Rolling Thunder Exploration Ltd (fka RTHXF)

[Jack Weaks]

Disclaimer:

These are thoughts generated by one who has traded commodities since the late 60’s but never purchased a stock until a few of years ago. That purchase of a single stock led to a 500% profit over a 24-month period. For myself the purchasing of a stock is much different than buying or selling S & P 500 contracts where a long-term play is remaining in the position for a few hours. By nature I like that game and will continue as I test purchasing some energy related stocks for a longer play.

Other than wanting to start the journey of learning the basics (class 101 for sure) about the oil & gas (energy) business I wanted to meet these guys and get a feeling as to where they stood on a character level. I feel very comfortable with my skills at reading people.

As to expertise or to think that I know what I am doing when it comes to picking stocks is laughable to me as I have no proven history in doing so, my advice should be taken with much caution and as from some guy you don’t know who has an opinion.

Personnel:
Brian J. Bass (CEO):
Stan Herdman (CFO)
Ken Ellison (geologist)

Ken was easy to relate to, as he is a blue jean type of fellow. I received that from the kidding they gave him about wearing a tie (not his normal attire). I actually talked with him more than the others (very nice & likable fellow). The blue jeans in no way limits what he has to offer the company.

Brian also was an easy person to relate to. The thing about Brian that stood out was his clear understanding that he (San Telmo) is a little fish among very large fish and desires to see San Telmo Energy remain alive and survive all the issues that arise from startup with its shortage of cash. My gut feeling is that he is into this thing to make it work and to make it work well. Little is 1,000 barrels per day in relationship to large as in 200,000 plus barrels per day (that is the figure I came up with after looking around on the web for a few minutes). If their 5 out of 7 hits as at the start continues I think they will eventually have the cash needed (realizing continued and possibly faster growth will eat up that cash)

Ken I did not talk with… but his numbers were what they are “numbers”, if you have looked at their financials you have seen them. From my prospective they are doing well.

My over all thoughts are; they are men that are of good character. They seemed straightforward in their answers to questions and in general how they spoke of the company and where they want to take it. One thing that is always a large red flag concerning the extent of my trust is how much ones talk seems filled with hype/pumping. I heard “none” of this either in personal talks or the PowerPoint presentation. (I felt for them going through the PowerPoint with only myself there…)

Points that stood out in my thinking upon returning:


When they want to purchase the mineral rights to a piece of land they file/post this and it is approximately an 8-week period before that piece of property is placed up for bid to all who are interested.

By the time a company jumps through all the government hoops the government has seen all the studies done on the property. This information is keep secret for 1-year from the public and all other companies. This allows the one drilling to have inside information that they may apply to their bidding process on adjoining properties if they decide to do so. This is one reason they do not want to fly a real high flag as to their discoveries. So when they bid on that property (which all competitors are aware of) they have a bit of edge because the other bidders do not have all of the data though they do know that oil or gas has been located thereby keeping the price down.

Gas wells start paying the government approximately 35% tax from the first day they pump.

Oil wells have an added benefit that they are exempt from the tax on the first 15,000 barrels (if I have figured this correctly that would amount to $262,500 at $50 per barrel price, per well). This makes for oil being the desired product to a cash short startup company as it gives them a chance to recover some of their resources/cash on the front end.

If your well happens to be among a group of wells owned by another company and that company has the infrastructure to move that product from the field to market you are somewhat at their mercy. This has been an issue at McLeod (with the first of Nov. now the word), they have been given a date as to when the compressor upgrade will happen and when that date comes and goes they can put a certain amount of pressure on them but two things that come into play are; first of all the company has no obligation to do so, other than that they will receive their fees for moving the product. Secondly there may be concern that the product they are moving through their system is actually coming from the same field that they draw from, which only takes away from their own resources. I would think they could stall the small/new guy until he was willing to sell out.

Continuing on the last point, they claim do to their past experience working for these companies they have working relationship with individuals which is very important to maintain and add to. I would think this is a big asset.

The Teepee Creek 6-3 well was a find that was more than they had hoped for. Though they were not hyping it was obvious they were more than pleased and have increased their vision for that property.

They can drill 4-oils wells or 1–gas well per square mile (not sure if they can have both). If I recall correctly they have 3- sections at Teepee Creek.

It appeared to me the 1000 barrels of oil per day (or equivalent; gas) will be before the end of the year.

It appears they will come up 3.5 million dollars short after new cash flow is used for development of current properties. The question is, are they to the point of being able to borrow rather than make more private placement offers. The answer given was they didn’t know, but would do what ever works best (and easiest) for the company. Private placement is most likely easier and quicker from things said, which makes sense as to why they might elect that route and understandably raise concern among stockholders (especially Catman type…). Long term I am not sure how that plays out (lack of understanding on my part currently) if they continue to have more hits than not.


How all this translates into stock prices I do not know (if you do, let me in on the secret). I just don’t know what brings investors to a given stock (finding favor with it). I do think that the principles in this company do care for the stockholders in the larger picture. By that I mean that they are interested in finding product and getting it to market over spending a lot of time pumping the stock for the short time as many companies do. One that took that route to an extreme and finally had to change management was “Applied Digital (ADSX) http://www.adsx.com/content/index.htm. Long term this one may be a big winner also. Brian said they are very open to suggestions as to how to communicate better. I would say he is open to the point that they felt it wasn’t given out to much information to those who have more cash to cause properties to become more expensive to San Telmo.


Hopefully you find some of these ramblings helpful. I realize there is not much new information here; also I don’t always make things as clear as need be.


JW


Good news coming early this next year; more wells at Teepee Creek
Bad news; may be more Private Placement shares issued…

I think it is not a stock to watch to closely (minute by minute or even daily) as it may drive you crazy… think long term. Play poker/blackjack or trade commodities for action…

Open to any thoughts you may have.