GXE - Gear Energy

[investor-man]

They mix words a bit. At the end your have:

 

The reduction is primarily a result of reduced commodity pricing forecasts by Gear's lenders.

 

Which makes it sounds like the bank made them do this, but toward the beginning of the press release you have:

 

The net proceeds of the offering will initially be used to reduce bank indebtedness, which may be redrawn to finance Gear's 2016 capital expenditure program and for general corporate purposes.

 

Which makes it sound like they are paying down their bank line just so they can use it up again.

 

One would guess the "current significant shareholder of Gear" who is buying $11mm worth of the debt is Don Gray, since he's sold about $29mm of Peyto over the last couple of months. I think it's fair to say that he and the other directors could not have purchased this many shares at this price without driving the price up quite a bit, so this is a way for them to get in cheap. It wouldn't surprise me if those new common shares end up right in their hands as well -- that said I have no idea how the investment banking side of all of this works.

 

This is definitely annoying, but our interests are certainly still aligned with theirs... still annoyed though.

[investor-man]

Financial statements released: http://www.gearenergy.com/financial-reports

 

still reading through them

[investor-man]

It's still not 100% clear to me if the banks made them do this, but it's sounding more like they did. Here's from page 10 of the MD&A

 

Gear’s ability to increase its borrowing capacity is based on its reserves value as determined by its external reserve evaluator.

 

but still a bit earlier:

 

Concurrent with the banking update, Gear has decided to further de-lever its balance sheet and reduce its outstanding indebtedness

 

I'll just write IR. I'll post the email and response if I get one here.

 

[investor-man]

names changed to protect the innocent ;)

 

Hi,

 

It is not clear if the bank line was decreased from $90mm to $60mm because the bank is making you do it or if you are doing it as a choice. Could you please clarify?

 

Thanks,

investor-man

 

Hi investor-man

 

It is the banking syndicate who requested the $90MM to $60MM decrease and was not a choice by ourselves.  Any further questions, please do not hesitate to ask.

 

Thanks!

David

 

David Hwang

Vice President Finance and Chief Financial Officer

 

I definitely feel a lot better about this.

[Cardboard]

I had mentioned that Penn West has a tremendous advantage over many of his peers with a credit line not subject to re-determination. Now we see what can happen.

 

However, the banks seem to have a point: look at the size of the write-off vs their assets. The percentage is very large. I haven't seen this kind of charge at other E&P's who have all seen the same energy prices decline in Q3 and all have recorded some impairments.

 

Cardboard

[Packer16]

The reason for the write-off in Gear is doing a valuation as of the current date and PWE appears to not have done one for core assets (or maybe the basis for the core assets are so low that making a comparison to Gear is comparing apples to oranges) since year-end.  If you look back at the last 3Q releases for PWE there is no write-off in core, which I find hard to believe given the decline in unhedged netbacks since year-end 2014 (PWE has declined from C$32.51 to C$10.89 while GXE has declined form C$33.52 to C$16.57) and the price of oil has declined by over 50%.  Unless these core assets have a low basis, I think you will see a big write-off on PWE's assets at year-end.

 

Packer

[argonaut]

Hi Packer,

 

How has this recent PR release affected your IV and margin of safety thoughts for GXE? Still as appealing and safe or?

[Packer16]

The reduction in the credit line was expected, however, the magnitude is higher than I thought.  However, management was able to find financing at a good rate 6% if shareholders do not approve conversion feature and some equity dilution 20% at about the current price.  I think it is cheap at this price and with small changes in oil prices should have some nice upside.  Capital efficiency is amongst the highest in the region and unhedged netbacks are at $16+ in the tough Q3 of this year.

 

Packer

[ItsAValueTrap]

Capital efficiency is amongst the highest in the region

 

How did they manage to achieve this when only 1 of their 71 natural gas wells is currently flowing?

 

I don't mean to be snarky but... don't you guys think you're drinking the Koolaid a little here?

