PR pushed to go out before market open Wednesday due to the noise in politics that occurred Friday and over the weekend (Musk vs Trump, China Tariffs, ICE and civil unrest in California).
Sorry for the silence over the past few days - after the unofficial announcement of the acquisition, Cohen and our team have been heads down on more acquisition targets inquiries similar to Vision, that would fall under Vision.
The basher sits here and acts like Cohen just chases junk wells... but completely ignores the fact that companies like Diversified, Scout Energy and Sabinal just to name a few - deploy this exact same strategy and do so on a much larger scale. Why would companies part with old well packages if there is still Oil & Gas under their ground?
Big companies costs more to operate than smaller companies. The basher completely forgets that Cohen has been buying and selling and advising Oil Field Services companies for over a decade.
The price to perform a service (for example a pump replacement) isn't worth the money for a bigger company to reinvest into the well - the bigger company has higher overhead and has a higher break even price on oil per barrel than the little guy like Cohen does. Additionally, things cost more to get done when you are a bigger company and bigger companies are not setup to self service themselves. So - before Big Oil M&A occurs, they shed off older assets and with them they shed off P&A costs (Plugging & Abandonment). The Rail Road Commission requires wells that are longer in active production status and are not qualified as a shutin to be Plugged. The state estates the total cost of plugging efforts (everytime you see the paid basher throw out large expenses owed against the wells - they are not actual or real liabilities, and are estimates that the state provides. Reality is that you can scrap all of the above and below ground infrastructure (tubing, casing, pump, rods, motor, horse head, beam, etc) for around the same cost as it costs to cement the well and plug it. The basher would prefer to scare people though and also has no clue what he's talking about. He just likes push and spread lies through his obsession with Cohen praying on his downfall and failure when in reality Cohen never burned him or anybody for that matter.
To answer your question re/audit - yes Cohen has an extensive audit background from working at PwC and as his work as a CFO for private equity backed companies.
Each time an acquisition is executed - it creates another company subject to 2 year audit.
The market right now is extremely hot for M&A big and small companies. Cohen will always keep compliance at the top of his list, he is focused on the audit, and is doing his best to juggle that with having financial statements that are in good form for the auditor. They will be reproaching Salberg to begin the audit as soon as they have brought back Vision Oil And Gas's existing wells back online to production.
The company intends to announce the hiring of its Production Engineer (leaving Devon Energy to work for the company) by next week.
Post acquisition of Vision plan:
Step 1 - pay $57k electric bill in June, and replace the current Conteact Pumpers on the Cochran County (Permian Basin) and Duval (South Texas) leases. The company anticipates production levels of 40-50 barrels a Day just through this alone.
Step 2 - begin well work overs on the 120 "shutin" target wells identified as good candidates (approximately 80 were identified by the consultant as needing only pump reworks / cleanings, and the company intends to run acid and chemicals). The company intends to start running its first of 2 service rigs (1 rig + 1 lead operator + 3 service rig hands) the Monday after July 4th weekend on July 7th. 1 service rig running workovers on 5,000 ft vertical wells = about 12 wells worked over per month. The company intends to run its 2nd workover rig side by side starting the 2nd week of August.
The company anticipates on average to produce 1 - 1.5 barrels per day per well in Cochran County that is brought back online.
The company intends to be at or between 150-200 barrels per day in total production by the end of November just off the existing assets owned by Vision alone. That would equate to approximately $208,000 - $278,000 in revenue per month after royalty interest is paid, and at $120k per month in profit before CAPEX OR Annualized EBITDA of $1.45M.
This is before the equipment rental revenue, and before the company re-enters services again, which it is now re-positioning its services offerings to accommodate other smaller independent operators, in addition to re-entering flowback services for the Major Operators.
This is also before any further acquisitions.
I just want to take a minute and emphasize how significant EBITDA / free cash flow like this is for a small company. After the Freedom Well Testing acquisition - the company was generating $500k a month in sales / revenue, but operating at breakeven / slight net loss.
By focusing on more profitable sales, this will position the company for better and more sustainable growth short and long term.
Note that to date, Cohen has financed all of the acquisitions of $AZRH either out of pocket or through stock awards and assumptions of debts AND assets at no detriment to the retail shareholders. By generating significant positive and free cash flow - this allows the company to continue do more - to acquire more and better assets and businesses - and to increase shareholder value without dilution.
Under this strategy, Cohen will eventually in the future raise capital but it will not affect the retail stock / shareholders - as he will be selling future cash flow from existing production to "Non-Op" (Non-Operator) Oil and Gas investors looking to take advantage of the tax benefits associated with IDCs (intangible drilling tax credits) and an above market yield annuity cash flow stream. This will only dilute Cohen's cash flow and profit, and will not dilute the common shareholders.
Lastly - as the basher keep bringing up Mountain V - Josh and Mike (the owner) have had an extremely close relationship for over 7 years. Josh and Mike communicate almost all day everyday. Josh is currently sourcing acquisition targets for Mountain V, and has done a lot of capital formation for Mountain V over the years.
As markets change - strategies change. This is small business and this amidst uncertainty in the broader markets tied to war and Politics. The 2 are evaluating acquisition targets under their JV vs pursuing the original drilling strategy that was more focused on driving bottom line value to Button Energy, but given the financial condition of Button Energy and the resurgence of gas prices back sub $4 / MCFE, the groups believe it is more economical to focus on acquiring production individually but together through a shared Acquisition Strategy Model and marketing platform.
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