UPDA Board of Directors Annual Update to its Shareholders - Profitability in First Quarter Projected
1/3/2007
DALLAS, Jan 03, 2007 (BUSINESS WIRE) --
UPDA (OTCBB:UPDA) has consistently made efforts to update its shareholders on the progress of the company and provide a comprehensive look inside our operation. This is consistent with our belief in transparency. Thus, we are pleased to report that the company is strong and in excellent condition for future growth.
In 2006, UPDA modified its operational strategy, which previously depended on joint venture partners to facilitate well workovers and conduct field operations. Although these joint venture partners provided extensive experience and expertise, we quickly recognized that the best interests of UPDA and its shareholders were better served through the internal control of field operations and the self administration of well workovers. The result was the creation of UPDA Operators, Inc. to operate the UPDA fields and Ambient Wells Services, Inc. to perform the workovers.
UPDA also continues to refine its management structure, recruit an expanding group of quality professionals organized in teams and committees designed to insure the integrity of the processes and the success of our endeavors. Our Legal Department now consists of three attorneys, including an SEC attorney, and a Paralegal Landman. Our Accounting Department is comprised of an SEC Accountant and an Oil and Gas Controller assisted by three bookkeepers and support staff. We have established a Due Diligence Committee to review all future acquisitions, and appointed a Geologist, an Attorney, and an Oil and Gas Accountant to report their findings to the Board. We added a Human Resources Department, a Land and Acquisitions Department and a Corporate Communications Department and created an Audit Committee and an Ethics Committee. Through this expansion and reorganization, UPDA enters the New Year prepared to manage all facets of its operations, communicate to its shareholders with even greater transparency, continue its efficient and effective expansion and maintain appropriate internal review and control.
UPDA has now evolved into a multifaceted organization with subsidiaries established to function in specific sectors of the energy industry: Exploration and Production, Wells Services, Storage Facilities and Trading. The result of this evolution and the plans for its future are as follows:
Exploration and Production:
UPDA Operators, Inc. controls the field operations of five UPDA subsidiaries - Catlin Oil and Gas, Inc., Canyon Creek Oil and Gas, Inc., Texas Energy, Inc., West Oil and Gas, Inc., and Texas Energy Pipeline, Inc.
Catlin presently has 22 out of its 65 wells on line and produces close to 300,000 cubic feet of gas and nearly 50 barrels of oil per day. Through the efforts of Ambient Wells Services, approximately 80 miles of new pipeline has been installed in this field and Ambient is presently operating one pulling unit and two roustabout crews to get all of the remaining wells on line before the end of the first Quarter.
Canyon Creek consists of five fields: Archer, Coleman, Pala Pinto, Prideaux and Victoria. The Archer field came on line and is producing over 100 BOPD and 2 - 4 additional wells will come on line this quarter. Coleman is producing around 20 BOEPD with additional workovers scheduled for February. Work started on Pala Pinto with 20-22 producing wells that are expected to be brought on line in the next two to three weeks now that compliance with all Texas Rail Road Commission regulations has been confirmed. A local company was retained to complete plans to fracture the formation in order to stimulate production that is projected to generate of 200,000 - 300,000 Cubic feet of gas per day from Prideaux. In Victoria, a new lease has been negotiated and work will commence this month.
West Oil and Gas continues to strengthen its relationship with the Masaood Group and expects this year to develop one or more of the many opportunities under review.
Texas Energy Pipeline operates an extensive pipeline and gathering system in Jack County, Texas, providing transportation and compression services to Catlin Oil and Gas and other natural gas producers.
Texas Energy, Inc. has dissolved its joint venture with Sundial Resources as a result of the determination that Sundial was unable to perform the planned workovers or bring the wells to production in a timely fashion. This strategic move, resulting from UPDA's expanding resources and steadfast refusal to compromise its priorities or expectations, led to the determination that UPDA and its subsidiaries would better served by internalizing all operations and, ultimately, to the creation of Ambient Wells Services, Inc.
Wells Services
The establishment of Ambient Wells Services, Inc. was the outcome of a conscientious realignment of UPDA's basic operational strategy designed to protect the UPDA assets, streamline field operations and control the cost and performance of well workovers. Ambient started by hiring the needed engineers and other field personnel. Today, Ambient is administering all UPDA field work, coordinating the efforts of subcontractors, building lease roads, upgrading infrastructure and performing all scheduled maintenance. In addition, Ambient is rebuilding the drilling rig and the double pole and triple pole pulling units acquired in the Catlin purchase. With the completion of these refurbishments, Ambient will be in a position to accelerate the workover processes and to drill the new wells that are expected to greatly enhance UPDA's production capabilities.
The opportunities in the wells services are tremendous, within the US in particular and the World in general. Drilling and workover activity has never been this intense, and, through Ambient, UPDA intends to capitalize on these favorable conditions. Recently, Ambient came to an agreement with Vala De Mexico to form a Well Testing Joint Venture, whereby Ambient will invest $500,000 in needed equipment and Vala, leveraging its position as an approved vendor of Haliburton and PEMEX, will supply marketing and logistical support to establish Ambient as an international provider of well services.
Storage Facilities and Trading
As UPDA continues to expand its expertise and relationships within the energy industry, the opportunity to trade in oil and natural gas has been encountered. Although this opportunity could be exploited through the more hypothetical undertaking of trading paper UPDA has determined to focus on the actual undertaking of commodity trading. Accordingly, UPDA's trading subsidiary has entered into an agreement to acquire a 48,000 barrel storage facility located within the Port of Brownsville, Texas. The Port of Brownsville services South Texas and North Mexico and is accessible by water, railroad and by trucks. UPDA Texas Trading is in the final stage of preparing the facility and updating the manuals to comply with US Coast Guard, EPA and Homeland Security requirements and, in addition, is installing large pumps to receive product by truck and to load barges and a LAC unit to perform oil quality tests and measurements. Within the First Quarter of 2007, these facilities will be operational, providing UPDA with additional streams of revenue, expansive domestic and international advantages and a hedge against price and production fluctuations.
The management and staff of UPDA begin this New Year with an appropriate awareness of their accomplishments and a growing sense of optimism in the future. Evident from the summary of UPDA's Exploration and Production results and with the creation of UPDA Operators and Ambient Wells Services, UPDA is positioned to become a roll up company. We have the infrastructure to effectively own and operate the oil and gas fields we acquire and to successfully and efficiently rehab and expand them as necessary and appropriate. With this capability, the company intends to grow its existing fields by acquiring contiguous leases adjacent to its existing fields and also to acquire new fields in other states and other countries.
The storage facilities and trading business will complement our production and add to the bottom line of our revenues as we execute on our intention to acquire additional facilities in the US and abroad.
In 2007, UPDA plans to open offices in Mexico, Morocco and Dubai. In Mexico to facilitate our trading and well services businesses, in Morocco to acquire oil and gas leases, and in Dubai as the emerging financial capital of the future.
UPDA expects to be profitable in Q1 from current production levels, which are projected to double in the next three to six months. Cash flow should be positive this year. And, more important, UPDA is now reviewing the many opportunities encountered from the financial community for the provision of lines of credit based on its proven and behind pipe reserves upon completion of a certified reserve report during the first quarter.
The UPDA Board of Directors hopes that this update provides ample insight into our company and would like to take this opportunity to thank our shareholders and to wish them a Happy New Year.
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