Spunky, I've grown suspecious of everything BD PRs. Lets take a look at the most recent PR:
"Mr. Benjamin Johnson, CEO of Summit, in reporting on the Company's operation and asset base, noted that "We have been and are continuing to analyze the Black Dragon properties in order to develop the business plan required by the new funding. In summary, we believe that almost every facet of Black Dragon's operations has potential for considerable improvement with an impact on profitability and we continue to be excited about the opportunities afforded through the influx of significant new investment funds. The areas we are focusing on are general business management, field maintenance operations, remedial work on existing wells, infill drilling into current producing zones, drilling into new zones on existing leases, and acquisitions of new properties."
OK, please tell me what is here to get excited about? What is Summit actually saying, that they can run the company better than Lanza? Well, yes, I bet they can. Maybe they can even find the 10,000 barrels of lost oil. Look, anybody could do better than Lanza. They tell us the are still excited about the possibility of new investment. We all are. Can’t say I’m to impressed.
"We are confident that improved business management procedures will have a significant effect on profitability by implementing certain practices, such as quicker decision making, computerization of all field and office activities, and better management control of such financial details, such as accounts receivables. Improved administrative controls will help facilitate achieving the desired profit projections which, we believe, can be realized quickly. Closer monitoring of field activities will also be implemented. All these seemingly small changes will add up to a large improvement in efficiency, increase in oil production, elimination of unnecessary costs, and increased revenue."
OK, so they are going to modernize operations. That’s great. Again, I don't see anything to get excited about.
As to the field operations, Mr. Johnson reported to Mr. Lanza that "Like all of the other producing properties in Black Dragon's area of operation, many of the existing wells are decades old and their production rates have been reduced through normal, mechanical degradation over time. Over half of all Black Dragon wells are currently not producing or are under-producing due to mechanical limitations. We expect to achieve significant production rate increases through a focused systematic program of remedial well work, where appropriate. New technology can be applied at the time each well is worked on, and careful attention to cost management will facilitate the maximum increase in profitability.
Again, we see that Summit is going to bring old wells on-line and modernize production. Great, but what else would we expect?
"In addition to work on existing wells, we are identifying a number of potential locations for drilling new wells into currently-producing and/or under-developed horizons on the Black Dragon leases. An oft-quoted principle in the oil industry is that the best place to find new oil is usually in the presence of old oil production areas, which we believe applies here. Although some of the original reservoir oil underlying the new well locations may have been partially recovered, the new wells will increase the overall recovery factor and accelerate the recovery of the remaining reserves to take advantage of economies of scale because the new wells will be drilled using modern technology, and employing appropriate simulation programs where justified. Even very old wells, drilled years ago can now be put into economically valuable production today because of improved methods and equipment."
This is the only interesting paragraph. But I have to say, it is a bit ambiguous. It is not exactly saying that BD has deep well rights. Which would be nice to have spelled out. Rather, they are going to exploit "new-horizons." Well, just what does that mean? Look, we have been told that BD has 12-billion in reserves and that they are expecting 100-million in investment. Can't say I see anything here to exactly shore up that claim or leave me to believe anything like 100-million in on the way. Listen, though, I'd be happy with 10-million.
Mr. Johnson added that his team had recently made a study of Louisiana State records and concluded that there exists a great opportunity to redrill older wells at different levels, noting that "even though Black Dragon's leases may appear to be located in a depleted, mature basin, the potential for exploitation of new horizons appears strong."
Again, the "potential" "apears" strong. I think they are going to need stronger language than that to close the deal.
Mr. Johnson concluded by reporting that his team is nearing completion of their data collection and analysis process and should be in a position to present its initial report to the Company and the Funding Group in the very near future.
Sure would be nice to have deginite date. The audit, remember, is coming in the very near future.
Mr. Lanza concluded by noting that "while the Summit Group will only assume management control upon receipt of funding, at which time, I will resign, they will have already made a substantial contribution to the Company with their recommendations. Change is already underway."
As you can all see, everything is contingent on funding.
Sounky, it you read it carefully, well, you realize it was very carefully written.
As regards Summit, why are they even issueing such interim reports. Seems they ought to just do there job and not be part of the stock promotion, assuming that is what this PR is all about, promoting the stock.
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