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I tried to contact them with no success. I'm tuned in now with the development of the "pipeline" to be built through the US. I hope Strata gets some exposure and this baby gets going.
Grapeman, do we know if any of their meetings in Asia resulted in any favorable investments?
Grapeman,
Its been a while and Strata has not moved. The value of over $1 billion in reserves is not enticing investors. You've held this for a while now. What are your thoughts? What happened to our Indian investors that invested $1 million into the company?
I don't see it on any news letters so I think some day traders might of bought on the news release and are now dumping. This is a thinly traded stock, so any large buys/sells will move it.
Carboniferous Oil Sands
Strata has focused its efforts on carbonate-hosted bitumen sands. The carbonates are the next challenge in the Alberta oil sands industry. Like oil sands two decades ago, carbonates represent an enormous and relatively untapped petroleum resource. The means for producing bitumen from carbonates is still being understood. The nature of the carbonate triangle in Alberta tends to vary and there is unlikely to be a single one-size-fits-all strategy for production. Cold production may be possible in some areas although in most cases production requires an in-situ treatment. Various technologies have been tested and others considered, including similar technologies to those employed in oil sands (cyclic steam, SAGD, etc). Bitumen carbonates are still being understood, and as yet there are several techniques which may prove to be effective. We are in the process of determining the most efficient means of producing the bitumen from our Peace River project.
Carbonate oil sands are an unconventional resource that remains almost untapped. While much of the world now knows about Alberta’s vast oil sands resource, many people are unaware that a bitumen resource of similar magnitude is locked in carbonate rock. According to a report by Petroleum Technology Alliance Canada (PTAC), 26% of Alberta’s bitumen resources are contained in carbonate rather than sand formations. One northern Alberta carbonate formation alone — the Devonian-age Grosmont complex — has bitumen volumes in place comparable to the huge Athabasca oil sands deposit. This comparison is made in the 176-page official history of the Alberta Oil Sands Technology and Research Authority (AOSTRA), the long-since disbanded provincial agency set up in 1974 to promote bitumen recovery technologies. The history devotes four well-illustrated pages to bitumen carbonates. The resource received serious attention during the AOSTRA years with a series of pilot tests running in the Grosmont formation between 1975 and 1987. However, oil prices fell and funding was cut. The remotely located and little known bitumen carbonates were largely forgotten until Royal Dutch Shell plc paid nearly $500 million dollars for leases in 2006.
Contained in a roughly triangular 70,000- square-kilometre area of northern Alberta called the Carbonate Triangle, the deposits may be the most technically challenging of the province’s bitumen resources. The basic difference between oil sands and bitumen carbonates is the former is bitumen mixed with unconsolidated sand, which can be either mined or produced from wells. The latter, as the name implies, is bitumen in carbonate rock — both dense limestone and heavily karsted rock. Grosmont bitumen is even heavier than the Athabasca bitumen and the reservoir is extremely variable, meaning that a single recovery method is unlikely to work throughout the formation. The lack of understanding of the heterogeneous nature of the reservoir is the main hurdle for developing successful bitumen recovery schemes. The bitumen is contained in a dual porosity system — both in the vugs (cavities or fractures) and in the rock matrix itself. The vugs could potentially be good news in that they could conceivably improve permeability once the viscosity of the bitumen is raised by heat or other means, but bad news if they serve as channels for steam to escape from the area of interest. In the karsted areas, these irregular cavities and tunnels are often the diameter of a man’s arm, and sometimes much larger. According to the PTAC review of the pilot results, challenges of drilling through this karsted rock include the potential for loss of drilling fluids into the formation, and problems with the placement of cement to maintain a strong well-to-formation bond.
DROWNED AREA OIL SANDS LEASE
Acquisition of Interest
On September 7, 2005 the Company acquired a 100% interest in Alberta Oil Sands Lease #7400100011 (the ‘Drowned Property’). The rights to the Drowned Property were acquired for a payment of CDN $25,000 (USD $20,635) as well as other closing costs of CDN$9,874 (USD $8,150). The Drowned Property covers 512 hectares of land in the Drowned Area of the Wabasca oil sands in the West Athabasca area of Northern Alberta. The lease gives the Company the right to explore the Drowned Property covered by the lease.
Strata's acquisition of the Drowned Property lease includes an overriding 4% royalty agreement with the vendor. The royalty is to be paid on a well-to-well basis and is payable on all petroleum substances produced by any well on the Property. In addition, the Company must pay the province of Alberta CDN $1,792 (USD $1,471) per year to maintain its right to the lease. The lease is subject to a royalty payable to the government of Alberta. The royalty is calculated using a revenue-less-cost formula.
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In years prior to the recovery of the project’s capital investment, the royalty is 1% of gross revenue. Once the project costs have been recovered, the royalty is the greater of 1% of gross revenue or 25% of net revenue.
Location
The Drowned Property lies near the southern edge of the Wabasca Heavy Oil/Oil sands field in west Athabasca approximately 45km south of the town of Wabasca or 60km Northeast of Slave Lake.
Lease Number Hectares Townships Range Section
7400100011 512 75, 76 23 1 and 36
Drowned Project Lease Information
The Drowned Property is comprised of a single lease with the government of the province of Alberta, Canada. The lease is a fifteen year lease and expires on October 4, 2015.
Lease Number Hectares Rent / Hectare Annual Minimum Lease Payments
7400100011 512 CDN $3.50 (USD $3.33) per year CDN $1,792 (USD $1,705) per year
Regional Geology
Regionally, the Wabiskaw Reservoir consists of three overlapping en-echelon sand bodies interpreted as shoreface sand which coarsen upwards from shale to fine sand. The three bodies are informally referred to as Wabiskaw “A” Sand, Wabiskaw “B” Sand, and Wabiskaw “C” Sand. The three bodies are separated from each other by shales and each has proven to be correlatable and mappable over a wide area. All three bodies contain bitumen but only the bitumen sand of the Wabiskaw “A” is being cold produced at the present time. The “B” and “C” are generally thinner and contain smaller bitumen accumulations.
Gas and water are also significant components of the reservoir fluids in the Wabiskaw sands. Several associated gas fields are currently in production. There may be a distinct basal water leg below the bitumen. This is especially true in the southwestern part of the Wabiskaw reservoirs.
The deposit lies above the western part of the Athabasca oil sands and extends westward somewhat beyond the McMurray Formation edge. In many regions, the Wabasca is oil rich and it overlies the McMurray forming two stacked reservoirs. Detrital matter arrived mainly from the west but mixed with a small component of sediments from the shield. The bitumen is highly viscous and is at a depth of 100 to 700 meters. The Wabasca is classified as the lowest Member of the Clearwater Formation and therefore overlies the McMurray Formation. The reservoir and the thickness of oil saturated material vary from 0 to 10 meters.
Property Geology
Several pre-existing bore holes indicate that neither the Wabiskaw “A” sand nor the Wabiskaw “B” sand is present on the Company’s Drowned Property, although it appears that 0 to 4 meters of a thin bitumen-bearing Wabiska “C” sand may be present. In addition, the McMurray Formation is present beneath the Wabiskaw and fills a local north-south oriented valley system incised into the older limestone basement. These McMurray valley filled sediments appear to be complex, consisting mainly of water-bearing silts and clays, and hold only minor, discontinuous, bitumen-bearing sands of an unknown quality. The Wabiskaw and McMurray sands lie at a depth of 550 to 600 meters and the Grand Rapids reservoir lies at a depth of 425 to 500 meters.