[kevin4u2]

Hi Packer,

 

How has this recent PR release affected your IV and margin of safety thoughts for GXE? Still as appealing and safe or?

 

Packer can speak for himself, but those investing in Gear because of the commonalities with Peyto are badly mistaken.  This is no Peyto.  As I have mentioned elsewhere, and to some on this board in private, the Gear equity is not worth much unless and until the price of oil rebounds.  AECO gas is $2.55/mcf an WCS oil is under $40/bbl.  Their assets are not worth much in this price environment.  You can't slapstick a $x/flowing boe multiple on the production and suddenly think there is a margin of safety.  The economics don't work that way.  This is a speculative bet on oil prices.

 

 

[Cardboard]

Here we have the two ambulance chasers of Corner of Berkshire: Its a Value Trap and Kevin4u.

 

These two who will never stick their .... out and never recommend anything. Just posting negativity all around. Not that I own or want to defend Gear but, you two: .... you!

 

Cardboard

[Packer16]

At today's prices it depends upon the capital efficiencies they achieve.  Based upon the recent disclosure the cash flow at $45 WTI is close to $23 million annualized unhedged.  If they can achieve a capital efficiency of $10k per the latest wells you have cap-ex of $19 million to maintain production or $29 million if you use $15k.  So you are at breakeven at today's prices, the lowest seen in years. 

 

Now lets compare to Peyto: Q2 field netbacks for Peyto is C$19.32 versus C$25.19 for Gear.  Capital efficiency $15.3k for Peyto versus $10 to $15k for Gear.  Peyto also has a 14% advantage in Q2 for operating margin.  Peyto is much larger and thus has scale that Gear does not have now.  Also the core philosophy of capital allocation is the same as the founder in both cases Don Grey. 

 

Gear today is not equal to Peyto today.  I do not think that anyone is implying that.  However, the same philosophy that built Peyto is active at Gear.  Gear is focusing on oil versus Peyto's focus on gas.  You are also paying 5x the amount on flowing boe (using 15:1 as the oil to gas conversion) more for Peyto than you are for Gear.  IMO to say it is a speculative bet on oil prices is ignoring the history of Gear and netback & capital efficiency data above.

 

I totally missed how the capital efficiency of Gear's oil wells has anything to do with gas wells?

 

Also, if you use today's prices for gas (15% lower than Q2 pricing), Peyto is also at cash flow breakeven (CFO less maintenance cap-ex) assuming $15k capital efficiency and a 36% decline rate. 

 

Packer

 

 

[Green King]

Here we have the two ambulance chasers of Corner of Berkshire: Its a Value Trap and Kevin4u.

 

These two who will never stick their .... out and never recommend anything. Just posting negativity all around. Not that I own or want to defend Gear but, you two: .... you!

 

Cardboard

 

Doing noting has a lower risk profile than doing something. If anyone can be easily influence by the views of others than that person is better off doing nothing.

[Wilson-TPC]

Capital efficiency is amongst the highest in the region

 

How did they manage to achieve this when only 1 of their 71 natural gas wells is currently flowing?

 

I don't mean to be snarky but... don't you guys think you're drinking the Koolaid a little here?

 

Lol. Glenn, what does that have to do with how many nat gas wells?

[kevin4u2]

At today's prices it depends upon the capital efficiencies they achieve.  Based upon the recent disclosure the cash flow at $45 WTI is close to $23 million annualized unhedged.  If they can achieve a capital efficiency of $10k per the latest wells you have cap-ex of $19 million to maintain production or $29 million if you use $15k.  So you are at breakeven at today's prices, the lowest seen in years. 

 

Now lets compare to Peyto: Q2 field netbacks for Peyto is C$19.32 versus C$25.19 for Gear.  Capital efficiency $15.3k for Peyto versus $10 to $15k for Gear.  Peyto also has a 14% advantage in Q2 for operating margin.  Peyto is much larger and thus has scale that Gear does not have now.  Also the core philosophy of capital allocation is the same as the founder in both cases Don Grey. 

