Replies to post #29541 on Phoenix Associates Land Syndicate (fka PBLSQ)

[tedwitt]

Why did ProGas have such a high revenue stream and show low profits? The answer was so simple it never crossed my mind. ProGas is a marketing firm. Small producers that don’t have a marketing department use them. It works like this. ProGas markets the gas and small amounts of oil to three companies (Enbridge, Louis Dreyfus and Gulf South Pipeline). These companies pay a lump sum to ProGas. Then in turn ProGas pays the producers, royalty holders, etc. Then ProGas retains some for their fee. They were once screwed by Enron to the tune of $500,000. Since then they have taken out an insurance policy (Which the producers agreed to pay for in whole) that guarantees payment on defaulted contracts. The beauty of this set up is that ProGas gets the payment first then sends out the money. First paid and insurance to cover the only weak link that they can not control. ProGas has been in business for 18 years.