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Previous Work
Historically, the Drowned Project has had four wells drilled on it by companies owning the gas exploration rights. The geophysical well logs demonstrate the presence of bitumen in all four wells, one of which shows the presence of oil sands. The Company did not undertake any exploration work on the Drowned Property in 2009.
Planned Work by the Company for 2010
The Company has focused its exploration efforts on its Peace River Property and as a result, does not have any current plans to undertake an exploration program on the Drowned Property in 2010 due to our limited funds.
PEACE RIVER OIL SANDS LEASES
The following are two maps showing the location of the Company’s 42 oil sands leases in the Peace River region of northern Alberta, Canada.
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Acquisition of Interest
The Company has entered into a series of leases in multiple transactions with the province of Alberta in the Peace River area of Alberta, Canada (the “Peace River Property”). All of the leases were acquired through a public auction process that requires the Company to submit sealed bids for land packages being auctioned by the provincial government. Upon being notified that it has submitted the highest bid for a specific land parcel the Company immediately pays the government the bid price and enters into a formal lease with the government. The bid price includes the first year’s minimum annual lease payments. The specific transactions entered into by the Company are as noted below.
Date Number of Leases Land Area
(Hectares)
Annual Minimum Lease Payments
December 15, 2005 7 10,752 CDN $37,632 / USD $35,806
June 15, 2006 3 4,864 CDN $17,024 / USD $16,198
August 10, 2006 9 7,424 CDN $25,984 / USD $24,723
August 24, 2006 2 2,048 CDN $7,168 / USD $6,820
October 19, 2006 4 3,584 CDN $12,544 / USD $11,935
November 2, 2006 9 14,336 CDN $50,176 / USD $47,741
January 11, 2007 4 4,608 CDN $16,128 / USD $15,345
January 24, 2007 2 2,304 CDN $8,064 / USD $7,673
April 3, 2008 2 512 CDN $1,792 / USD $1,705
42 50,432 CDN $176,512 / USD $167,947
The Peace River Property consists of a total of 50,432 hectares of land in a region of northern Alberta known as Peace River. The leases are subject to royalties payable to the government of Alberta. The royalty is calculated using a revenue-less-cost formula. In years prior to the recovery of the project’s capital investment, the royalty will start at 1% of gross revenue, and increase for every dollar oil is priced above $55 per barrel, to a maximum of 9% when oil is priced at $120 or higher. Once the project costs have been recovered the net royalty, applied post-payout, will start at 25% of net revenue and increase for every dollar oil is priced above $55 per barrel to 40% when oil is priced at $120 or higher.
Location
The Peace River Property lies in the Peace River oil sands field in Alberta in an approximate 50 to 60 kilometer arc from the town of Peace River. Our holdings in the Peace River area are situated in three distinct areas consisting of the Cadotte, Culp, and Bearhead groups of leases. The Cadotte leases lie northeast of the town of Peace River, the Bearhead lease are to the southeast while the Culp lease are located almost due south.
Peace River Project Lease Information
The Peace River Property is comprised of 42 leases with the government of the province of Alberta, Canada. All of the leases are for a 15 year term, require minimum annual lease payments, and grant the Company the right to explore for potential oil sands opportunities on the respective lease.
Regional Geology
The Peace River Cretaceous clastic reservoir consists of a complex stratigraphy similar in nature to the Athabasca Deposit to the east. These are thought to comprise fossil estuarine systems where the best reservoirs are contained in tidal inlet and barrier sands. Secondary reservoir targets may be tidal delta, bayhead delta, tidal channel, and tidal flat sands. The Peace River Carboniferous reservoir consists of platform sediments with relatively few reef building organisms. Structurally, the Peace River strata dip to the southwest and the elevation of the bitumen-bearing interval lies between 50 and 100 meters below sea level or at a depth of between 680 to 790 meters below the surface.
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Property Geology (Cadotte Leases)
The Company has not yet undertaken significant exploration of its Bearhead and Culp leases. The discussion in the following sections of this report relates to the Cadotte leases.
Strata has focused its efforts on the bitumen resources contained in the Bluesky/Gething clastic Cretaceous Formations and the Debolt/Elkton carbonate Carboniferous Formation in the Cadotte area. In particular, our exploration programs to date have focused on 29 sections in the Cadotte area located in Townships 86 and 87, Ranges 18 and 19W (the “Target Area”).
The nature of the geology of the carbonate sequence in the Target Area has a significant influence on the distribution of the bitumen resource. The principal reference source for this section is the Alberta Research Council’s publication, “Geological Atlas of the Western Canada Sedimentary Basin”. The sequence that hosts the bitumen deposits is the Rundle Group of Lower Carboniferous age. The Rundle Group in this area includes three stratigraphic units which, in ascending order, are the Pekisko, Shunda and Debolt Formations. From place-to-place the Debolt Formation may also include another distinct unit, the Elkton Member. In the Cadotte Lease area, the Elkton Member is usually present, as long as the overlying unconformity with the Cretaceous sequence has not eroded the entire Debolt Formation sequence. Although there are many intervals that are bitumen enriched in the Rundle sequence in the Cadotte Lease area, the principal enrichment zones occur in the Elkton Member, the upper half of the Debolt but usually not right at the top of the formation and, to a lesser extent, in the Shunda Formation. The high grade zones of enrichment are those that occur in the Elkton Member and the Debolt Formation.
A Cretaceous clastic sequence that includes the Gething and Bluesky Formations at the base, unconformably overlies the Carboniferous rocks in this area. All the beds dip gently to the west with those lying below the unconformity having a somewhat greater dip than those above it. This causes the sequence below the unconformity to be eroded to a greater degree to the east and to be less complete, compared with the west. These westerly dips are the result of post-depositional tectonic events and do not reflect the original orientation of the accumulation of sediment. The Carboniferous sequence of the Rundle assemblage accumulated as a result of a series of prograding events that developed in a southerly to south-westerly direction.
The Carboniferous sequence mainly includes platform sediments that show generally shallower-water characteristics up-section. In a basinward direction the depositional facies proceed from beach and lagoonal environments through shoals of the shelf margin to marine basin muds. The lithologies that result include high energy siliciclastics of the beach environment, through various types of carbonates on the platform and its slope to shale in the deep marine environment. There even appear to be beds present that have the character of unconsolidated coarse sediments. Several transgressive events therefore resulted in the accumulation of clastic sediments interbedded with carbonate units.
The carbonate units included relatively few reef building organisms and thus there was little tendency for irregular geological bodies such as reefs to form in this sequence in this area. From one well to the next the regular nature of the deposition that took place at this time is apparent and it is relatively easy to show the correlation that exists between the same units in adjacent wells in the target area. This feature of regular bed continuity is in strong contrast to the variability of the clastic units of the overlying Cretaceous sequence as seen in the Athabasca region.
