- With our success in the leasing of our targeted prospects, our plan is to partner with other entities to include oil and gas companies and/or financial investors. Our goal is to diversify risk and minimize capital exposure to exploration drilling costs. We expect a portion of our exploration costs to be paid by our partners through these transactions, in return for our delivery of an identified prospect on acreage we control.
-We have planned operating expenditures through December 2017 of approximately $4 million, which includes $0.6 million of gross lease rentals to the BOEM, $1 million in seismic data payments and $0.1 million in payments for seismic software licenses, and $2.3 million in exploration costs and general and administrative expenses. We will need to raise funds to cover these and other planned operating expenditures.
-We have incurred losses since our inception resulting in an accumulated deficit of approximately $33.5 million at September 30, 2016, and we have a net capital deficiency.
- The commercial viability of our projects is highly dependent on the price of oil. Prices also affect our ability to borrow money or raise additional capital. We will need to obtain additional financing to fund our activities. Our ability to do so may be adversely affected by an extended decline in oil prices. If we are unable to obtain such financing when needed, on commercially reasonable terms, we may be required to cease our operations, which could have a materially adverse impact on the market price of our stock.
-The failure to timely affect all lease related payments could cause the leases to be terminated by the BOEM. Net lease rental obligations on our existing prospects are expected to be approximately $0.6 million in fiscal year 2017. Our leases have a five-year primary term, expiring between 2019 and 2020.
- There has been limited trading activity in our stock, and when it has traded, the price has fluctuated widely. We consider our common stock to be “thinly traded” and any last reported sale prices may not be a true market-based valuation of the common stock.
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