Interesting stuff, potential under the radar gem here..??? Wonder how they are going to fund the building of these facilities..? Hopefully not all through Convertible Debenture.
If and when they do ever break ground on them I'll definitely try to pick up a few tickets.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
On June 15, 2011, PetroStrata Corporation, a wholly owned subsidiary of Drayton Richdale Corporation, executed a Joint Venture Agreement with Estes Development Corporation, a coal producer from the State of West Virginia. Under the terms and conditions in the Agreement, PetroStrata will build and operate a 20,000 sq.ft. Shale Oil Extraction on 40 acres near Rock Springs, Wyoming and another 20,000 sq.ft. Coal Oil Extraction Facility on 50 acres near Cuba, Illinois. PetroStrata will utilize its cost effective, propreitary and environmentally friendly PetroMicronic Reactor at both location to extract crude oil and coal oil respectively. The development cost for the Rock Springs site estimated to be $36 Million and the Illinois site is projected to be $24 Million. The completed plant in Rock Springs is expected to produce 4,800/bbls/day of crude oil. In projecting a market value of $82.00/bbl, Rock Springs will generate $81 Million annual net revenue before taxes (see attached Exhibit 1 Rock Springs Financial Projections and Utilization of Funds). The Illinois facility is projected to produce 5,700/bbls/day of coal oil and the net annual revenue over $107 Million (see attached Exhibit 2 Illinois Financial Projections and Utilization of Funds).
The facilities will be operating 24 hrs./day, 328 days/year and will employ 75 to 100 individuals at each location. The extractions plants are scheduled to be operating at full capacity within 24-30 months from ground breaking. Through a contractual supply of coal/ore inventory, along with hard assets, the joint venture has increased Drayton Richdale Corporations net worth to exceed $500 Million.
The Balance Sheet values with regard to inventory and pledged assets for capital formation were derived from a February 5, 2009 appraisal of above ground coal inventory prepared by Moss, Johnson and Associates, Ltd. It was determined that Estes Development Corporation's 18,369,188 tons coal asset base in the Illinois location, at $46.00/ton, is $846,224,648 at market value. With this foundation, the current Company Book Value/Share, post the June 15, 2011 joint venture agreement is $16.54/share.
Taking into account the attached projections for the shale oil extraction plant for Rock Springs, Wyoming and the coal oil extraction plant in Illinois, the Company's Projected Earnings/Share is $6.51/share. The Price to Book Value of 0.0078 indicate a high growth potential for the Company. Accordingly, the Price to Earning Ratio of 0.019 projects the company to be a "Value Stock" in the long term.
The Company will need to raise capital for the construction and operation of both petroleum extraction facilities. Due to the substantial revenues that will be generated by the project as articulated in the hereby attached projections, the Company will structure a short term, five (5) year Convertible Debenture with an eight (8) percent interest rate.
The foregoing discussion should be read in conjunction with our consolidated financial statements, notes to those statements, Management’s Discussion and Analysis of Financial Condition and Results of Operations from the 2010 Form 10-K and the other financial information appearing elsewhere in this report. The risks and uncertainties described in this Form 10-Q and our 2010 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties that we are not presently aware of, or that we currently consider immaterial, may also affect our business operation. Our business, financial condition or results of operations could suffer if the concerns set for are realized.
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