Hero Technologies Inc (HENC)

[tchauncy]

HENC Lands Australia's Top Investment Bank...

IMO, that's what the headline on the PR could have said. Here is why:

Some comments on HENC’s press release yesterday…

Without a doubt, in my opinion, yesterday’s announcement that Tristone Capital has agreed to be Holloman Energy’s Investment Banker in brokering a sale and/or partner in its 1.125 million acre Cooper Basin holdings is to date and maybe for some time to come the most positively significant thing that could happen to HENC.

Before I get into my take of the PR specifically, let me share some research on Tristone.

As can be seen from the “Completed Transaction page on the Tristone website (http://www.tristonecapital.com/transactions/ ) In just the past eight years, they have completed some $ 60 billion in transactions with or for just about every recognizable oil company in the world. Significantly, Tristone was recently acquired in May by Macquarie Group, Australia’s largest Investment Bank. (see Macquarie/Tristone link below) Therefore I think it is safe to say that Macquarie would have had to approve this engagement. (I found it interesting that of all the deals that were done by Tristone in the past. None, before the HENC deal, were done in Australia).

Macquarie/Tristone.(Big file, slow download)
http://www.tristonecapital.com/upload/media_element/6/01/macquarie-tristone--creating-an-integrated-energy-platform.pdf?1251823256

Now I think it is safe to say, that Macquarie probably knows more about the Cooper Basin then just about any bank in the world. An interesting fact is that looking at the client list of ISIS Petroleum Consultants; Macquarie is a client of ISIS. Meaning Macquarie relies on the accuracy of ISIS results to finance, make loans, etc on ISIS reported oil and gas reserves. Remember, ISIS recently completed a Reserve study of HENC’s PEL-112 and PEL-444 and reported P90 (90% probable) reserves of over 25 million barrels of recoverable reserves on the two concessions. So, IMO, one doesn’t have to read too hard between the lines to surmise that Macquarie trusts the fact that the 25 million barrels are a “good” number. (BTW, 25 mmbls at $50 a barrels is $1.25 Billion.) Another point. Since the ISIS report was issued, two more successful wells converging toward, and within 12km of PEL-112 have been drilled and tested totaling an additional 3,300 barrels of oil per day. Two wells also have been completed as producers, but not yet tested, within 15km of PEL-444. See updated company website for Cooper:
http://www.hollomanenergy.com/index.cfm?page=Cooper_Basin


Now let me share what I read in the PR. “…This engagement launches an international campaign to identify and provide bidding opportunities for potential joint venture partners.” From this statement, it is apparent that Tristone’s task is to promote the sale of a portion of HENC’s property to a partner and I would guess sealed bidding would be used. I would assume that proceeds from this sale would provide HENC’s share of drilling capital. I would also guess that Tristone/Macquarie (TM) will be attempting to get the highest bids possible for a larger fee. In order to do this, based on my past background as a former Merrill Lynch Investment banker, I can all but assure you that TM will be putting their own presentation together using their own Petroleum Geologists and Engineers. IMO, While this may take a few more months, if sealed bidding is used, we should get max price. What should be noted here is that recent wells in the Cooper Basin are world class in potential versus cost. Multi-thousand barrel a day wells are common here. Therefore, anyone from Exxon/Mobil on down would be a qualified prospect for TM to show this prospect. (Before divesting their Delhi unit some years ago, Exxon was a major player in the older, more gas prone eastern part of the field.).

Another point to consider. One of the bigger problems a small development stage explorer has to consider is success. The reason this could be a problem is that developing a field with offset wells once the wildcat is successful. Cash has to be readily available to drill consecutive wells in a short period of time in order to take advantage of drilling rigs and other on-site oil field services. Very few places is this more apparent then in the Australian out-back where rigs might have to be moved in from a thousand miles away. Also, wealthier partners who have cash are usually ready to develop right away. If you don't have the money to keep up, you might be forced to either sell or suffer strong penalties. By having an in-place relationship with someone like TM, credit (which most companies use to drill development wells) could be immediately available.

IMO, the bottom line with this announcement. For those of us shareholders who have bought this stock for an intermediate term home run, ($3 to $5) or a long term grand slam, we have the team and the prospective assets to do it. If I can give an analogy: If HENC had similar assets but in the US and Goldman Sachs (The top US Investment Bank) became their Investment Bankers, I couldn't imagine that the stock wouldn't soar. Well HENC has the Top Australian Investment Banker and “Elephant” potential in a large position in Australia’s hottest play. With a little patience as the audience increases for HENC, there is every reason to believe a much higher share price is on the horizon.

Link to 083009 PR

http://finance.yahoo.com/news/Holloman-Energy-Engages-pz-1431495118.html/print?x=0

Link to Awards received by Macquarie Group

http://www.macquarie.com.au/au/about_macquarie/company_profile/awards_main.htm


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