller 12bopd 4% 0.5bopd
20 Producing 592bopd - 132bopd
Average WI in all wells: 132bopd(KFG) / 592bopd(Total) = 22.3% or 22% average
Now lets see what KFG can cash flow at $80 per barrel with LLS prices right now:
132(bopd) X $80(per barrel) X 90 days(quarter) = $950,400 not including management fees.
Below is a list of wells that either have to A) Be put back online B) Need to be drilled, or C) Have to still pay out.
- Craig 3 well still needs to pay out, increasing from 10% to 21.5%
- Barnum 2 wells still needs to pay out, increasing from 9% to 20.5%
- Roundtree well shut for now, needs to be put back online
- Miller well still needs to pay out, increasing from 4$ to 18%
- 1 Fayette well to be drilled soon, as per the September 11th 2014 news release
- Craig 4 well to be drilled in December 2014
- Barnum offset in first quarter of 2015, could be 2 other potential offsets
- Several Franklin areas to drill in Q1 2015 with 3 targets ready
All information was updated November 1st 2014 as per the main page of the KFG website.
KFG Production Chart As Of November 1st 2014
Using the current numbers that were updated today on the website, here is what KFG's wells are producing as a whole and the net back to KFG. Fayette does not state a number, but if you look back at other financial statements, it shows production at a constant 110-120bopd from the 9 wells. For this chart I'm only using the lower amount.
Wells(name) Total Production KFG's WI KFG's Cut(bopd)
9 Fayette 110bopd 75% 80bopd
2 Macneil 50bopd 20.5% 10bopd
3 Parker 90bopd 10% 9bopd
3 Craig 165bopd 21.5% & 10% 30bopd
1 Barnum 140bopd 9% 13bopd
1 Dale 25bopd 17% 4bopd
1 Miller 12bopd 4% 0.5bopd
20 Producing 592bopd - 146.5bopd
Average WI in all wells: 146.5bopd(KFG) / 592bopd(Total) = 24.7% or 25% average
Now lets see what KFG can cash flow at $80 per barrel with LLS prices right now:
146.5(bopd) X $80(per barrel) = $11,720 per day X 30(days) = 351,600 per month. This does not include the management fees given to KFG per well. All in costs per well is around $30 per barrel, so very good margins even with the lower prices.
Below is a list of wells that either have to A) Be put back online B) Need to be drilled, or C) Have to still pay out.
- Craig 3 well still needs to pay out, increasing from 10% to 21.5%
- Barnum 2 wells still needs to pay out, increasing from 9% to 20.5%
- Roundtree well shut for now, needs to be put back online
- Miller well still needs to pay out, increasing from 4$ to 18%
- 1 Fayette well to be drilled soon, as per the September 11th 2014 news release
- Craig 4 well to be drilled in December 2014
- Barnum offset in first quarter of 2015, could be 2 other potential offsets
- Several Franklin areas to drill in Q1 2015 with 3 targets ready
All information was updated November 1st 2014 as per the main page of the KFG website.
KFG project information has been updated on the website. All production is current as of today. It also mentions the future wells being drilled between now and January.
http://www.kfgresources.com/project.htm
KFG Resources Ltd., through its 100% owned U.S. operations subsidiary "KFG Petroleum Corporation" owns production and holds exploration and development interests in Louisiana and Mississippi. Daily average production for the quarter ended July 31, 2014 was 75 BOPD. Average oil price received was $102 per barrel. Oil sales for the quarter ended July 31, 2014 were $788,143 and management fee income was $116,266 totaling $904,409 as compared to $582,176 in the fiscal first quarter of 2013.
Wilcox Oil Play
KFG focuses on the Wilcox formation which is a water-drive reservoir of Eocene Age prevalent in East-Central Louisiana and Southwest Mississippi. The Wilcox is a relatively shallow horizon varying between 3500 and 9200 feet in depth. There is also the deeper Tuscaloosa formation in many areas where KFG operates and when found is known to be a prolific production horizon. KFG's projects are described below.
Mississippi
Fayette Field, Jefferson County, Mississippi
The Fayette field is located 21 miles northeast of the city of Natchez. KFG has a 74.9% working interest (59.4% net) in the field. Fayette is a salt feature covering approximately 3800 acres. Past production was from the Wilcox and the Lower Tuscaloosa formations. KFG did a 3D seismic survey in 2008 and the results led to the discovery of the Spring Hill feature in June 2009. Spring Hill is fully developed with 6 producing wells. KFG has 2 other wells at Fayette including 1 small gas well. The reprocessed 3D seismic survey reveals both shallow and a deep target which KFG intends to test in the future. The Spring Hill is past the flush part of production and is in a long slow decline.
Carthage Point Field, Adam's County Mississippi
KFG drilled the MacNeil #2 well in March 2013 and a successful offset, the MacNeil #3 in October 2013. In August 2014 payout of the project was achieved and KFG's working interest increased to 20.5% from 8%. Daily production is 50 BOPD.