 

Gear today is not equal to Peyto today.  I do not think that anyone is implying that.  However, the same philosophy that built Peyto is active at Gear.  Gear is focusing on oil versus Peyto's focus on gas.  You are also paying 5x the amount on flowing boe (using 15:1 as the oil to gas conversion) more for Peyto than you are for Gear.  IMO to say it is a speculative bet on oil prices is ignoring the history of Gear and netback & capital efficiency data above.

 

I totally missed how the capital efficiency of Gear's oil wells has anything to do with gas wells?

 

Also, if you use today's prices for gas (15% lower than Q2 pricing), Peyto is also at cash flow breakeven (CFO less maintenance cap-ex) assuming $15k capital efficiency and a 36% decline rate. 

 

Packer

 

I don't disagree with anything you say other than Peyto's capital efficiency is lower than 15.3k.  Peyto is still profitable at the current gas price while Gear is not at the current oil price.  Also, the 5x per flowing BOE is meaningless and makes no sense to me.  That metric would only apply if and when you are comparing production of equal quality and cost structure. 

 

For example, what is the RLI of Peyto and what is the RLI of Gear?  If you look at proved developed producing (PDP) reserves Peyto has a 7 year reserve life, while Gear has a 2.6 year reserve life.  That means at current production rates, gear would produce all of their reserves in two and a half years.  They are on such a steep decline it isn't even funny.  Peyto's production might decline fast in the first year due to flush production but will flatline for decades.  That means a lot when you do a DCF on the production stream of Peyto and Gear you are comparing apples to oranges.  A longer RLI would it also greatly reduce risk and provide for far more upside when prices recover.  If you look at proved and probable (2P) reserves, Peyto's RLI is 18 years vs 7.9 year at Gear.  Back in 2009, before Peyto began going nuts on the fracking, their RLI was 14 years PDP and 29 years on a 2P basis.  Peyto gas wells, like the early gas wells that Shell drilled in the foothills, will produce gas for 100's of years.

 

For the person who keeps coming around with nothing to add to the discussion but personal attacks, I wish he would provide some real analysis for once.  You may not appreciate my comments, but you should ask yourself why?  Are they true or are they not true?  You may think I'm pessimistic, but I assure you my analysis is thorough and I understand how these assets are valued.  I have run my own NPV models and adjusted for commodity prices and they are not worth much.  The recent huge loss in Q3 for gear, due to the impairment charge, was not difficult to predict if you looked at their reserves.  How to reconstruct their reserve model based on public data takes some creativity, knowledge of finance, and how the reserve models work, but it is hardly rocket science.  Pessimistic or rational?  You may not appreciate my comments but you should know that I was personally thanked for being the voice of reason on the PWE thread.  Saved some individuals from losing a boat load of money.  If you don't take dissenters serious, how good of a critical thinker are you?  Are dissenters valued on COBF?  I know that will likely piss you off again, but it will just be your limbic mind alerting you to the fact that your needs (ego) are under attack. 

[ItsAValueTrap]

Here we have the two ambulance chasers of Corner of Berkshire: Its a Value Trap and Kevin4u.

 

These two who will never stick their .... out and never recommend anything. Just posting negativity all around. Not that I own or want to defend Gear but, you two: .... you!

 

Cardboard

 

Actually, I shorted a lot of oil stocks before oil prices plunged.  I nailed the analysis on Miller Energy.  Uh... you guys into short ideas?

 

http://glennchan.wordpress.com/2013/08/14/miller-energy-resources-mill-this-company-is-awful/

http://glennchan.wordpress.com/tag/rex-energy-rexx/

http://glennchan.wordpress.com/2014/05/21/short-selling-update-may-2014/

http://glennchan.wordpress.com/2015/08/06/my-approach-to-diversified-shorting/

 

Capital efficiency is amongst the highest in the region

 

How did they manage to achieve this when only 1 of their 71 natural gas wells is currently flowing?

