Company Overview
Wilon Resources, Inc. (OTC.PK: WLON)
Wilon Resources is a publicly traded company focusing on the exploration and production of natural gas in the Appalachian Basin region. The Company currently operates approximately 60 producing wells with plans to aggressively expand the number of wells over the next few years. The Company owns 12,000 acres of mineral leases within the Basin region concentrated along the Kentucky-West Virginia border. The Company plans to expand these lease-holds within certain targeted geographic areas.
The Company sells the natural gas it produces to gas transmission companies, industrial end-users and utilities under contracts with terms ranging from one month to three years. As customary in the industry, virtually all of the Company’s contract pricing provisions are tied to a market index.
The Company is afforded many advantages by drilling in the Appalachian Basin, which include but are not limited to:
• Highly Successful Drilling Rate- The Company has a proven successful drilling record within the shallow formations (1,000-7,500 ft.) of the Basin. Wilon currently concentrates drilling in the Devonian Shale deposits, which has shown to be a very promising geological area.
• Location- Appalachia is surrounded by major natural gas markets in the United States. The proximity to a substantial number of large commercial and industrial gas markets, including natural gas powered electricity plants, coupled with the relatively stable nature of Appalachian production has resulted in generally higher well head prices for Appalachian natural gas as compared to those prices of the Gulf Coast or Mid-continent regions.
• Long Life Production- These formations are generally characterized by long-lived reserves that produce for more than 20 years.
Wilon management believes the demand for production will continue to grow in the future due to the efficiency, safety, cleanliness, and price competition of natural gas.
What is natural gas? Natural gas is a non-renewable, colorless, odorless, gaseous hydrocarbon mixture made up of methane and a small percentage of other light hydrocarbons. Natural gas is the cleanest burning fossil fuel. Natural gas is found naturally underground and delivered via wells drilled into porous rock formations. Most natural gas used in the United States comes from North America.
What is natural gas used for? Approximately 23 percent of the energy consumption of the U.S. comes from natural gas. Over one-half of the homes in the U.S. use natural gas as their main heating fuel. Natural gas is also an essential raw material for many common products, such as: paints, plastics, fertilizer, antifreeze, films, dyes, and medicines. More than 62 million homes use natural gas to fuel stoves, furnaces, water heaters, dryers, and other appliances. Natural gas now powers nearly 130,000 buses, taxis, delivery trucks, and other natural gas-powered vehicles.
Natural gas prices were in the $2 to $3 per million Btu (MMBtu) range only five years ago. Record natural gas prices were set in October and November of 2005, but a warm winter have led prices to settle in the $6-$7 MMBtu range. Still, prices paid by residential customers this past winter averaged 30% higher than the prior winter. The Energy Information Administration (EIA) estimates that concerns about tightness of future supplies of natural gas and continuing pressure from high oil market prices will keep gas prices for the next winter season at today’s high prices.