LaGrange Field, Adam's County Mississippi
KFG has a 10% working interest in the Parker Lease with no reversion. Four wells have been drilled - three producers and one dry hole. Combined production on the lease is 90 BOPD and it is fully developed. Also at LaGrange but in a different part of the field, KFG drilled its Craig #1 well in November 2013 followed by its Craig #2 in January 2014. Production from both wells is about 115 BOPD. A third well, the Craig #3, was put on production in July 2014 and it is currently producing 50 BOPD. The Craig #4 well has been staked and will be drilled in December 2014. The Craig #1 and #2 wells have paid out and KFG's interest jumped from 10% to 21.5% in those wells. KFG's working interest in the Craig #3 well is currently10%
Mantua Field, Adams County, Mississippi
In September 2014 the Company completed its Barnum #2 well at 6398 feet in the Parker Sand of the Wilcox. The well is currently producing 140 BOPD and will be offset in the first quarter of 2015. KFG has a 9% working interest in that well, jumping to 20.5%at payout. At this writing there appears to be three potential offsets.
Franklin County, Mississippi
There are several areas in Franklin County being leased by the Company which KFG intends to drill in the first Quarter 2015. Depths range from 4400 feet to 6800 feet. In each instance KFG has mitigated its risk by only keeping a 10% working interest and, if successful, backing in for up to an additional 16.25%. At present three of these projects are drill ready.
Louisiana
Concordia Parish, Louisiana
KFG has three leases in Concordia Parish. The Dale lease went off production in April 2013 and was returned to production in May 2014.after being shutin for a year waiting on saltwater disposal well approval. The lease is currently producing 25 BOPD from two well with an average working interest of 17%. The Roundtree lease is currently shutin, awaiting a cement squeeze to shut off a channel in the cement and the Clayton Lease, (#1 Miller) continues to produce about 12 BOPD, KFG has a 4% working interest at Clayton increasing to 18% at payout. .
Insider Buying this week:
Latest 6 months of SEDI filings for KFG by transaction date, descending [?]
amended.gif Amended Filing
As of 11:59pm ET October 27th, 2014
Filing
Date Transaction
Date Insider Name Ownership
Type Securities Nature of transaction # or value acquired or disposed of Price
Oct 27/14 Oct 27/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 55,000 $0.130
Oct 27/14 Oct 27/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 80,000 $0.120
Oct 25/14 Oct 24/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 50,000 $0.090
Oct 23/14 Oct 21/14 Haney, Kevin Direct Ownership Common Shares 10 - Acquisition in the public market 40,000 $0.085
Oct 23/14 Oct 14/14 Haney, Kevin Direct Ownership Common Shares 00 - Opening Balance-Initial SEDI Report 5,100,000
A great summary from Pinnacle Digest came out after the close today on KFG. I think this will attract some new buyers
and watchers tomorrow as this company bucks the trend of the falling oil stocks. The best juniors are the ones that can
make money when everyone else is losing money. It didn't specify, but last year KFG made $120,000 half half of the
revenue and $76 price per barrel.
http://www.pinnacledigest.com/
http://www.pinnacledigest.com/blog/pinnacle-digest/kfg-resources-jumps-50-monday
Best part at the bottom of the article:
This is all relevant, because on Monday, KFG was among the most liquid stocks on the TSX Venture. In a tumultuous environment for even the most balanced and successful oil and gas companies, KFG has found a way to climb within striking distance of its 52-week high.
Investors will need to see continued production increases and exploration upside if its market cap is to rise.
KFG Resources is representative of a junior resource stock that can still catch a bid because it has revenue and low costs. When a company earns in for a limited percentage of ownership of any given well, it mitigates its risk hugely; if the companies involved should miss on the well, they move to the next opportunity.
A junior oil and gas company can earn 10% on 10 different wells, providing it ten times the opportunity of hitting on any single well vs. being the operator and earning 100% on a single well. This is not a new strategy, but one being utilized more and more often in the junior resource sector.
Additional insider buying as per Canadian Insider:
https://www.canadianinsider.com/node/7?menu_tickersearch=KFG+%7C+KFG+Resources
Here is the progress KFG has made between August 2013 and October 2014:
August 2013 - KFG Exited 2013 with a small profit, but lost 25% of Fayette's production due to payouts.
September 2013 - KFG earned $116,000 on just $500,000 in revenue at $76 per barrel price for LLS
November 2013 - Craig 1 put into production
December 2013 - KFG earned $126,000 on $758,000 revenue
February-March - Craig 2 and Parker 2,3,4 start drilling phase and put into production
April 2014 - KFG lost $300k due to accrued income, increased costs from hiring new employees, buying new equipment and additional costs from all the new wells.