 

I don't mean to be snarky but... don't you guys think you're drinking the Koolaid a little here?

 

Lol. Glenn, what does that have to do with how many nat gas wells?

 

Gear might be doing a terrible job at acquiring or drilling wells.  (Though I haven't done much research on the company.)  A lot of shale guys are batting close to 100%.  Contango used to bat .500 in the gulf of mexico doing crazy high-risk wildcat stuff.  And then you have Gear... batting 1 out of 71.

 

[Picasso]

No bone in this fight, but I appreciate the dissenting views as well.    I take more comfort knowing I addressed all the negative concerns to the best of my ability.

Lord knows I've stepped outside my circle of competence a few times and that may be happening with some of these oil/gas names.

[Packer16]

At today's prices it depends upon the capital efficiencies they achieve.  Based upon the recent disclosure the cash flow at $45 WTI is close to $23 million annualized unhedged.  If they can achieve a capital efficiency of $10k per the latest wells you have cap-ex of $19 million to maintain production or $29 million if you use $15k.  So you are at breakeven at today's prices, the lowest seen in years. 

 

Now lets compare to Peyto: Q2 field netbacks for Peyto is C$19.32 versus C$25.19 for Gear.  Capital efficiency $15.3k for Peyto versus $10 to $15k for Gear.  Peyto also has a 14% advantage in Q2 for operating margin.  Peyto is much larger and thus has scale that Gear does not have now.  Also the core philosophy of capital allocation is the same as the founder in both cases Don Grey. 

 

Gear today is not equal to Peyto today.  I do not think that anyone is implying that.  However, the same philosophy that built Peyto is active at Gear.  Gear is focusing on oil versus Peyto's focus on gas.  You are also paying 5x the amount on flowing boe (using 15:1 as the oil to gas conversion) more for Peyto than you are for Gear.  IMO to say it is a speculative bet on oil prices is ignoring the history of Gear and netback & capital efficiency data above.

 

I totally missed how the capital efficiency of Gear's oil wells has anything to do with gas wells?

 

Also, if you use today's prices for gas (15% lower than Q2 pricing), Peyto is also at cash flow breakeven (CFO less maintenance cap-ex) assuming $15k capital efficiency and a 36% decline rate. 

 

Packer

 

I don't disagree with anything you say other than Peyto's capital efficiency is lower than 15.3k.  Peyto is still profitable at the current gas price while Gear is not at the current oil price.  Also, the 5x per flowing BOE is meaningless and makes no sense to me.  That metric would only apply if and when you are comparing production of equal quality and cost structure. 

 

For example, what is the RLI of Peyto and what is the RLI of Gear?  If you look at proved developed producing (PDP) reserves Peyto has a 7 year reserve life, while Gear has a 2.6 year reserve life.  That means at current production rates, gear would produce all of their reserves in two and a half years.  They are on such a steep decline it isn't even funny.  Peyto's production might decline fast in the first year due to flush production but will flatline for decades.  That means a lot when you do a DCF on the production stream of Peyto and Gear you are comparing apples to oranges.  A longer RLI would it also greatly reduce risk and provide for far more upside when prices recover.  If you look at proved and probable (2P) reserves, Peyto's RLI is 18 years vs 7.9 year at Gear.  Back in 2009, before Peyto began going nuts on the fracking, their RLI was 14 years PDP and 29 years on a 2P basis.  Peyto gas wells, like the early gas wells that Shell drilled in the foothills, will produce gas for 100's of years.