It is also most noteworthy that the bitumen enrichment is strongly influenced by the bedded nature and continuity of the sediments. It is readily possible in many cases to show the same details of the enriched sequence in adjacent wells even when they are spaced a kilometre or more apart. This has a very strong impact on the selection of data separation distances for the classification of resources; in this sequence an equivalent assurance of existence is achieved with much wider spacing of wells than that used in the classification of bitumen resources for the Cretaceous surface mineable oil sand deposits presently being explored and developed near Fort McMurray.
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Previous Work
During the winter drill season of 2006 – 2007, Strata drilled four wells on the Cadotte leases. Three of these wells were within the Cadotte Target Area and one was in the Cadotte East leases. All of the wells were drilled and cored. Three wells were drilled with cores in the Cadotte Target Area, two of which were cased allowing for production testing with the ability to re-enter these wells for future testing. The other well was abandoned due to drilling fluid losses during drilling which did not allow the well to be cased for testing in the future. The fourth well drilled in the Cadotte East location was cored and cased. Due to natural gas flowing from the well, to which the Company did not have the rights to, additional borehole tests were not conducted. The cores of all of these wells were tested and examined in a laboratory in Calgary. The results of these tests were that cold production was not viable. However, the results indicated that the bitumen would flow at approximately 85°C. These results will allow the company to explore different means of extraction in addition to steam.
Former lease holders have drilled wells on and around the Company’s Target Area. Geophysical well logs are of variable quality but generally consist of a full suite of tools to evaluate the potential reservoirs. With respect to available drilling data, the leases of the Target Area are drilled at an average spacing of one well per section. However, not all of these existing wells were drilled to investigate the sequence located on the Company’s Cadotte leases. The effective average spacing with wells that have penetrated the Carboniferous sequence is approximately 0.8 wells per section. This spacing is from twenty-three wells on or immediately adjacent to the leases. There are an additional two hundred nineteen wells in the surrounding area, the data from which has also been referenced and inspected by the Company to assist with its evaluation of the Cadotte leases.
However, the quality of the data from the wells of different vintage is quite variable. Several of the wells were drilled in the 1950’s. The drilling records and logs for these wells are sometimes poor or absent or they may be less complete than those of more recently drilled wells. A database search was done to identify higher quality data which was restricted to wells drilled since 1970 and this, plus the new Strata wells was used as the primary reference data. A total of eighteen wells of this vintage are located on or immediately adjacent to the lease blocks. The well log data from these wells is the primary source of information on the leases available for the present evaluation but this was supplemented by high quality data from a further thirty-nine more distant wells in the area.
Planned Work by the Company for 2010
Strata intends to continue to discuss a variety of funding arrangements with potential partners in 2010, but until funding can be secured the Company's development plans will temporarily be put on hold. Once financing has been secured, the Company plans to undertake an engineering and production testing/ drilling program in the Cadotte target area. The Company does not have any plans to undertake land acquisitions in 2010.
Estimated Resources of Bitumen
In the United States, registrants, including foreign private issuers like us, are required to disclose proved reserves using the standards contained in Rule 4-10(a) of the United States Securities and Exchange Commission’s (“SEC”) Regulation S-X.
The Company completed the drilling of its first four wells in the winter drilling season of 2006 – 2007. Strata had engaged Norwest Corporation (”Norwest”) of Calgary, Alberta, Canada to assist Strata with the planning and undertaking of its exploration of the Cadotte leases. On August 16, 2007 Norwest completed a technical report titled Evaluation of In-Place Bitumen Resources - Cadotte Leases and on February 29, 2008 Norwest Questa Engineering Corporation (“Norwest Questa”) of Golden, Colorado completed a report titled Preliminary Feasibility Study of the Cadotte Leases, Alberta, Canada. Both of these reports are available to the public on the www.sec.gov web site. All discussion in this section is qualified by reference to the two reports and readers are advised to read the two technical reports in their entirety.
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Evaluation of In-Place Bitumen Resources - Cadotte Leases – August 16, 2007
The study was designed to comply with the requirements of National Instrument 51-101 and the resource classification scheme and criteria elaborated in Volume 1, of the Canadian Oil and Gas Evaluation Handbook. Recoverable bitumen volumes were not addressed in this report because no estimate of the recovery factor was available at the time. Mr. Geoff Jordan, P. Geol., former Senior Vice President of Norwest Corporation and a qualified person as defined by National Instrument 51-101 was responsible for the preparation of the technical information in the report.
The amount of exploration drilling and testing on the Cadotte Target Area is sufficient for that part of the Peace River Oil Sand deposit to be classified as a Discovered Resource (the classification system was subsequently changed such that the Discovered Resource would now be called Discovered Petroleum Initially In-Place (PIIP)). The classification of the Discovered Resource into Low, Best (Most Likely) and High categories was based on the following criteria:
· The Low Estimate includes all of the material that has a minimum grade of 8 wt% and a minimum thickness of 10 m;
· The Best (Most Likely) Estimate includes all of the material that has a minimum grade of 8 wt% but no minimum thickness; and
· The High Estimate includes all of the material without any grade or thickness constraint. Hence the latter is an estimate of the original bitumen in place for the zones under investigation in the Cadotte Target Area.
The results of the different estimates for the Original Bitumen In Place (“OBIP”) are presented on the following table:
Effective OBIP for the Cadotte Area by Target Zone
in millions of Stock Tank Barrels (MMSTB), Using 8% wt Cut-off
Formation Low
Estimate Best (Most Likely)
Estimate High
Estimate
Bluesky/Gething N/A N/A 103
Debolt 1,443 1,500 1,503
Elkton N/A 490 644
Total 1,443 1,990 2,251
In the Bluesky/Gething Formations the results indicate that there are some areas where grades above the threshold of 8 wt% occur but these are somewhat scattered and there are no areas where especially high grade results were found. At the same time, the ore thickness is generally relatively low.
It is important to note that the resource estimates presented in this report are made for quantities on an in-place basis. This is not an estimate of quantities that may be recovered. Such an estimate could not be made at the time because there was no reliable value available for the bitumen recovery factor that should be applied. Such a factor is determined as a result of the completion of various engineering tests and analyses.
The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time this report was prepared, the estimates presented herein are considered reasonable. However, they should be accepted with the understanding that additional data and analysis available subsequent to the date of the estimates may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources of bitumen will be recoverable.
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Neither Strata nor Norwest make any express or implied warranties or guarantees of any kind concerning this report; including without limitation any implied warranty of merchantability or fitness for a particular purpose. Specifically, neither Strata nor Norwest make any warranties or guarantees that any property identified in this report will produce oil and/or gas in any quantity, or that any property identified in this report will produce or receive any economic, commercial, or other benefit.
Readers of this 20-F are advised to read the August 16, 2007 report titled Evaluation of In-Place Bitumen Resources - Cadotte Leases, that is publicly available on the www.sec.gov web site, was filed on September 27, 2007 under cover of 6-K.