June 2014 - Four wells paid out, turning 10% interests into 20% interests, increasing KFG's production by 35-40bopd. Craig 3 and Barnum 2 started drilling
July 2014 - Craig 3 put into production. New Reservoir was found
August 2014 - KFG has net profit of $67,500 for 2013 after 4 quarters(ended April 30th)
- Total revenue at $2,659,768. Says in MD&A that all lost production was recovered and even more from a year ago.
September 2014 - Barnum well put into production at 40bopd, but 2 weeks later production increased to 140bopd.
- Fall drill program announced, 3-4 wells to complete before end of December
October - KFG earned $461,000 on $900,000 revenue. Investor acquires a 10% stake in KFG.
The October results only include 22 wells of the 24 currently production, so in Q2 which will come out in December(ending October 31) we will see additional revenue from the following:
- Craig 3 well
- Barnum well
- Full quarter of the 4 wells that paid out in June
KEVIN HANEY ACQUIRES 10% VOTING INTEREST IN KFG RESOURCES LTD
Kevin Haney of Dauphin, Man., has acquired 5.1 million common shares of KFG Resources Ltd., effective Oct. 16, 2014. Total shares held directly and indirectly amount to 5.1 million voting units, representing a 10-per-cent interest. These shares were purchased for investment purposes. Mr. Haney may purchase additional shares in the market or, alternatively, sell some or all of his holdings, depending on market conditions. It is not the intention of Mr. Haney to influence control or direction over the management of the company.
For further information, contact Mr. Haney at 204-648-4383.
© 2014 Canjex Publishing Ltd. All rights reserved.
Looked at two main Mississippi oil sites today and saw that KFG's Craig 4 well and Seale(Franklin wild cat) are licensed and ready to drill whenever the company is ready.
http://gis.ogb.state.ms.us/MSOGBOnline/
The second thing was trying to see how well KFG is performing compared to it's peer in Mississippi and Louisiana. But DrillingEdge is only upto date until June. Also keep in mind that this is total combined production of KFG and it's partners, which doesn't include Craig 3 or Barnum.
http://www.drillingedge.com/mississippi
Breakdown of areas and where KFG ranks in terms of production as of June.
Jefferson County --> KFG was the main producer in this county
http://www.drillingedge.com/mississippi/jefferson-county
Adams County --> KFG was the second main producer in this county
http://www.drillingedge.com/mississippi/adams-county
Lincoln County---> KFG was the second main producer in this county
http://www.drillingedge.com/mississippi/lincoln-county
Warrn County--->KFG isn't very active here, only one small well in this county
http://www.drillingedge.com/mississippi/warren-county
Grand total for Mississippi is 18 wells in production with 12,185 barrels produced.
12,185(barrels) / 30(days) = 406bopd.
http://www.drillingedge.com/mississippi/operators/kfg-petroleum-corporation/31500
Then the company has a few wells in Louisiana. For whatever reason though, I can't find the breakdown of where these are on this website.
http://www.drillingedge.com/louisiana/operators/kfg-petroleum-corporation/2944
Shows 3 wells with a total production of 732bopd. KFG showed 22 in the Q1 results because it included Dale, which was shutdown in this quarter as mentioned in the MD&A. Now Dale is back up and Craig 3 and Barnum 2 are producing, so total count will be 24 wells for Q2 2014.
732(barrels) / 30(days) = 24bopd
Now there are some investors wondering what will happen with the recent drop in oil prices. Well KFG is covered. One of the few articles I was able to find about Louisiana Light Sweet crude, but it has upto date recent pricing which is important since KFG sells it's oil at these prices. Like I mentioned in previous posts, my estimated average selling price for KFG in Q2 will be around $95. LLS has been trading closer to brent prices over the last couple months rather than WTI. One of KFG's many advantages in this tough oil market. Just this week the price hit a low of $90.58, so KFG is still getting $90 a barrel and with $30 cost per barrel, very profitable still. Unlike Western Canadian select, it hit a low of $74.46.
http://www.petroleumnews.com/pntruncate/501597498.shtml
At the bottom of this article
Louisiana Light Sweet, a Gulf Coast benchmark which has recently been trading near par with Brent, settled at $96.29 on Oct. 2, but by Oct. 8 it had fallen nearly $6 settling at $90.58 according to CME Group information provided by Argus. Western Canadian Select, another North American benchmark, settled at $77.86 on Oct. 2, but by Oct. 8 it too had fallen settling at $74.46.
News: Barnum well producing at 140bopd, Craig 4 to be drilled shortly
KFG's operating profit at $460,581 in Q1 2015
2014-10-01 12:27 MT - News Release
Mr. Robert Kadane reports
KFG REPORTS OPERATING PROFIT FOR FISCAL 1ST QUARTER ENDING JULY 31, 2014
KFG Resources Ltd.'s wholly owned subsidiary, KFG Petroleum Corp. of Natchez, Miss., had net income of $460,581 for the company's fiscal first quarter ending July 31, 2014, compared with $113,525 in the corresponding quarter in 2013. Gross revenue for the quarter was $904,409, as compared with $582,176 in the fiscal first quarter of 2013. The company had cash on hand of $1,133,429 and a current ratio of 2.1 to 1. There was no long-term debt.