 

For the person who keeps coming around with nothing to add to the discussion but personal attacks, I wish he would provide some real analysis for once.  You may not appreciate my comments, but you should ask yourself why?  Are they true or are they not true?  You may think I'm pessimistic, but I assure you my analysis is thorough and I understand how these assets are valued.  I have run my own NPV models and adjusted for commodity prices and they are not worth much.  The recent huge loss in Q3 for gear, due to the impairment charge, was not difficult to predict if you looked at their reserves.  How to reconstruct their reserve model based on public data takes some creativity, knowledge of finance, and how the reserve models work, but it is hardly rocket science.  Pessimistic or rational?  You may not appreciate my comments but you should know that I was personally thanked for being the voice of reason on the PWE thread.  Saved some individuals from losing a boat load of money.  If you don't take dissenters serious, how good of a critical thinker are you?  Are dissenters valued on COBF?  I know that will likely piss you off again, but it will just be your limbic mind alerting you to the fact that your needs (ego) are under attack.

 

The Peyto capital efficiency number is the Q2 2012 number from the Q2 statement.  It is the actual obtained capital efficiency over the past 12 months.  Gear has obtained a $10k capital efficiency in Q3.  I think that if you pull out the hedging gains from the Peyto income statement and use the TTM efficiency numbers (along with a 20% decline in gas prices that have occurred since Q2), Peyto is essentially break-even on an unhedged basis.  If capital efficiency declines to $12k, Peyto is profitable. 

 

I agree that Peyto's wells have longer lives but if you are at break-even then it does not matter how long your wells last if the price remain constant.  BTW I do not think oil or gas prices are going to stay where they are and if you think they are going to decline further the best bet is to stay away from all these names. 

 

IMO the real question is do you think Peyto is worth 5x Gear on flowing BoE basis (when they have comparable unhedged Q3 netbacks Gear $16.57/boe vs Peyto $15.83/boe - illustrating comparable operating margins/boe)?  I think Peyto is worth more due to the longer life but not 5x.  I think the bigger point is we are at prices where some of the lowest cost producers are near break-even unhedged so we are reaching an economic floor for prices.  Given the news stories I have been hearing it also sounds like a classic bottom - Oil going to $30.  We will see.

 

Packer

[goldfinger]

Here we have the two ambulance chasers of Corner of Berkshire: Its a Value Trap and Kevin4u.

 

These two who will never stick their .... out and never recommend anything. Just posting negativity all around. Not that I own or want to defend Gear but, you two: .... you!

 

Cardboard

 

Actually, I shorted a lot of oil stocks before oil prices plunged.  I nailed the analysis on Miller Energy.  Uh... you guys into short ideas?

 

http://glennchan.wordpress.com/2013/08/14/miller-energy-resources-mill-this-company-is-awful/

http://glennchan.wordpress.com/tag/rex-energy-rexx/

http://glennchan.wordpress.com/2014/05/21/short-selling-update-may-2014/

http://glennchan.wordpress.com/2015/08/06/my-approach-to-diversified-shorting/

 

Capital efficiency is amongst the highest in the region

 

How did they manage to achieve this when only 1 of their 71 natural gas wells is currently flowing?

 

I don't mean to be snarky but... don't you guys think you're drinking the Koolaid a little here?

 

Lol. Glenn, what does that have to do with how many nat gas wells?

 

Gear might be doing a terrible job at acquiring or drilling wells.  (Though I haven't done much research on the company.)  A lot of shale guys are batting close to 100%.  Contango used to bat .500 in the gulf of mexico doing crazy high-risk wildcat stuff.  And then you have Gear... batting 1 out of 71.

 

I have always been in admiration with you Value Trap!  ;D

[Packer16]

At today's prices it depends upon the capital efficiencies they achieve.  Based upon the recent disclosure the cash flow at $45 WTI is close to $23 million annualized unhedged.  If they can achieve a capital efficiency of $10k per the latest wells you have cap-ex of $19 million to maintain production or $29 million if you use $15k.  So you are at breakeven at today's prices, the lowest seen in years. 

 

Now lets compare to Peyto: Q2 field netbacks for Peyto is C$19.32 versus C$25.19 for Gear.  Capital efficiency $15.3k for Peyto versus $10 to $15k for Gear.  Peyto also has a 14% advantage in Q2 for operating margin.  Peyto is much larger and thus has scale that Gear does not have now.  Also the core philosophy of capital allocation is the same as the founder in both cases Don Grey. 

