Replies to post #15652 on Empire Energy Corporation Intl. (fka EEGC)

[BobSinCA]

We know EEGC is 'cash poor,' with a huge cost of capital. How cash poor we will know better in early August when we see how Mr. Bendall 'pays' for his shares.

EEGC is required to drill, AND COMPLETE, Bellevue in less than eleven months from now per the lease as previously quoted in this forum

As I suggested three months ago, having someone else do the drilling is faster operationally (as you have stated with more eloquence and oil exploration experience than I), and more prudent with limited cash (I do have the start-up company experience to discuss cash management ).

Note:

- If EEGC finds oil, it will be able to get significantly less expensive financing to buy a rig and accessories, and hire a crew, than it can now. And EEGC shareholders on this board are confident that the initial wells will result in commercial discovery.

- If it doesn't find oil with the initial couple of wells, doesn't matter.

So, other than 'because management has so decided,' I am not really clear as to why rig ownership is deemed a good idea at this stage of EEGC's existence. What has changed since the company wanted to rent the Hunt rig two years ago -- other than the time of lease ending is sooner, cash is less available (again, pending how the RO comes out; note SmartWin had an option on half the company at $.25 or more per share, as I recall), and the amount of territory available to drill is less. These factors seem to tilt more toward contracting the drilling rather than owning.

Without assessing blame, just trying to find a rationale -- after the SmartWin and Hunt experiences, perhaps it is difficult for EEGC to get a contract with a driller, maybe that is why they are looking to buy a rig and staff it?

But, they then have to ship, outfit, certify and man it while working against the clock with limited dollars.

So far, EEGC is publicly committed to a purchase -- it has announced the rig and provider, and had its CEO pictured next to it. While the company does not owe the shareholders an explanation as a result of discussion in this forum, I suspect the question would arise at a shareholders meeting.

[big gttom]

Oh ok. I spent like 20 minutes finding this stuff in my country on the web:
Most of these rigs include the substructure, mud equipment, etc. that you so eloquently speak of for less than 1.5 m.

http://www.kruseasset.com/Detail.aspx?AuctionID=75

http://www.kruseasset.com/Detail.aspx?AuctionID=68

http://www.kruseasset.com/Detail.aspx?AuctionID=86


And this guy finances rigs right in EEGC's backyard:

Bruce A. Kessler
KESSLER CAPITAL

11701 Wedd Suite 4

Overland Park, KS 66210

913-661-0301 Office

913-302-3127 Mobile

[e-mail]

Also, Rigzone has 69 rigs for sale on their site and most of them come with the stuff AND pipe: http://www.rigzone.com/market/Results.aspx

Here is an interesting one for sale: http://www.rigzone.com/market/Detail.aspx?aid=12651

Or, here are some more:
http://www.sunmachinery.com/rigmonth.htm#NATIONAL_370_(Ref4421N)


And with at least 10% worldwide unemployment, I don't think its hard...well, if Malcolm needs a few drillers, engineers...etc, to just place an ad here:
http://www.rigzone.com/jobs/search_job_results.asp?JobCategory=3

It just seems to me with a million or 2, EEGC could easily own an acceptable rig with everything on site...

And so, IMO EEGC either pays approx 3 million to Hunt(approx. 1.5 owed, 1.5 to drill) and puts the 20 million collateral shares back in the treasury or pays approx. half that cost to own one and to drill in house...
...and if they hit oil, they simply pay Hunt off with their elevated collateral share price.
To me, that is a better business decision with limited funds available and I wouldn't think it would take more than a few weeks to procure, a month to ship from the US and a few weeks to set up/certify. Or, maybe he just wants a new shiney Speedstar to drive Tatiana around in.


Geez, I don't know. I don't run an energy company. But, Malcolm does...