Nice work, Now ProGas Defined
Why did ProGas have such a high revenue stream and show low profits? The answer was so simple it never crossed my mind. ProGas is a marketing firm. Small producers that don’t have a marketing department use them. It works like this. ProGas markets the gas and small amounts of oil to three companies (Enbridge, Louis Dreyfus and Gulf South Pipeline). These companies pay a lump sum to ProGas. Then in turn ProGas pays the producers, royalty holders, etc. Then ProGas retains some for their fee. They were once screwed by Enron to the tune of $500,000. Since then they have taken out an insurance policy (Which the producers agreed to pay for in whole) that guarantees payment on defaulted contracts. The beauty of this set up is that ProGas gets the payment first then sends out the money. First paid and insurance to cover the only weak link that they can not control. ProGas has been in business for 18 years.
The twin hurricanes Katrina & Rita hit the producers and not ProGas, but in a sense the producers are ProGas. If they are not producing then neither is ProGas. The majority of production is back in play. It was Rita that did the major clock cleaning since it put a huge production area directly in the dirty side of the storm. (For those of you not in Hurricane Alley, being between 12 O’clock and 3 O’clock off the eye of a Hurricane is the least friendly area to be). Aside from the Mardi Gras pipeline which might be personally owned by John B, the assets of ProGas comprise an office in Houston, corporate apartment in Houston and an Office in Louisiana. The purchase of the other two buildings never went through, the owner changed his mind. The Houston office is in a very nice building located between the Galleria and River Oaks. It looks like the type old oil people would put together… Double screen computer set ups, desks for four, maps, etc… fully functional. The company only does hedging on behalf of the producers. There are employees that can trade and have experience in trading.
The company itself has seven employees. These employees have work histories with Mobil, Chevron, Enron and more. Most seem over 40. One employee was transferred back to Louisiana to help with accounting at PBLS. ProGas was fully audited at purchase. The x-Enron employees lost a chunk of their retirements in the Enron Implosion (Therefore I trust them). From the histories, I trust that John B is more than able to run all of PBLS’s energy developments (Which he is now doing). These people have dealt with way larger volumes than the ones being considered for WY & NV. With the pool of experience these people have to draw on it will not be a big leap.
ProGas could be used to market any production that comes from these areas. Now put together 1) Marketing. 2) Three oil service companies. 3) Leases of decent nature to develop. The only thing that lacks here is a Rig. Other than that we are looking at an intergraded production company taking shape. Add a rig purchase or a deal to drill WY/NV and PBLS is off to the races. Betty Crocker Instant Energy Company.
Did I like what I saw? Yes.
Will I buy more PBLS? That is a YES.
“I got a great deal on some French WW2 army surplus guns. Never used and only dropped once...”