 

Gear today is not equal to Peyto today.  I do not think that anyone is implying that.  However, the same philosophy that built Peyto is active at Gear.  Gear is focusing on oil versus Peyto's focus on gas.  You are also paying 5x the amount on flowing boe (using 15:1 as the oil to gas conversion) more for Peyto than you are for Gear.  IMO to say it is a speculative bet on oil prices is ignoring the history of Gear and netback & capital efficiency data above.

 

I totally missed how the capital efficiency of Gear's oil wells has anything to do with gas wells?

 

Also, if you use today's prices for gas (15% lower than Q2 pricing), Peyto is also at cash flow breakeven (CFO less maintenance cap-ex) assuming $15k capital efficiency and a 36% decline rate. 

 

Packer

 

I don't disagree with anything you say other than Peyto's capital efficiency is lower than 15.3k.  Peyto is still profitable at the current gas price while Gear is not at the current oil price.  Also, the 5x per flowing BOE is meaningless and makes no sense to me.  That metric would only apply if and when you are comparing production of equal quality and cost structure. 

 

For example, what is the RLI of Peyto and what is the RLI of Gear?  If you look at proved developed producing (PDP) reserves Peyto has a 7 year reserve life, while Gear has a 2.6 year reserve life.  That means at current production rates, gear would produce all of their reserves in two and a half years.  They are on such a steep decline it isn't even funny.  Peyto's production might decline fast in the first year due to flush production but will flatline for decades.  That means a lot when you do a DCF on the production stream of Peyto and Gear you are comparing apples to oranges.  A longer RLI would it also greatly reduce risk and provide for far more upside when prices recover.  If you look at proved and probable (2P) reserves, Peyto's RLI is 18 years vs 7.9 year at Gear.  Back in 2009, before Peyto began going nuts on the fracking, their RLI was 14 years PDP and 29 years on a 2P basis.  Peyto gas wells, like the early gas wells that Shell drilled in the foothills, will produce gas for 100's of years.

 

For the person who keeps coming around with nothing to add to the discussion but personal attacks, I wish he would provide some real analysis for once.  You may not appreciate my comments, but you should ask yourself why?  Are they true or are they not true?  You may think I'm pessimistic, but I assure you my analysis is thorough and I understand how these assets are valued.  I have run my own NPV models and adjusted for commodity prices and they are not worth much.  The recent huge loss in Q3 for gear, due to the impairment charge, was not difficult to predict if you looked at their reserves.  How to reconstruct their reserve model based on public data takes some creativity, knowledge of finance, and how the reserve models work, but it is hardly rocket science.  Pessimistic or rational?  You may not appreciate my comments but you should know that I was personally thanked for being the voice of reason on the PWE thread.  Saved some individuals from losing a boat load of money.  If you don't take dissenters serious, how good of a critical thinker are you?  Are dissenters valued on COBF?  I know that will likely piss you off again, but it will just be your limbic mind alerting you to the fact that your needs (ego) are under attack.

 

The Peyto capital efficiency number is the Q2 2012 number from the Q2 statement.  It is the actual obtained capital efficiency over the past 12 months.  Gear has obtained a $10k capital efficiency in Q3.  I think that if you pull out the hedging gains from the Peyto income statement and use the TTM efficiency numbers (along with a 20% decline in gas prices that have occurred since Q2), Peyto is essentially break-even on an unhedged basis.  If capital efficiency declines to $12k, Peyto is profitable. 

 

I agree that Peyto's wells have longer lives but if you are at break-even then it does not matter how long your wells last if the price remain constant.  BTW I do not think oil or gas prices are going to stay where they are and if you think they are going to decline further the best bet is to stay away from all these names. 