Preliminary Feasibility Study of the Cadotte Leases, Alberta, Canada – February 29, 2008
The preliminary feasibility report was prepared in compliance with Canadian National Instrument 51-101 guidelines for disclosure concerning oil and gas resources in Canada. NI 51-101 requires that the procedures and criteria of the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook) be used for resource classification and these standards and criteria have been used in this report. In this case it has been found that the estimate of potentially recoverable bitumen in the Cadotte Target Area cannot yet be classified as a Contingent Resource. The major factor is that, at present, there is no pilot project that is applying in-situ recovery methods to bitumen in a hardrock carbonate host that can be used as a demonstration of recoverability. Not only is this the case for Canada but there are no suitable examples anywhere in the world. This means that existing pilot projects in clastic hosts, which have different physical characteristics from carbonates, have to be used for performance prediction. This additional risk prevents the “Contingent Resource” classification being made. The additional factors that also prevent classification as a Contingent Resource include:
1. A lack of a cost estimate for the full-field development and operation of a bitumen recovery and upgrading project;
2. Lack of permeability data for the target zones; and
3. Limited geologic and reservoir data samples for the target zones
The Norwest August 16, 2007 report resource estimate is classified as “Discovered Resources”, in accordance with the criteria and former classification scheme of the COGE Handbook. The current version of the COGE Handbook has re-titled “Discovered Resources” as “Discovered Petroleum Initially In Place” (“Discovered PIIP”). The Pre-Feasibility estimate prepared by Norwest Questa is compliant with the requirements of National Instrument 51-101 with respect to classifying the resource as Discovered PIIP. Dr. John D. Wright, Ph.D., P.E., who was President and Chief Engineer, of Norwest Questa Engineering Corporation at the time of the preparation of the Preliminary Feasibility, is a qualified person as defined by National Instrument 51-101. Dr. Wright supervised the preparation of the technical information in this report.
The analogy method was utilized to develop recovery factors that were applied to the OBIP estimates to obtain a low, most likely, and high estimate for potentially recoverable bitumen. Several projects using technology similar to that expected to be implemented on the Cadotte leases were used as analogies for a bitumen recovery method and a resultant range of recovery factors. Shell’s Carmon Project (“Carmon Creek”) was one of the primary analogies utilized by Norwest for the recovery factor estimates. Norwest reviewed the Carmon Creek Project and concluded that some bitumen bearing stratigraphy on Strata’s land correlates with the same stratigraphy at Carmon Creek. Over the last 25 years, Shell has tested numerous recovery methods at Peace River and has recently concluded that Horizontal Cyclic Steam (“HCS”) is the optimal recovery method for Carmon Creek. The present Preliminary Feasibility Study for Cadotte is based on the application of that method of extraction, as well as the Shell Carmon Project well layout and designs which were obtained from various public disclosure reports.
For the Cadotte leases a production schedule was developed over the key Target Area of twenty nine sections. Each section, which has an area of one square mile, is about the same size as the Carmon Project pad and development block design. Each pad and development block includes 20 wells of 1,400 m length, each of which is about 600 m in the vertical direction and 800 m horizontally. In the design the pads are “brought on stream” over a four year build-up period. The development block sequence is implemented such that the highest grade and thickest ore blocks are addressed first as long as the local infrastructure is able to service those areas. During the main period of development, the daily production rate for the leases is about 56,000 barrels.
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The production life for this schedule exceeds 20 years. Cost estimates for this preliminary feasibility study were obtained from a review of public literature.
Based on the analogy method with an adjustment for difference between gross and effective OBIP calculations, Norwest Questa estimated the following recovery factors for application to the effective OBIP deterministic cases:
· 17 percent for the Low estimate
· 26 percent for the Most Likely estimate, and
· 38 percent for the High estimate.
Norwest Questa then applied the estimated recovery factors shown above to the effective OBIP estimates from the August 16, 2007 report, which is the in-place Best estimate at an 8 wt% grade cut-off, to obtain the Low, Most Likely, and High Resource estimates for the Cadotte Area as follows:
Potentially Recoverable Portion of Discovered PIIP for the Cadotte Area by Target Zone in millions of Stock Tank Barrels (MMSTB)
Formation Low
Estimate Most Likely
Estimate High
Estimate
Bluesky/Gething N/A N/A 39
Debolt 245 390 571
Elkton N/A 127 245
Total 245 517 855
Norwest Questa conducted an initial economic evaluation of the Cadotte area, at a level of study consistent with that of a Preliminary Feasibility Study, based on the Most Likely potentially recoverable Discovered PIIP estimate of 517 MMSTB. Based on a forecast price of $65 per barrel and constant costs, this Preliminary Feasibility economic analysis indicates that the development of the Cadotte area is economically viable with a net present value (discounted at 10%) of cash flows before income taxes of about $1.2 billion.
Norwest Questa also completed a sensitivity analysis based on three different oil prices as noted below.
Summary of Economic Evaluations
at Different Oil Price Assumptions ($US Billions)
Oil Price Gross Oil Revenue Net Investment Total Operating Expenses Crown Royalties Cumulative Cash Flow Cumulative Disc. (10%) Cash Flow IRR
Constant $65 WTI 19.7 1.6 8.2 2.1 7.8 1.2 27%
Constant $55 WTI 14.8 1.6 8.2 0.8 4.2 0.4 17%
Constant $75 WTI 24.7 1.6 8.2 3.3 11.5 2.0 35%
Based on forecast prices and costs, this preliminary feasibility economic analysis indicates that the development of the Cadotte area is economically viable with a return on capital investment of 27% and Net Present Value (“NPV”) discounted at 10% of $1.2 billion. At a WTI crude oil pride of $65 per barrel, the impact of the planned royalty change is only about a 1% reduction of return on capital investment. At a constant $55 per barrel WTI price, the return on capital investment is just over 17%. Based on the favorable results of the pre-feasibility economic analysis, the Cadotte area warrants further evaluation including a pilot well test program and feasibility level project design and cost estimates.
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This report is limited in scope to document only the potentially recoverable portion of the Discovered Petroleum Initially In Place (Discovered PIIP), formerly referred to as Discovered Resources, within the Target Area of the Cadotte properties. This report does not attempt to place a Fair Market Value on that resource portion.
Norwest Questa reserves the right to revise its opinions of all estimates of resources if new information is deemed sufficiently credible to do so.
The accuracy of any estimate is a function of available time, data, geological engineering, commercial interpretation, and judgment. While the resource estimates presented herein are believed to be reasonable, they should be viewed with an understanding that additional analysis of new data may justify their revision and Norwest Questa reserves the right to make such revisions.
Readers of this 20-F are advised to read the February 29, 2008 report titled Preliminary Feasibility Study of the Cadotte Leases, Alberta, Canada that is publicly available on the www.sec.gov web site, was filed on March 6, 2008 under cover of 6-K.
With the recent additional validation from Norwest, investors must be seeing that Strata is the real deal. Lets hope financing goes well and with the oil they have estimated at $2 billion only for a part of all the land they have, this will get real good. I'm hope after the Cadotte projects takes off, they will start sampling the rest of the land they have.
Finally got some news. Lets hope this is a beginning of good things to come.
Strata Oil & Gas Announces Contingent Resource
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Symbol Price Change
SOIGF.OB 0.15 +0.03
Press Release Source: Strata Oil & Gas Inc. On Thursday December 23, 2010, 1:38 pm EST
CALGARY, ALBERTA--(Marketwire - 12/23/10) - Strata Oil & Gas Inc. ("Strata") (OTC.BB:SOIGF - News), is pleased to announce the release of its Resource Reclassification Report on its 100% owned Cadotte Project in the Peace River Oil Sands area of Alberta, Canada.
