Daenerys, thanks for your kind words, but let me say that I don't consider myself an expert at all. There is another poster on the yahoo board by the name of Todd who probably comes closer to being an expert than I am on oil and gas. Sure would be nice if he would post over here from time to time. Also, please don't sticky any of my posts, as I don't want to be responsible for anyone buying into FNRC, as it is a very risky stock. Having said that, I am fairly heavily invested here.
Concerning the press release from this past week, I have some observations off the top of my head. It seems as if FNRC is going to sell 1 million shares of preferred class B stock for $2.5 million, but then they said each share is potentially convertible later into 100,000 shares of common stock. If that conversion were to happen, you are talking about 100 billion new common shares outstanding, on top of the current 20 billion authorized. If this is not correct, someone please set me straight.
Plus, we now have a dividend as of 28 April, which will effectively double the current 2.4 billion shares outstanding to about 4.8 billion. Just for the sake of argument, I'm not counting the 15 billion in restricted shares issued to management already.
So what we have is a company that supposedly has a shareholder value of $10 million, divided by potentially 120 billion shares. Best I can tell, this works out to about $.0001 per share, which is about where we are now.
If the above calculations are correct, then I think the current share price fairly accurately reflects the current market value of the company.
As I have said before, getting those 8 new wells going in Wyoming should put FNRC back into the black, especially with the current higher price of natural gas.
However, what will really do something for the share price will be to start drilling in Ohio and then to get a producing well.
Keep in mind that FNRC has $14 million in restricted cash on its books now, along with a $7 million line of credit. I think the $7 million is being used primarily for the Ohio well with the new $2.5 million going mostly toward getting the 8 new Wyoming wells up and running.
But the dividend for shareholders was a nice surprise. We get 1 class E share for every 100,000 shares of the common currently owned as of 28 April. It appears that each of those class E shares can convert back to 100,000 new shares of common stock in 6 to 12 months, effectively doubling our current holdings. Plus, by then, we should know something on the Ohio project.
Good luck and if you or anyone else can shed some light on what is going on with the shares, I would appreciate reading about it.
Good luck,
Cropduster
AI