 

IMO the real question is do you think Peyto is worth 5x Gear on flowing BoE basis (when they have comparable unhedged Q3 netbacks Gear $16.57/boe vs Peyto $15.83/boe - illustrating comparable operating margins/boe)?  I think Peyto is worth more due to the longer life but not 5x.  I think the bigger point is we are at prices where some of the lowest cost producers are near break-even unhedged so we are reaching an economic floor for prices.  Given the news stories I have been hearing it also sounds like a classic bottom - Oil going to $30.  We will see.

 

I agree with you about undocumented comments and enjoy the pushback as it refines the thesis.  I am still trying to figure out where the natural gas well success numbers are from and how relevant it is to a heavy oil producer?  Maybe the poster is looking at another company with Gear in its name that is a gas company??

 

Packer

[investor-man]

I'll throw my two cents in and also say I appreciate comments from ItsAValueTrap and kevin4u2. They are both thoughtful and constructive in their criticism.

[rykelsap]

Some quick notes on this stock:

 

1- According to the 2014 AIF, Gear had 71 net natural gas wells in Saskatchewan (74 gross wells).  Only 1 of those wells is producing, and that's down from the 2013 AIF numbers.  So what I couldn't figure out is:

a- I thought this was a heavy oil company?

b- It looks like their Saskatchewan play became a disaster?  The company seems to have shut in almost all of its natural gas wells.

c- Their monthly letters don't say anything about shutting in natural gas wells.

 

2- It seems overvalued, though my estimates may be off.  I'm guestimating that the company should have a mkt cap of 30M or lower.

 

Value Trap,

 

I appreciate the realism you bring to many investment ideas. However, your concern over the non-producing natural gas wells is a red herring. Looking at the geoscout data, of the 75 Saskatchewan natural gas wells that are operated by Gear, the most recent drill date was in 2008 and Gear was the original operator for none of the wells. As far as I am aware, Gear has never targeted a natural gas play in Saskatchewan but the wells show up in the AIF because hydrocarbon bearing formations in western Canada are stacked. If I acquire land, it may already have wells that have been drilled into a different formation then I am targeting. In acquiring the land, I often take on the abandonment liabilities for the existing wells but that doesn't mean I am targeting the same play type. In the case of Gear it appears the company acquired land that had previously been drilled for natural gas in the Colony and Viking formations by Cavell Energy during a period of higher gas prices from 2002 to 2004. Gear is now targeting the Cummings, McLaren and Lloydminster formations for heavy oil. The non-producing natural gas wells are in no way a reflection of the company's current operations.

[Packer16]

rykelsap - Thanks for solving the mystery.

 

Glenn - thanks for saving the Contango presentations, they are a great resource.

 

Packer

[ItsAValueTrap]

rykelsap, thanks for the great comments.

[redhots]

Looks like the significant shareholder that is doing most of the buying is Burgundy Asset Management. 

 

Following closing of the Offering, the Significant Shareholder is expected to hold 16,541,041 Common

Shares, representing approximately 19.3% of the Common Shares to be issued and outstanding following

closing of the Offering, and $11,593,000 principal amount of Convertible Debentures. The Convertible

Debentures held by the Significant Shareholder will not be convertible until such time as the Shareholder

Approvals are received. If Shareholder Approvals are received and the full amount of the Convertible

Debentures held by the Significant Shareholder was converted into Common Shares, the Significant

Shareholder would hold 29,866,328 Common Shares, representing approximately 30.2% of the Common

Shares to be issued and outstanding following such conversion (assuming no other holders have elected to

convert the Convertible Debentures).

 

Directors and officers are also participating... but are getting diluted.  (assuming conversion)  They currently own ~9% and are buying ~4% of the offering.

 

Directors and officers of the Corporation have indicated their intention to purchase up to approximately 1.3

million Common Shares pursuant to the Offering, representing less than the pro rata portion of the

Common Shares available pursuant to the Offering relative to the current aggregate shareholding

percentage of the directors and officers of 9.6%.