Hemi Energy Group Inc. (fka HMGP)

[zguy]

hillzman, I think your questions about the additional shares being issued were good. It caught me a little off guard so it probably did surprise a few others as well. Even if I myself have figured it out and understand it, that doesn't mean that all look at things the same way and by the question being reasonably asked (as you did) others can provide a reasonable answer/opinion.

I've gone through a lot of data and information and I'll give you my take on it and why I think the amount was higher than people might have expected.

If you listen to the 6/13 interview here...
http://75.126.3.206/mp3/HMGP_061307.mp3

and the 6/12 interview here...
http://www.wallst.net/audio_bin/3487.wma

you can learn that this large gas find they kinda stumbled upon on accident and it caught them a bit by surprise. It sounds like they got the main land this was on sometime around mid May and based on geological information they believed the find spread to contiguous land around this as well. If they actually finalized the paperwork around mid May they were probably starting on and working on paperwork for contiguous land around this at that time as well.

So, my take... I think what they found they believed to be so good (they even PRd this and hinted to how good it was going so far as to say this would "validate Hemi's existence") they very aggressively leased the land around this. I don't think in the 1st quarter of the year there was any intention at all to lease all the land they could around this prolific gas find (they didn't know about it) but once they did learn of this gas find, plans changed. So, most of us believed we'd be aggressively drilling. Drilling could be done with money generated from the sale of gas and oil. However, the weather precluded this aggressive drilling and instead of just sit around and do nothing, they had a BBQ, studied a building full of information, and looked for more hidden gems. In the one interview you'll hear Keith said the land owner CAME TO HIM with information about the gas wells on his land. He used that information and his own information and put two and two together... he found the hidden gem. Now, remember the email where Keith said he gives the land owner's the choice of money or shares? It is possible some of these land owners wouldn't take money but instead wanted shares? With drilling you give those people cash. With leasing, if the land owner wants shares and Keith really wants the land, I guess you give them shares. LOL!

So, if you go back to my other post where we went up at least 563% in total land held in Woodson and my post a while back where I put together what Keith said about the wells already on this land and how they could generate over $30,000,000 in revenues, it is my belief that Hemi stumbled upon this, plans changed a bit, and more shares than were originally planned to be issued were issued. HOWEVER, what everyone needs to realize and keep in mind is this... Is the CEO putting to good use the shares he is issuing??? In this case it sure appears the few million more shares we see above what we expected seem to be put to very good use! And, considering all this additional land gathering (at least 563% more is a ton!) was not part of the plan just 3-4 months ago, and 3-4 months ago believing our share structure would not really change, I can see and understand why it did change more than I thought during this time period.

Now, if I look at some of the other oil stocks I watch and even own, their shares o/s have MORE THAN DOUBLED this year. But, that's just the first part of the equation... if they doubled for good reason then that is excellent! However, when looking at why they doubled and comparing them to Hemi, I don't see the value these other companies got out of doubling their shares being nearly as good as the value Hemi got out of increasing theirs by just a mere fraction of a doubling! After all this... you can gather that when I originally saw the 50+mil number I thought "Hmm???" but did not fly off the handle and jump off the deep end but rather study the reasons. After studying the reasons and knowing what we know I've now got a big smile on my face instead of the raised eyebrow :) Also, I look back on myself and knowing about all the PRs about land acquisitions and knowing the weather had not been helping production, I must have been a bit naive and/or foolish to think Hemi could increase their prime holdings in Woodson County by at least 563% for FREE! In fact, after studying this a bit more, I'll go out on a limb and say that those who still would rather have us at 45mil o/s will be BOWING at Keith's feet one year from now (when it is more understood just what he did with these shares) and asking him "How did you acquire all that land and drill all those wells while at the same time issuing so few shares????" Based on my DD, there will be a time in the future where we'll all look back and be absolutely amazed that Hemi was able to do what they did without raising the AUTHORIZED shares!

At any rate, this is just one thing I like so much about this stock. If you DD the people behind the company, you have little to worry about as unexpected items like the now 50mil+ shares o/s can be explained after intelligently thinking about the reasons.