Norwest Corporation ("Norwest") of Calgary Alberta completed this independently prepared Resource Reclassification Report ("Report") on behalf of Strata. In the report, Norwest concludes that historical pilot testing in the region combined with field testing and ore characterization work that Strata has completed at Cadotte to date, is sufficient to allow Norwest to construct a computer simulation of a pilot design for the testing of Debolt bitumen producibility at Cadotte. It is also sufficient to demonstrate the existence of a carbonate pilot, not previously available, needed for the classification of the recoverable resource estimate for that area as "Contingent".
"This upgrade in resource classification solidifies Strata's position as an industry leader in the carbonates. Our newly classified Contingent Resource asset has greatly enhanced shareholder value, bringing our 56,000 barrels per day commercial plan a major step forward to fruition."
"Our attention in the coming months is to forge ahead with securing financing for our production testing phase, and to focus the company's manpower and resources on bringing the Cadotte project to Reserve status," said Mr. Daems.
The report prepared by Norwest is compliant with the requirements of National Instrument 51-101 with respect to classifying the resource as Contingent Resource. Mr. Geoff Jordan, P. Geol., Senior Geologist of Norwest Corporation and a qualified person as defined by National Instrument 51-101 is responsible for the preparation of the technical information in the report.
Table 6.2 from the report (shown below) indicates the new classification.
TABLE 6.2 CONTINGENT RESOURCE FOR THE CADOTTE AREA BY TARGET ZONE IN MILLIONS OF STOCK TANK BARRELS (MMSTB)Formation P90 (Low P50 (Most Likely P10 (High Estimate) Estimate) Estimate)Bluesky/Gething N/A N/A 39Debolt 245 390 571Elkton N/A 127 245Total 245 517 855
The report contains a literature review conducted on data and publications concerning pilot projects carried out in the carbonate of the Grosmont Formation, to better understand the potential behavior of similar carbonate in the Debolt Formation in the Cadotte area. It was found that:
-- The fluid and rock properties are very similar in both the Grosmont and the Debolt Formations, with a tendency to be more desirable in the Debolt because of the somewhat higher reservoir pressure temperature;-- The numerous thermal projects conducted in the Grosmont Formation have had mixed results with surprisingly high production in some of them, especially when using the Cyclic Steam Stimulation recovery method. This technique is considered very promising for application on the Strata Cadotte Project;-- Both the Grosmont and Debolt Formations are reported to have "heterogeneous" characteristics that provide high lateral permeability inside ore zones with very high oil saturation;-- Laboratory tests show high recovery factors with thermal processes, but other methods are also being extensively tested. The most promising appear to be those using solvents. Sonic systems are also being considered;-- Reservoir simulation seems to confirm the channeling character of the rock in terms of steam and combustion gas behaviour;-- Current bitumen recovery testing and development activity from carbonate is growing as oil prices make these reservoir types and fluids more economic; and-- Alternative sources for thermal energy generation are also being considered to exploit carbonate reservoirs, as water consumption costs and carbon dioxide disposal costs may rise significantly in the future.
Contingent Resources are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets.
What is the O/S for the company now?
Does anyone have an opinion on how the BP spill will affect the PPS on companies operating in the oil sands if any?
Eloi,
Did you hear anything from the company yet?
Eloi,
I received a letter in the mail from the company stating that they are operating along their goals and we should hear something soon. I don't know what to expect from the company. I've held on this stock for a year. The company seems promising but we have no visibility.
Hi. Can you tell me where Sam Zell bought more shares at the .09 level? Is there a SEC filing? I can't seem to find one. Thanks.
Daytrade?
They announced some news
Anyone have thoughts on the future of the co?
Hmm..
Yep.
Newbie question. Why would anyone buy this stock now? If the co goes bankrupt, the stocks are worthless no?
Does anyone have any thoughts on this stock?
Is anything happening here? I thought this company would get acquired since Pharma pipelines are about to expire.
MRNA- RNAi company in its development stage. New management has restructured the company. Leading RNAi company with a broad portfolio of patents.
BOTHELL, WA--(MARKET WIRE)--May 14, 2009 -- MDRNA, Inc. (NasdaqGM:MRNA - News) today reported financial results for the first quarter ended March 31, 2009.
Related Quotes
Symbol Price Change
MRNA 1.45 +0.30
{"s" : "mrna","k" : "c10,l10,p20,t10","o" : "","j" : ""} "The first quarter of 2009 was a period of significant accomplishment for the Company," stated J. Michael French, President and Chief Executive Officer. "With the sale of our intranasal contract manufacturing operations in Hauppauge, N.Y. on March 31st, we completed our transition from a clinical stage delivery company to a pre-clinical RNAi drug discovery company, having reduced or eliminated all of our legacy liabilities within the last nine months. In addition, during the quarter, we generated over $12 million in revenue solely from our RNAi technologies. More importantly, we believe the agreements with Roche and Novartis have validated the key aspects of our RNAi drug discovery engine: siRNA constructs and siRNA delivery. We expect to leverage the validation of our platform into multiple target and therapeutic-based research and development collaborations with additional pharmaceutical companies. Having completed our transition to an RNAi drug discovery company, we feel we have emerged as a true leader in the field."
Revenue for the three months ended March 31, 2009 was $14.2 million, compared to $1.3 million for the quarter ended March 31, 2008. The 2008 period included $0.7 million in license and research fee revenue, $0.5 million in Nascobal® product sales and $0.1 million in government grants. Revenue in 2009 primarily included upfront licensing fees of $7.25 million from Novartis, upfront licensing fees of $5.0 million from Roche, recognition of $1.0 million in milestone revenue from Amylin Pharmaceuticals, Inc. related to the amendment to our 2006 License Agreement and recognition of the remaining $0.7 million of deferred revenue from the $2.0 million payment received in 2005 from QOL due to the Asset Purchase Agreement with Par Pharmaceutical Companies, Inc. entered into during the first quarter 2009.
Net income for the current quarter was approximately $7.3 million or $0.23 per share, compared to a net loss of $16.5 million or $0.63 loss per share for the prior year quarter. This positive net income, compared to the loss in the 2008 period, reflects in large part revenue from licensing transactions in the RNA interference space enabled by our broad RNAi intellectual property estate and drug discovery platform. These license agreements, as well as target and therapeutic-based research and development collaborations, represent the types of periodic transactions contemplated as part of our business strategy.
Research and development ("R&D") expenses for the current quarter decreased $6.7 million to $4.2 million compared to the prior year quarter. In the current quarter, the decrease in our R&D expenses was associated with our transition from a clinical-stage intranasal drug delivery company to a pre-clinical RNAi drug discovery company.
Selling, general and administrative expenses for the current quarter decreased by $2.7 million compared to the prior year quarter to $2.1 million due to our cost containment efforts.
We recorded a net restructuring charge in the first quarter of 2009 of $0.1 million, comprised of facilities related charges. Total restructuring charges were $1.9 million for the prior year quarter primarily comprised of employee severance and related costs of approximately $1.6 million and $0.3 million in net clinical trial termination fees related to the termination of the clinical trial for intranasal PTH(1-34) for osteoporosis.