Adams county, Mississippi
Operationally, the company's Barnum No. 2 well in the Mantua field reported initial production of 40 barrels of oil per day in mid-September. After two weeks of production, the well is now producing 140 bopd from the original perforations at 6,398 feet in the Parker sand. The well has several potential zones behind pipe. Field development will begin in the first quarter of 2015 after extensive production testing. The company's working interest in the well is 9 per cent, jumping to 20.5 per cent at payout. Additionally, the Craig No. 4 well has been staked as a southwest offset to the Craig No. 3 well in the LaGrange field currently producing 50 bopd. The company's working interest in the Craig No. 4 is 10 per cent, jumping to 21.5 per cent at payout.
© 2014 Canjex Publishing Ltd. All rights reserved.
KFG Earns $461,100US in Q1 2014, $0.01c eps
KFG Resources Ltd. Financial and MD&A Highlights for Q1 2014 Ending July 31
(Expressed in US Dollars)
Price: $0.10
Shares Outstanding: 50,584,144 with no options or warrants
Cash: $1,133,429
Accounts Receivables: $1,032,148
Prepaid Expenses: $22,922
Reclamation Bond: $20,000
Property & Equipment: $1,432,033
Total Assets: $3,640,532
Total Liabilities: $1,042,248 (All payables)
Revenue
Oil and gas: $788,143
Management Fees $116,266
Total Revenue: $904,409
Total Expenses: $444,015
Net Income: $460,100
Basic and diluted income per common share: $0.01
Now we will move onto the MD&A. Keep in mind the following:
1) 4 main wells paid out mid Q1, so only half of that new revenue was added to this quarter
2) Craig 3 was put online end of Q1, no revenue from that
3) Barnum wasn't online until mid Q2
This is why the well count only shows 21. With Craig 3 and Barnum we are at 23. Not sure why it isn't 24, maybe one well was down this quarter. Either way, the above translates to a much bigger revenue/profit for Q2 and with several wells to go it will only increase. $0.04-0.05c eps for 2014 is very realistic at this point. Even at a lower range 10 times earnings price, KFG would be at $0.40-0.50c minimum by next fall. Doesn't include additional revenue and new discoveries either.
MD&A
Overall Performance
For the three months ended July 31, 2014, the Company had cash flow from oil and gas production of $788,143, compared to $519,526 for the three months ended July 31, 2013. Oil production decreased from 86.15 BOPD to 75.07 BOPD, and gas production decreased 3.86 MCF per day. The average price of gas increased $0.87 per MCF and the average price of crude oil decreased $11.43 per bbl when comparing the three months ended July 31, 2014 and July 31, 2013.
Overall the Company has recovered from giving up 25% of its interested in the Fayette Field wells at payout. Currently, with the MacNeil wells and Craig wells at payout, revenues are on a growth pattern again. The Company was able to grow just utilizing cash flow. Several new projects are in the pipeline and the Craig #3 well will payout in the next few months increasing that revenue stream. KFG will have no problems financing growth through its internal cash flow throughout the remainder of its fiscal year ending April 30, 2015. In addition, the Barnum #2 well is on production as of mid September 2014. The Craig #4 will be drilled in mid October 2014.
The Company reported net income of $460,100 for the three months ended July 31, 2014 compared to net income of $113,525 for the three months ended July 31, 2013, with the increase in net income a result of less operating expenses plus better prices for oil and new oil from the Craig and McNeil bases due to increased working interest in the wells.
The quarter ended July 31, 2014 reflected the production of the Craig #2 well as well as payout of the Craig #1 and #2 wells increasing KFG’s working interest from 10% to 21.5% and late in the quarter the MacNeil #1 and #2 paid out increasing the working interest in those wells from 8% to 20.5%.
Production at Fayette is stable and has started a slow decline. With the Dale lease back on production and new production coming off the Craig and Parker leases, KFG will have adequate internal cash flow to develop existing leases as well as support several new prospects in the coming months. Unless the price of oil collapses, the Company will generate sufficient capital to fund its requirements throughout 2014 internally.
LEVEL 2 QUOTE
Market Maker Shares Bid Price Ask Price Shares Market Maker
105,000 0.085 0.100 5,500
25,000 0.080 0.105 10,000
50,000 0.075 0.110 19,500
5,000 0.070 0.115 15,000
40,000 0.055 0.120 60,000
10,000 0.035 0.135 50,000
100,000 0.020 0.140 20,000
264,000 0.015 0.150 50,000
200,000 0.010 0.180 11,000
300,000 0.005 0.200 212,000
2 weeks left to go until Q1 results are out. Given the new payout structure that started mid Q1, profits should be growing every quarter from now on. Q2 will show the full impact of current rates around 160-170bopd and then Q3 will add the 3-4 new wells being drilled this fall, along with the payout of Craig 3 and Barnum 2.
