Glaefore Petroleum (GFPMF) is a solid oil a nd gas stock that seems to be flying under the radar. The Company recently provided updated financial statements and appear to be on track with executting their business strategy. This stock might not have much in the way of activity, but it certainly is worth keeping an eye on for the future.
About the Company:
Gale Force Petroleum Inc. is a public oil and gas corporation focused on acquiring and exploiting under-developed oil and gas reserves in mature basins, bringing operational expertise and capital to lower-risk, development-type projects. The Company owns producing oil and natural gas properties in Texas, Oklahoma, Tennessee and West Virginia. In the previous 18 months, the Company re-launched with a new business plan, has concluded eight oil and gas property acquisitions, and has successfully increased oil and gas production for seven straight quarters. In total, not including the Marcellus Property purchased on the Company on January 31, 2012, the Company has gross reserves consisting of 1.23 million bbls of gross proved oil, 113,000 bbls of probable oil, 1.53 MMcfs of proved natural gas and 225 MMcfs of probable natural gas, with an aggregate present value before taxes of approximately $40.5 million using a discount rate of 10%.
By the end of March 2012, the Company expects to conclude the purchase of the Texas Reef Properties (announced on February 13, 2012). In conjunction with the Company’s existing properties, we expect to (a) increase oil production to over 600 BOE per day (80% oil), and (b) own 2 million BOEs of proved and probable oil and natural gas reserves (80%+ proved) with a present value exceeding $60 million using a 10% discount rate. The Company’s longer-term objectives, within 3 years, are to (a) increase oil production to over 2,000 barrels per day, and (b) own in excess of 10 million BOEs of proved and probable oil reserves (mostly oil and liquids-rich natural gas), with a present value exceeding $250 million using a 10% discount rate. Attaining these objectives is subject to, amongst other factors, negotiating the purchase of additional properties and the availability of new equity and debt financing. These objectives are subject to change as different opportunities present themselves.
The Company expects to conclude the Texas Reef properties acquisition by the end of March, and anticipates closing the Great Gulfcan assets acquisition by May 2012. Check out the release here. The Company is also currently evaluating, performing due diligence and negotiating for the purchase of other properties. To finance its property acquisitions, the Company intends to use some additional bank financing as well as issuing new equity.
The following are some of the key highlights from the financial reports for the six and three month periods ended December 31, 2012:
• Production grew rapidly during the quarter again. As previously announced on January 10th, 2012, the Company exited 2011 with gross production of 275 BOE per day (90% oil) with current production over 300 BOE per day (90% oil).
• At the property level, the Company generated $989,972 of cash for the 6 months or $644,397 for the three months.
• After deducting general, administrative and financing expenses from property level cash generated, the Company generated $397,616 of cash for the 6 months or $336,166 for the three months (i.e. there is no “burn” as the company is cash-flow positive from total operations).
• The Company earned net profits of $617,707 during the six months and lost $350,416 during the 3 months. The variation between cash generation and net income is mainly due to foreign exchange fluctuations, which have no impact on the underlying cash-flows of the business.
• To continue development operations, the Company had $671,231 in cash available at year end (including line of credit, but not including funds raised on January 31, 2012).
“The financial results show Gale Force has been consistent in the execution of its plan to grow rapidly through accretive acquisitions and low-risk development”, said Michael McLellan, Chairman & CEO. “We are on track for even higher reserves growth and increases in production and cash-flow over the coming periods”.
The Company was delayed in publishing the financial reports due to issues regarding the transition from Canadian GAAP to IFRS reporting standards, which were brought to the Company’s attention only shortly prior to the filing deadline. As a result of the lateness in publishing the financial reports, a cease trade order (CTO) was issued and trading in the Company’s shares was suspended. The Company has corrected the deficiencies and filed the applications for removal of the CTO and reinstatement to trading.