We recorded an expense of $1.0 million during the current quarter related to the change in fair value of price adjustable warrants, and a net gain on settlement of liabilities $0.7 million related to our efforts during early 2009 to restructure our outstanding liabilities, including our capital lease obligations with GE capital, severance compensation and other accounts payable.
We ended the first quarter of 2009 with approximately $7.7 million in cash and cash equivalents, including $2.2 million in restricted cash, compared to approximately $3.4 million in cash and cash equivalents, including $2.3 million in restricted cash at December 31, 2008. We received a "going concern" opinion from KPMG, LLP, our independent registered accountants, in our 10-K for the 2008 fiscal year.
As previously disclosed, the Company received a Staff Determination from The NASDAQ Stock Market arising out of its non-compliance with NASDAQ Marketplace Rule 3340(a)(3), which requires a minimum of $10 million in stockholders' equity for continued listing on the NASDAQ Global Market. MDRNA presented its plan to regain compliance before the NASDAQ Listing Qualifications Panel on April 23, 2009, and is currently waiting for the Panel's response, which is expected by the end of May 2009.
FIRST QUARTER AND RECENT CORPORATE ACCOMPLISHMENTS
Strengthened Management Team and Scientific Leadership
-- Hired Barry Polisky, Ph.D., as Chief Scientific Officer. Dr. Polisky
previously served as Research Vice President at Merck & Co. and Chief
Scientific Officer at Sirna Therapeutics where he led the research and
development of RNAi-based therapeutics.
Validated RNAi Drug Discovery Platform through multiple Pharma Licensing Deals
-- Entered into a worldwide, non-exclusive sublicense agreement with
Roche for MDRNA's siRNA constructs and chemistry platform;
-- Entered into a worldwide, non-exclusive licensing agreement with
Novartis for MDRNA's liposomal technology platform for siRNA delivery.
Advanced the RNAi Drug Discovery Platform and RNAi Pipeline
-- Reported positive in vivo data on the Company's proprietary RNAi drug
discovery engine at multiple international meetings and conferences.
The Company reported:
-- Systemically delivered meroduplex siRNAs were: (1) well tolerated;
(2) effective against multiple liver targets when delivered
systemically, and (3) inhibited tumor growth when applied topically
for bladder cancer. Keystone Symposia's RNAi, MicroRNA, and Non-
coding RNA Meeting;
-- Positive data demonstrating a dose response, which resulted in up
to 90% knockdown of ApoB message in a rodent model using UsiRNAs
targeting multiple metabolic targets. Informa Life Sciences TIDES
Oligonucleotide and Peptide, Research, Technology and Product
Development Conference.
-- Refocused the Company's pipeline efforts on a single indication -
hepatocellular carcinoma (liver cancer) - to maximize the use of
capital and increase the potential success of pre-clinical studies and
early stage human clinical trials.
Restructured Key Elements of the Company
-- Eliminated rent obligations from January 2009 until July 2010 on the
Company's excess facility in Bothell, Washington through a previously
disclosed lease amendment;
-- Significantly reduced previously disclosed employee-related cash
severance payments for both a one-time cash payment due in June 2009 as
well as continuing severance payments through September 2009;
-- Significantly reduced the Company's ongoing monthly payments to
General Electric Capital Corporation on leased equipment and leasehold
improvements by restructuring the debt into a Loan and Security Agreement;
-- Our restructuring, renegotiation and cost containment efforts will
result in cash utilization of approximately $5.5 million beginning in the
second quarter of 2009, a greater than 25% reduction compared to the fourth
quarter of 2008.
Monetized Legacy Nasal Assets
-- Sold the Company's manufacturing facilities in Hauppauge, New York as
well as the Company's Abbreviated New Drug Application (ANDA) for generic
calcitonin-salmon nasal spray to Par Pharmaceuticals. Under the terms of
the Agreement, MDRNA received upfront cash and will receive profit sharing
on commercial sales of calcitonin. In addition, Par assumed MDRNA's supply
and manufacturing obligations as well as all operating costs associated
with the facilities;
-- Received an accelerated $1.0 million milestone payment from Amylin
Pharmaceuticals for advancement of the intranasal exenatide program by
amending a 2006 Development and Licensing Agreement. Under terms of the
amended agreement, MDRNA could receive up to an additional $79 million in
future milestones and royalties;
-- Engaged Adjuvant Global Advisors, LLC to identify potential licensing
opportunities for MDRNA's intranasal delivery clinical programs in Asia and
Europe.
Conference Call and Webcast Information
Management will host a conference call to review financial results for the quarter ended March 31, 2009 and recent business developments. The call is scheduled for Friday, May 15, 2009, at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time). To participate in the live conference call, U.S. residents should dial 866-761-0748 and international callers should dial 617-614-2706. The participant passcode for the live conference call is 95089155. To access the 24-hour telephone replay, U.S. residents should dial 888-286-8010 and international callers should dial 617-801-6888. The participant passcode for the replay is 40891910. Alternatively, to access the live audio webcast for this conference call, please go to MDRNA's Web site at http://www.mdrnainc.com approximately 15 minutes prior to the conference call in order to register and download any necessary software. A replay of the webcast will be available for 30 days following the event.
MBRK- The company is meeting the sales forecast for its Moxatag launch.
John Thievon
Thank you, Faith and good morning everyone. Welcome to our call. The first quarter of 2009 was a productive one for MiddleBrook as we launched MOXATAG to trade and prepare for it's professional launch. We launched MOXATAG to healthcare professionals nationwide on March 16, 2009, while it is still very early in the launch there, indicators that we were making very good progress.
First I will run through some of the numbers and then I will share some of our findings in the field. For the first quarter of 2009, we produced revenue of $9 million, 7.5 million of which was from MOXATAG. As you can see from the net sales for MOXATAG we received solid support from our trade customers. Approximately 20,000 retail pharmacies participated in our order ship program to place a bottle of MOXATAG on the shelf in those pharmacies prior to professional promotion. This does not include pharmacies ordering independently of order ship programs.
And now that we have 300 sales reps and manager detailing healthcare professionals nationwide and driving prescriptions to pharmacies we expect distribution to increase. Keep in mind in accordance to IMS health about 40% of the annual prescription for strep throat are filled April through September. So, it’s a great time for our field force to be building awareness among healthcare professionals across the country and working to generate prescriptions for MOXATAG.
Our sales territories are align to maximize MOXATAG's market potential and our 271 sales reps and 30 district managers are detailing the physicians responsible for just over 40% of the oral solid respiratory antibiotic market for strep throat. According to IMS health national prescription audit weekly data approximately 3500 MOXATAG prescriptions have been filled as of April 24th was more than one quarter of those prescriptions filled in just one week the week ending April 24th.
This is inline with our expectations and we expect it to be a couple more months before MOXATAG prescriptions accelerate to significant levels on a weekly basis. We believe that the week over week gains we are seeing on the prescription numbers which averaged out to about 30% of the week or a positive sign. We also monitored the number of physicians writing MOXATAG and we know that new physicians are prescribing MOXATAG every week which is also a good sign.