KFG Resources starts completion work at Barnum
2014-09-11 07:36 MT - News Release
Mr. Robert Kadane reports
KFG FALL 2014 DRILLING SCHEDULE
KFG Resources Ltd.'s wholly owned subsidiary, KFG Petroleum Corp., of Natchez, Miss., has started completion operations on its Barnum well in Adams county, Mississippi.
Initial production rate from the Parker sand (a semi-depleted zone) is 40 barrels of oil per day.
KFG has three new projects ready to drill this fall -- two in Franklin county, Mississippi, and one in Adams county, Mississippi. If time permits, there will be additional drilling at Fayette field in Jefferson county, Mississippi.
The Craig No. 3 well, at the LaGrange field, has stabilized production at 50 barrels of oil per day. It is anticipated that a west offset will be drilled before year-end.
In all these wells, KFG has a 10-per-cent working interest, reverting to 21.5 per cent at payout.
© 2014 Canjex Publishing Ltd. All rights reserved.
Barnum now gives KFG 24 wells in production and a rate that's getting closer to 200bopd of light oil. With 3-4 lined up this fall, no doubt that it's an achievable target.
I was able to find the old Fayette page on KFG's website(link isn't attached anymore) and this shows that Fayette has a huge net back. Odds are that the Craig, Parker, Macneil and other leases are roughly the same as well. Even if LLS(Louisiana Light Sweet) was to drop to around $90 per barrel, KFG should still be getting close to a $60 net back. Like I said before, once Q1 and especially Q2 are out, this will change the revenue and profit direction of the company.
The other thing to keep in mind is the low decline rate of Fayette. Even thought KFG only has 75% interest now, production is still between 120-130bopd as per the Q3 results(Q4 doesn't specify). Sure two wells were added, but these are lower production and very low decline wells.
http://kfgresources.com/projects/p6faye.htm
As of December 1, 2011 the five Spring Hill wells produced stable production of approximately 110 BOPD. The Company owns 100% of the working interest (79.16% net) in the Spring Hill Nos. 1, 2, 5, 6 and 7 reverting to a 74.6% working interest (59.1% net) after payout of all costs of seismic, land, drilling, completion, taxes and operating expenses - currently about US $1,000,000. At a current price of $108 per barrel, the Company's net back after royalty, taxes and operating expenses is in excess of $75 per barrel. The No. 7 well opens up an additional offset to the south.
KFG NAV(Net Asset Value for 2013)
Total Assets: $3,017,302
Total Liabilities: $879,582
Oil Reserve Value: $ $8,599,000(No Discount)
$3,017,302(assets) - $879,582(liabilities) = $2,137,720(equity)
$2,137,720(equity) + $8,599,000(reserve value) = $10,736,720
$10,736,720(total assets) / 50,584,144(shares) = $0.2122 or $0.21c NAV
KFG has no warrants or options, therefore only common shares used. But this year KFG's NAV has already gone up given the 4 wells that paid out and the Craig 3 production + oil reservoir discovery.
**UPDATED PRODUCTION NUMBERS**
News Release - Name of Wells - Production
July 31 2014 - Craig 1,2,3 - 240bopd @ 21.5% and 10% = 41bopd
June 12 2014 - Macneil 2,3 - 60 - 70bopd @ 21.5% = 13 - 15bopd
June 12 2014 - Parker 1,2,3,4 - 130bopd @ 10% = 13bopd
April 1 2014(MD&A) - 9 Fayette wells - 120 - 130bopd @ 75% = 90 - 98bopd
Aug 28 2014(MD&A) - Dale well - 25bopd @ 18% = 4.5bopd - Put into production in April but numbers unknown until now
April 1 2014(website) - Roundtree - 15bopd @ 12.5% = 2bopd (29% at payout 2015)
April 1 2014(website) - Miller 1 - 15bopd @ 4% = 1bopd(18% at payout)
Wells Being worked on:
Barnum 2 - Salt water dispoal well being put in. Will be producing shortly
Seale(New area) - Approved by Mississippi, waiting to be drilled
Several other wells are to be drilled between now and year end. Q1 pay outs will only affect half of that quarter given the timing, but current production above will be fully implemented in Q2 since that started August 1st 2014.
Daily revenue estimated calculation using Brent pricing at only $100 per barrel
Macneil(13-15) + Parker(13) + Craig(41) + Fayette(90) + Roundtree(2) + Miller(1) + Dale(4.5) = 164.5 to 166.5 bopd. Lets calculate that with the lower number and LLS prices at $95 per barrel.
