This latest financing is great news, Apollo is very highly regarded and the fact that they have gotten involved with such a small investment (for them) strongly implies that they must think that this company will be doing a lot bigger and better things in the coming years. What a world this is now, where a tiny company can get some leases, do a farmout, and then, after drilling a single well, completely finance its drilling obligations for a quarter interest in a multi-year 2-well drilling program, all with only increasing the number of its FD shares outstanding by less than 5%. A few months ago I had introduced Kim Bradford (Osage CEO) to my buddy Alex Montano of CK Cooper with the thought that Alex might be able to help him do an equity raise to partly finance this next round of growth, but after they met, Kim just blew Alex off, and now I see why.
Apollo has now done our due dilligence for us. There's no way they would have gotten involved in this project unless they thought they would not only get their money back but also make a big profit on the Osage stock they are getting. Actually, to be more precise, they are getting penny warrants, not actual stock, and there is a subtle yet significant difference between those 2. The 6-month hold period for privately issued stock does not start until the consideration is paid for the stock. So that stock that Apollo is getting by virtue of receiving the penny warrants is not tradeable by them until 6 months after they fork over the penny per share exercise price of the warrants.
A recording of Osage's presentation at the Energy Prospectus luncheon in Houston tomorrow will be available to all a few hours after the presentation has taken place, at www.energyprospectus.com .