In addition to tracking the weekly prescription numbers through IMS and prescriber data we are monitoring our check voucher program redemption rates. You may recall that we implemented this program to provide a $15 discount of the patients co-pay. This $15 savings is available at the cash register. These check vouchers are distributed to high prescribing physicians through our field sales force. Physicians can give them, to their patient along with their MOXATAG prescription. To-date about 30% of the prescription filled for MOXATAG have been accompanied by these $15 checks. We have recognized that this program has been valuable to patients thus far and we will continue to evaluate ways to keep the cost of MOXATAG affordable for all patients.
In terms of feedback in the field, I will share a few observations. Overall, comments from physicians and pharmacists are supportive with MOXATAG and its benefits which include a lower overall dose compared to conventional aminopenicillin therapies, patient convenience and compliance. On the physician front we are seeing fairly typical results in terms of rate of adoption.
In our experience it takes six or more details for a physician to change their prescribing habits and our high prescribing physicians are on about three week call cycle. So, we are just getting in front of these physicians for the second time in the last week or so. Of course, you will always have some early adopters and some that are more resistant to change.
Doctors have been writing amoxicillin for year's, so that’s a strong habit to overcome and we need to continue to deliver a solid sales message to remind doctors of MOXATAG’s significant advantages over the two to four times a day of amoxicillin. Accordingly, we are monitoring feedback very closely seeking out opportunities to accelerate our prescription results. While many pharmacists are on-board and fill 3500 prescription pharmacists represent an opportunity for us to provide education on MOXATAG’s benefits and availability.
In some cases, pharmacies called the physicians to say that the pharmacy doesn’t have MOXATAG on their show and would like the doctor to switch to a amoxicillin. Our sales reps are working diligently to resolve this issue by working with physicians office staff to ensure that the prescription is still with MOXATAG as you know there were no AB rated generic equipments in MOXATAG.
We are seeing that in some instances, the pharmacies actually have MOXATAG on the shelf but wasn’t aware that they had it. Keep in mind that a high volume pharmacy might have 10 to 15 pharmacists that work in the store on different shifts, so we need to make sure that we continue to call in the same pharmacist to increase pharmacist awareness of MOXATAG. Accordingly, our reps have increased the pharmacy calls. We are also seeing the pharmacies do not affect [ph] the MOXATAG on their shows and we are working to point out the benefits of stocking it and letting them know that the doctors are prescribing MOXATAG and will continue to do so, so they should bring in a bottle immediately.
One bottle as you may recall contains 30 tablets which equates to three prescriptions. It is important to know that pharmacies can get a bottle of MOXATAG within 24 hours. Our marketing, trade, managed care and sales management teams are working together to provide our sales reps everything they need to continue our progress and address any issues that reps are facing in the field.
Before I move on to discussing our sporting the work of our field force, I will say that overall feedback from pharmacist and physicians in the field is positive and most value the benefit of MOXATAG. We are supported in the efforts of our national field sales force with the national wide marketing campaign and raising awareness of MOXATAG among our targeted healthcare professionals and in trade and manage care. Our advertising campaign and professional publications will reach about 90% of all primary care physicians and 73% of pharmacist at least once a month during 2009. Our direct mail and email campaign that physicians, pharmacist and managed care executives will further raise awareness for MOXATAG.
As recently announced we have also launched moxatag.com a comprehensive online resource for information about MOXATAG for patients, physicians and pharmacists. And we plan to have strong attendance at medical and other professions meetings at the national and regional levels.
On the managed care coverage front, I am pleased to report that MOXATAG is widely available through managed care providers resulting in access to roughly 297 million lives. Well that number may include some duplication, we have achieved coverage for approximately 92% of all covered commercial lives in the US a territory status for both pharmacy benefit managers and managed care organizations.
MOXATAG is currently covered in third tier with their prior authorization on only about 1% of all commercial lives covered. MOXATAG is also apparently covered by medicated 46 states. We will continue working to expand our managed care and Medicaid coverage and we expect our coverage to increase overtime. We have also discovered that there are significant regional plans with co-pays from MOXATAG between $6 and $20 making MOXATAG very attractive relative to price in different parts of the country.
KEFLEX remains an important element of our overall commercial strategy and we are starting to see a flattening of the KEFLEX 750 prescriptions declined and our goal is to increase these prescriptions over time. Our reps are detailing and sampling KEFLEX 750 in the second position and we believe we will deliver stronger KEFLEX 750 messages as our reps established better relationships and have more time in front of the physicians.
And on the business development front we are continuing to review opportunities both on in licensing and co-promotion fronts. That said everything is secondary to the success of MOXATAG which remains our primary focus.
With that I will now turn the call over to Dave for review of our financial results and our business outlook.
Dave Becker
Thanks, John, and good morning to everyone. For the first quarter of 2009, our total net revenues were $9 million compared to $2.4 million for the same quarter last year. The increase is driven by initial trade stocking orders related to the MOXATAG launch, which total $7.5 million. With respect to the prescription data for the 2009 first quarter which consisted basically of the last two weeks of March total MOXATAG prescriptions were about 650.
Net sales of our KEFLEX products total $1.5 million for the first quarter a $900,000 decrease or 37% decline when compared to the 2008 first quarter results. With respect to KEFLEX prescription data for the 2009 first quarter, total prescriptions were about 46,200 compared to 74,500 for the same quarter last year.
This 38% decline is primarily due to the decision to decrease the size of the contract sales force, starting back in November of 2007. Today our 271-person field sales force plus our 30 district sales managers are deployed within territories designed to maximize MOXATAG market potential. Its also important to remember that KEFLEX is now in secondary detail position behind MOXATAG.
At this point we have begun to notice of flattening out of the decline in the number of KEFLEX prescriptions and expect to be growing those prescriptions in the months to come. Gross margin on sales was $8.2 million or 91.6% of net sales for the 2009 first quarter.
During the prior year quarter the gross margin was $1.8 million or 74% of net sales and included $279,000 charge for obsolete inventory. The improvement in gross margin percentage reflects the higher overall gross margin rate on MOXATAG as compared to our KEFLEX products.
Research and development expenses were $1.9 million for the 2009 first quarter, compared to $3.7 million for the same quarter last year. The decrease in R&D expenses over the prior year quarter is primarily driven by the reduction in facility and personnel-related expenses. You will recall that in previous quarters, we recorded significant charges related to the unused space of our Maryland facilities as well as equipment sales. As a result, we have lower overall expenses in current quarters.
Selling, general and administrative expenses for the 2009 first quarter was $16.5 million versus 4.8 million in the prior year quarter. The $11.7 million increase in SG&A expense over the prior year quarter primarily relates to the hiring, training and the deployment of our field sales force, MOXATAG marketing program related to the launch including position samples as well as increases in stock-based compensation.
Net interest income for the 2009 first quarter totaled approximately $256,000 versus approximately $125,000 during the same quarter last year. The increase in investment income is the result of higher invested cash balances offset by lower investment yields.
The final result is a net loss for the 2009 first quarter of $10 million or $0.12 per common share. This compares to a net loss of $13.8 million or $0.26 per common share during the prior year quarter. As you know, the September 2008 EGI financing resulted in the issuance of 30.3 million new common shares. And such shares were outstanding for the entire first quarter. In the prior year first quarter, there were approximately 53.3 million shares outstanding.