164.5bopd X $95 per barrel = $15,627 X 90 days(Q2) = $1.4 million in oil and gas revenue for Q2. Then add between $150,000 to $200,000 in management fees. Q1 will be good but Q2 will show the full impact of current production.
KFG Year End Results, Ending April 30th 2014
This will be the last year KFG produces at less than 100bopd. Given the new rates which started early June and new reservoir discovery over July, the company is easily producing at double the average for 2013. Q1 results will be out in exactly a month which will show a significant increase from last year's Q1 and Q4, then Q2 will be even higher given the payout times. Every quarter KFG should be increase in production from now on.
Price: $0.10
Shares Outstanding: 50,584,144
Insider Holdings: 10%
Options and warrants: 0
Financials
Assets
Cash: $1,205,750
Accounts Receivable: $577,215
Marketable Securities: $476
Prepaid Expenses: $14,486
Reclamation Bond: $20,000
Property and Equipment: $1,199,375
Total Assets: $3,017302
Liabilities
Accounts Payable: $700,604
Deposits from Co-owners: $178,978
Total Liabilities: $879,582
-Assets grew by $500,000 year over year. Then if you include the reserve growth and new potential, it's been a real transition of a year.
- The reason for the drop in oil revenues is very easy to explain. When KFG's main property paid out last year, the interest went from 100% to 75%. This loss was made up over 2013 but it took some time. Now of course we have exceeded it by quite a bit.
Revenue
(2013)Oil and gas: $2,240,754 (2012)$2,925,253
(2013)Management Fees: $419,014 (2012)$120,626
(2013)Expenses: $2,586,411 (2012)$2,961,875
(2013)Net Income: $67,467 (2012)$76,164
(2013)EPS: $0.0013c (2012)$0.0015c
Overall not bad given the circumstances over the year. Oil revenue was down quite a bit, but we picked up on the management side, going from 15 wells to 22 and now 24 in production with many more to do.
MD&A Highlights
Overall the Company has recovered from giving up 25% of its interested in the Fayette Field wells at payout. Currently, with the MacNeil wells and Craig wells at payout, revenues are on a growth pattern again. The Company was able to grow just utilizing cash flow. Several new projects are in the pipeline and the Craig #3 well will payout in the next few months increasing that revenue stream. KFG will have no problems financing growth through its internal cash flow throughout the remainder of its fiscal year ending April 30, 2015.
For the year ended April 30, 2014, the Company had cash flow from oil and gas production of $1,482,016, compared to $1,823,195 for the year ended April 30, 2013. Oil production decreased from 92.02 BOPD to 71.79 BOPD, and gas production
decreased 3 MCF per day. The average price increased $1.06 per MCF and the average price of crude oil decreased $3 per bbl when comparing the year ended April 30, 2014 to April 30, 2013.
Revenue from the sale of oil and gas was $2,240,754 for the year ended April 30, 2014, compared to $2,925,253 for the year ended April 30, 2013. The decrease in revenue is a result of lower prices and production primarily because oil revenues at Fayette were reduced by approximately 25% when the property paid out and triggered a revision of KFG’s interest from 100% to 74.9%.
Management fee revenue for the year ended April 30, 2014 was $419,014 as compared to $120,626 for the year ended April 30, 2013. The increase is a result of all of the wells drilled during the year. Overhead charges are for the drilling and completion of wells. Also, each new well incurred monthly overhead charges to operate the wells. KFG also received overhead charges on wells operated for other parties.
The Company reported a net income of $67,467 for the year ended April 30, 2014 compared to net income of $76,164 for the year ended April 30, 2013, with the decrease in net income a result of lower production rates during the year and an increase in general and administration expenses.
In April 2013, the Dale lease went off production just after the Fayette wells paid out – reducing the Company’s interest by 25% as a result production and prices fell. In August 2013, the MacNeil #3 helped get production back on track, but bad weather and price weakness hampered production. IN November 2013,, Craig #1 went on production and in February 2014, the Craig #2 went on production. But the Dale lease was still shut in. As of late March 2014, the Parker #4 went on production. The Dale lease went back on production in April 2014. Three events have occurred recently. The MacNeil #2 and #3 paid out and KFG’s interest went to 21.5% from 8% and the Craig #1 and #2 paid out and KFG’s interest went to 21.5% from 10%. And lastly, the Craig #3 was put on production (KFG’s interest is 10% until payout). The quarter ended April 30, 2014 benefited from all the field work as overhead income increased substantially.
Liquidity and Capital Resources
The Company’s main sources of liquidity are internally-generated cash flow from its oil and gas operations and access to equity capital markets. Because KFG’s internally-generated cash flow is presently sufficient to fund its overall operating expenses, the Company will not require continued additional funding in order to execute on its business strategy. The Company anticipates that public capital markets will serve as the principal source of capital to finance its future oil and gas activities and/or significant property purchases. Changes in the capital markets, including a decline in the prices of natural gas
and oil, could materially and adversely impact on KFG’s ability to complete further equity financings, with the result that the Company may be forced to scale back its operational activities.
