Xun Energy, Inc. (fka XNRG)

[PG]

(Published 27 September though the interview was publicized on the XUN forum in August.)

“We already have standing in oil business” – the Head of Xun Energy states

Xun Energy Company has suddenly plunged into oil business making it clear that it’s not going to stay in the shadow of large oil producing monsters and that it’s quite able to knock Exxon, the world leader, off its pedestal.
Jerry G. Mikolajczyk, the President of Xun Energy gave an exclusive interview to Fineko Information Agency (abc.az)

- Xun Energy is not too long in oil business, why did the Company decide to change its profile so dramatically?

- We have not changed our profile. The Company changed its focus from real estate to energy in February 2010 after entering into a definitive agreement with Global Power and Water Industries, Inc. (GPWI) which had several power purchase agreements with several Chinese cities and provinces. When the current CEO took control of the Company, he brought with him many years experience in the energy industry, both on the private side and in public utility financial management.

- Many other companies with higher financial and technical possibilities and more experienced in this area are engaged in oil business. How can you estimate your competitive abilities?

- This is an area where we already have standing as evidenced by the high quality leases and associations we have in Pennsylvania

- How the process of investments attraction is going?

- Investment attraction is an ongoing process. What we mean by “ongoing process” is that the Company has a business plan with staged objectives; each requires funding either from cash flow or inflow from outside sources.

Our investment needs for our staged growth is disclosed in our Powerpoint presentation in New York, link: January 13 Presentation

- Does the well drilling at Rice Lease go according to schedule? Are there any factors (weather conditions, government regulations etc.) that can cause delays in oil production?

- As disclosed, on our Xun Forum, weather has caused a delay. However, the pads are completed at the Rice lease. We do not anticipate any government regulations that would impact our drilling and completions program.

- What are your plans in case if the wells turn out to be non-productive?

- We are drilling in a proven and producing field with 5 wells currently producing oil on the same lease within hundreds of feet of our drilling locations. Therefore the risk of the wells being non-productive is very unlikely. We have 30 well locations and an option to acquire 15 more oil well locations. We anticipate each well will produce at various rates of production. We based our economics on the average of all the wells and not any one well in particular. Based on current production from wells on the lease, each well has its own personality and will produce accordingly.

- How do you estimate your business situation in case of oil prices fall?

- Oil prices are the riskiest component of any oil operation. The key is to maximize the net back (net margin, EBITDA) per barrel of oil net of owner royalties and lifting costs. Based on estimates of our costs, our netback is estimated to be approximately 67% based on USD$85.00 per barrel oil selling price. Our fixed costs are minimal per oil well.

- Is it your first experience to cooperate with Vencedor Energy Partners (Xun Energy Operator) or you have already worked together before?

- Yes, this is our first business venture with Vencedor Energy Partners. We are very pleased with their performance and look forward to additional ventures with them.

- How do you estimate the impact of your company operations to the environment of the region?

- Negligible. The region is the site of the first oil well in North America and has a long history of oil production. Our sites and operations are designed to meet or exceed the current environmental regulations required for our type of operation. We are using new equipment and will operate and maintain the sites according to State regulations.

- How many people are engaged in operations (the work force)?

- Currently the Company has 4 workers. Based on completing the current 30 oil drilling and completions program plus exercising our option for the additional 15 oil wells, 9 permanent jobs (includes annual service program) would be created and 67 direct and indirect jobs would be created during the drilling and completions program.

- Are you sure that you will be able to rise the declared debt financing to the full extent?

- The Company is working with various financial consultants on raising the necessary funds for completing our projects. The Company qualifies for a Small Business Loan (SBL) as administered by the SMALL BUSINESS ADMINISTRATION of Untied States of America. The Company has made application for $5 million under the SBL program and it is in process. There is no guarantee that the company will be successful in closing on the SBL. As disclosed in our SEC filings, we have a $15 Million Reserve Equity Financing Agreement (REFA) of credit with AGS Capital Group, LLC. The Company is required to register the stock for the REFA. The Company has received its first round of comments on the Registration Statement (S1) from the SEC and has acted on the comments. The Company expects to be submitting a new S1 for the REFA soon.

ABC.AZ XUN Interview