Now, let's move on to the balance sheet and here you will note several major changes when compared to the quarter ended December 31st of 2008.
We started the first quarter with combined cash and marketable securities balance of $74.7 million and ended with $55.4 million at March 31st of 2009. The decrease is due primarily to the increase in selling, general and administrative expenses, but it's important to note that because of the MOXATAG launch, our accounts receivables balance increased from $426,000 at December 31, 2008 to $9.5 million at March 31, 2009.
As it is typical in the pharmaceutical industry, we extended payment terms from 30 days to 90 days on initial launch orders. Therefore, we anticipate collection on these initial orders to occur during the second quarter.
Our inventories totaled $2.4 million at March 31 2009, resulting in a $2 million increase over the December 31, 2008 balance. As you would expect, our MOXATAG inventories increased due to the commercial launch of the product.
With respect to KEFLEX and as previously disclosed, we would notify by our supplier that they would be shutting down operations by the end of January of 2009. This resulted in us making a one-time order of KEFLEX inventory to ensure sufficient quantities to meet future sales demand for at least the next 18 months. We physically received that inventory during the first quarter, yet we are allowed to pay for that inventory in quarterly installments throughout 2009. We are now in the process of evaluating another contract manufacture to meet our future KEFLEX sales demand.
Our net property, plant and equipment balance was $8.6 million at March 31, 2009 compared to $4.2 million at December 31, 2008. A $4.4 million increase is driven by our automobile fleet leases for our sales force and sales managers. We are required to account for our fleet leases as capital leases and as such the present value of the lease payments must be set up as an asset with an offsetting obligation in current and long-term liabilities.
In addition, to the fleet lease liability our balances of accrued expenses and other current liabilities increased as a result of accruals for sales related liabilities such as product returns and co-pay check redemptions.
That concludes my review of the first quarter financial results. And at this point I will provide our business outlook for 2009.
As I mentioned we ended the first quarter with approximately $55.4 million in cash and marketable securities. And as a reminder our accounts receivable balance at March 31, 2009 totaled $9.5 million. As previously disclosed we expect our 2009 combined net sales for MOXATAG and KEFLEX to be in excess of $40 million. This assumes continual week-over-week growth of MOXATAG prescriptions and no generic approval and launch of an equivalent to our KEFLEX 750 milligram product.
With respect to prescription volumes we continue to expect that more than 50% of the MOXATAG prescriptions will be filled during the calendar fourth quarter of 2009. This is due to partly to seasonality but importantly the amount of time involved in changing prescriber habits. With that in mind we believe that our second quarter net sales will be under $2 million and pre-dominantly comprise of KEFLEX sales as sufficient levels of MOXATAG inventory are now in the channel and it will take sometime for those levels to be reduced to prescription fall through.
At $190,000 per representative, our field sales force is expected to cost about $51 million on an annualized basis. That's a fully burden number which includes all expenses incurred in the field as well as the cost of our district sales management and physician samples. With a significant investment in our sales force our targeted marketing campaign, product development in general and administrative expenses, we currently estimate that our total operating expenses will range between $93 million and $100 million for 2009. And keep in mind that, that includes approximately $5 million of non-cash expenses for stock options, depreciation and amortization.
Assuming FDA agreement with our clinical protocol, our current product development plan suggest that we will spend sufficient enough to advance KEFLEX process project to be prepared for patient enrolment into Phase III clinical trials during 2010. Future spending on this program is dependent upon the useful launch of MOXATAG and adequate financial resources.
And finally our current plan suggests that, if we hit our targets we could achieve operating profitability sometime in 2010.
That concludes our 2009 business outlook and at this point I will open the call up for questions.
After the reverse split, my average price is now $4! I don't know if Mr Wang is as good a business man in the bio field than in the tech field.
Is the company still in business? Any company webiste link?
Your quote "In case you didn't notice, they are assured funding now to continue operations with no dilution after the news Feb 13, and they have no real debt"
I look at the PR for those dates and did not find anything that says they will have funding without dilution.
MiddleBrook Pharmaceuticals Launches MOXATAG, the First and Only FDA-Approved Once-Daily Amoxicillin
Monday March 16, 4:15 pm ET
WESTLAKE, Texas--(BUSINESS WIRE)--MiddleBrook Pharmaceuticals, Inc. (Nasdaq: MBRK - News) today launched MOXATAG (extended-release amoxicillin) Tablets, 775 mg, the first and only FDA-approved once-daily amoxicillin. MOXATAG is approved for the treatment of pharyngitis/tonsillitis secondary to Streptococcus pyogenes in patients twelve years and older. MOXATAG is dosed once-daily at 775 mg, versus the current most commonly prescribed generic amoxicillin treatment regimen for pharyngitis/tonsillitis which is 500 mg three times per day according to the 2008 IMS Health National Drug Therapeutic Index. There is no AB-rated generic for MOXATAG.
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MOXATAG is the first product formulated with MiddleBrook’s proprietary PULSYS® technology. PULSYS enables the pulsatile delivery, or delivery in rapid bursts, of amoxicillin from MOXATAG. MiddleBrook’s PULSYS technology prolongs the release and absorption of amoxicillin from MOXATAG.
“MOXATAG’s once-daily dosing advances traditional treatment with amoxicillin, a drug that has been trusted and relied upon for the treatment of pharyngitis and tonsillitis for decades,” said MiddleBrook President & CEO John Thievon. “MOXATAG is effective, and MOXATAG uses a lower overall dose than conventional amoxicillin or penicillin treatments for pharyngitis and tonsillitis.”
“Studies show that enhanced patient convenience improves compliance,” Thievon continued, “and we believe that compliance is a critical success factor in antibiotic therapy. In fact, studies show that failure to take antibiotics properly is the number one reason patients fail antibiotic therapy. Accordingly, MOXATAG has the potential to help improve clinical outcomes. Our 271-person field force today began educating healthcare professionals across the nation about the benefits of MOXATAG. We are excited about MOXATAG’s commercial potential.”
Moxatag launch is in just a couple of weeks. This should be interesting.
Anyone have any opinioins on MBRK?
Anyone think MBRK will be acquired by a big pharma? There aren't many companies out there with an approved drug from the FDA.
Is this company still doing business or did it shut down?
do they still own the rights though? i remember in the sEc filings that they lost it because they were able to make payments to havard.
Hi all. Does DNAG still have PT-401 from Harvard? Last time I checked, they lost it due to not making payments.
It they need to raise more money, it means more dilution.
Precious,
Good to see you're still here. Have you been in contact with anyone from DNAG?
So we're just waiting for the right suitor then? Is that why the most recent sec filing indicates when mgt separates the company of their rights and stuff?
Hello. Newbie here to this company. How long has this company been in existance and how is the company's credibility? Most .ob stocks are scams or mismanaged. Is the CEO for this company proven himself as a leader? Any info is appreciated.
Are we sure the conversion ratio is 8.5 to 1? or will it change depending on the NNBP share price?
dmceng, can you provide a link or calculation how you came to the conclusion that we get to "keep" DNAG shares and also get a dividend stock from NNBP? TIA.