Fourth Quarter
In February 2014, the Craig #2 well was put on production. Initial production was 80 BOPD throughout the quarter. In March 2014, the Parker #3 and Parker #4 were put on production producing a combined total of 100 BOPD. KFG has a 21.5% working interest in the Craig #2 well and a 10% working interest in the Parker wells. Also the Dale lease in Louisiana was put back on production for 25 BOPD. KFG’s interest in those wells averaged 18% at April 30, 2014. The Craig and Parker wells are in Adams Co., Mississippi.
Outlook
Production at Fayette is stable and has started a slow decline. With the Dale lease back on production and new production coming off the Craig and Parker leases, KFG will have adequate internal cash flow to develop existing leases as well as support several new prospects in the coming months. Unless the price of oil collapses, the Company will generate sufficient capital to fund its requirements throughout 2014 internally.
KFG 51-101 Ending April 30th 2014
Before reading, please keep in mind that these reserves have already increased substantially since the report was done. This is due to the Craig 1 & 2 wells, along with the Macneil 2 & 3 wells paying out early June. Interests went from 10% to 21.5% and that means additional reserves for the company. As well, during the summer KFG found a new reservoir drilling Craig 3 and will likely find some new reserves with Barnum, Seale and any other wells drilled between now and April 30th 2015.
The reserves below are split up between KFG and it's partners.
Light Oil
Proved Reserves - 381,400 *** 89,200 barrels NET to KFG
Probable Reserves - 231,600*** 64,400 barrels NET to KFG
Natural Gas
Proved Reserves - 35,200***3,300BOED NET to KFG
Total: 613,000***153,600 barrels NET to KFG and 3,300 boed of nat gas
NPV(Net Present Value) Before Tax - $8,599,000USD
Some recent articles about drilling in Mississippi. KFG has leases in these areas and with more success around us means land values will go up as well as additional
M&A in the area.
July 2014 - http://www.nola.com/business/index.ssf/2014/06/louisiana_mississippi_shale_dr.html
June 2014 - http://www.nola.com/business/index.ssf/2014/07/goodrich_petroleum_readies_to.html#incart_related_stories
February 2014 - http://bigstory.ap.org/article/shale-drilling-could-jump-2014-miss-la-0
KFG Level 2
LEVEL 2 QUOTE
Market Maker Shares Bid Price Ask Price Shares Market Maker
21,000 0.125 0.130 500
21,000 0.120 0.135 12,500
70,000 0.100 0.140 52,000
4,000 0.085 0.145 94,000
44,000 0.080 0.150 109,500
5,000 0.075 0.160 17,500
5,000 0.070 0.180 61,000
120,000 0.045 0.200 26,000
10,000 0.040 0.290 40,000
100,000 0.020 0.750 51,000
Just joined this site, to help spread the name.
I think Denbury wanted to buy one field years ago , I think BOB will build the production by the drill bite to at least 400 to 500' bopd and many will come knocking.
Best fit is the major JV partners from Texas, they are oil men already.
They would take it private.
Freedom
Your welcome. I agree, Rob Kadane is one of the best CEO's I've dealt with over the last four years and I think he will be rewarded nicely down the road.
Took quite some time to arrange everything in regards to the wells, partners, drilling, etc. But I strongly believe it paid off and we are in great shape right now. I don't see how this stock can lose other then the price of oil collapsing. We get paid on LLS(Louisiana Light Sweet) which is a crude oil that has a premium ontop of WTI and just under Brent.
Biggest issue now is getting the word out there that KFG is back in business and growing quickly, but that will come in time. A new promotional campaign will be ideal and we can afford that now given the roughly $500,000 per month cash flow.
Thank you for that excellent summary, Mr. Buck. I've watched this for many years myself, and it slipped out of my mind-share until a few days ago when it popped out of one of my scans.
Mr. Kadane is a walking testament to the power of persistence, all right, and he deserves to be rewarded handsomely for that alone.
I have no idea what Rob Kadane's end game plan is. I would think once we get to 400bopd+ that he might want to sell the company to some of the operators down there but who knows. Given his history of two companies sold in the past, this is the likely outcome. Just couldn't give you a time frame.
All I can say is that were finally on a growing streak right now and I have been watching KFG for several years. With all these new oil finds and the support of the farm-in partners paying pretty much all the costs on each well, we are in good hands. Just have to sit back and watch the production accumulate.
Right now were at 160-170bopd, I think after the Barnum well is completed and pays out, along with Craig 3 we will be doing 200bopd. I would guess year end(December) exit production rate to be around 230bopd since we have a couple more wells to drill between now and then.
Looking forward to year end results coming out in a few weeks. We should show another year end profit, higher revenues and our reserves should at least double given we went from 10 to 20 wells and 3 new producing zones.
How soon do you anticipate Kadane might either :
1) sell out to a larger operator; or
2) take the Company private?
He doesn't need the hassles of being a public company any more, so why does he still bother to do so?
KFG Resources completes Craig No. 3 well at LaGrange
2014-07-31 07:46 MT - News Release
Mr. Robert Kadane reports
KFG OPERATIONS UPDATE
At the LaGrange field in Adams county, KFG Resources Ltd.'s wholly owned subsidiary, KFG Petroleum Corp., along with its partners, has completed the Craig No. 3 well in the Second Wilcox formation at 4,375 feet. The well is currently pumping 90 barrels of oil per day with 15 barrels of water per day. KFG has a 10-per-cent working interest in the well, reverting to a 21.3-per-cent interest at payout. The well is in a separate reservoir from the Craig No. 1 and No. 2 wells and sets up an offset location. Total lease production is currently 240 barrels of oil per day.
At the Mantua field in Adams county, a saltwater disposal permit has been issued for the Barnum No. 2 well and completion operations have begun. KFG has a 9-per-cent working interest in the well, reverting to a 20.5-per-cent interest after payout.
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1 / 4000 0.085 0.17 25000 / 1
2 / 44000 0.08 0.18 11000 / 1
1 / 5000 0.075 0.2 26000 / 2
2 / 8000 0.07 0.25 40000 / 1
1 / 6000 0.055 0.34 6000 / 1
0 / 120000 0.045 0.44 10000 / 1
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KFG Financial Comparison Chart (Audited Annual Financials From 2008 to 2015)
(Expressed in US Dollars)
KFG Year End Results in 2008
- Cash: $2.66M, Total Assets: $2.96M, Total Debt: $553K
- Revenue: $798K, Net Loss For The Year: -$64K
- Shares Outstanding: 30,874,646
- This was before the global crisis. KFG was trading around $0.15c and still raising money. Total was 25 million shares which is half of the entire O/S right now and a major cash injection. However this was done at a lower price.
KFG Year End Results in 2009
- Cash:$1.62M, Total Assets: $2.33M, Total Debt: $156K
- Revenue: $645K, Net Loss For The Year: $456K
- Shares Outstanding: 42,147,311
- Additional Funds Raised
KFG Year End Results in 2010
- Cash: $304K, Total Assets: $1.84M, Total Debt: $640K
- Revenue: $997K, Net Loss For The Year: -$1.4M
- Shares Outstanding: 47,786,580
- Additional Funds Raised
KFG Year End Results in 2011
- Cash: $1.03M, Total Assets: $2.94M, Total Debt: $834K
- Revenue: $2.9M, Net Income For The Year: $832K
- Shares Outstanding: 50,480,644
- This was a milestone year because KFG hit a string of wells(Fayette) that helped them recover from the financial crisis. Some assets were also sold and funds raised as well. The stock went back to the teen price range this year.
- Additional Funds Raised.
KFG Year End Results in 2012
- Cash: $637K, Total Assets: $2.43M, Total Debt: $439K
- Revenue: $3.5M, Net Loss For The Year: $144K
- Shares Outstanding: 50,559,191
- Despite the record profit, KFG took a major risk this year and unfortunately lost. Drilling a 100% interest Tuscaloosa well which cost the company over $1 million USD and it did not work out. This is why KFG’s strategy changed from solo wells to JV wells in multiple areas.
KFG Year End Results in 2013
- Cash: 861K, Total Assets: $2.5M, Total Debt: $430K
- Revenue: $3.05M, Net Income For The Year: $76K
- Shares Outstanding: 50,584,144(Some shares cancelled and this is the current share structure.
- This was the year where KFG started to diversify into multiple wells rather than just rely on the 9 Fayette and do a couple 100% interest wells.
KFG Year end Results in 2014
- Cash: $1.21M, Total Assets: $3.02M, Total Debt: $880K
- Revenue: $2.7M, Net Income For The Year: $67K
- Shares Outstanding: 50,584,144
- The reason why revenue went down this quarter was due to the fact that the 9 Fayette wells paid out from 75% to 59%, along with additional costs from doing other wells. However, new production was put in place to replace the lost paid out production from Fayette.
- Debt increase is based strictly on deposits from partners, not bank or payables.
KFG Results after 9 months in 2015
- Cash: $2.134M, Total Assets: $3.7M, Tot Debt: $1.07M
- Revenue: $2.27M, Net Income After 9 Months: $493K
- Shares Outstanding: 50,584,144
- If the price of oil didn’t drop 60% and weather didn’t hamper KFG’s operations (as stated in their last news release), net income would be close to $1 million USD right now. Regardless, this has not stopped KFG’s growth plans. Five to seven wells have been announced for the summer drill campaign and the company can only go forward from here.
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