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Neutrino Resources Inc.: House of cards becomes solid producer.

CALGARY, Alberta--(BUSINESS WIRE)--Nov. 29, 1995-- Dear Investor, Neutrino Resources Inc. would like to take this opportunity to introduce our company to you. The following is a Calgary Herald, Nov/28/95 business article on our firm. Neutrino knows that we are not only in the business of Oil and Gas, but also one of investor relations. To this end Neutrino's aim is to effectively communicate with the investment community, and provide full and timely information on our activities. We welcome your inquiries, and if you provide us with a means we will gladly add you to our dissemination list in order to keep you abreast of neutrino's future growth.


Going out and raising money when the experts said it couldn't be done has allowed Calgary's Neutrino Resources to achieve remarkable growth.

In just two years, Neutrino's daily production has grown from nothing to a current 1,700 barrels of oil equivalent daily.

This growth came as Neutrino has also pulled off two mergers and went public on the Toronto Stock Exchange.

Company president Jeff Arsenych remembers the February day in 1994 when he made Neutrino's first big deal- he agreed to pay $200,000 for a 60-day option to buy a 72 per cent interest in the Inverness oil field near Swan Hills for $3.5 million.

"We didn't have $200,000, let alone $3.5 million," he says. "We went out and got some more investors to buy 200,000 shares at $1. Then we had 60 days to raise $3.3 million cash. We went to just about every investment dealer in town and they said it was absolutely impossible for a private company to raise that kind of money."

But Arsenych and his partners, Bob Bailey and David Berkwermert, did that and more. They raised $3 million cash by selling more $1 shares. They also arranged for seven different owners to sell properties producing a total of about 200 barrels a day to Neutrino for shares valued at $1.50 each. And they also negotiated a bank loan of $2 million.

"It was all a house of cards because all the financing, property roll-ins and bank debt were contingent on closing the Inverness deal," Arsenych recalls. "We got a deadline extension and closed the deal in July, 1994."

Arsenych, 38, was born in Regina, graduated from the University of Regina with a psychology degree in 1980, and spent a year working as a landman for Saskoil (now Wascana Energy) before earning an MBA from the University of Western Ontario in 1983.

He then worked as a landman for Canterra Energy and as a financial analyst with Texaco Canada Resources. Arsenych managed exploration ventures and corporate development for Triton Canada Resources from 1987 until 1990, then returned to Saskoil as co-ordinator of business development until he left to launch Neutrino in 1993.

He lined 16 investors who each bought 10,000 $1 shares to finance the search for an acquisition of producing properties with the potential for further exploitation through horizontal drilling.

First, they made an unsuccessful bid to privatize the National Oil Company of Barbados. That cost the young company about $20,000. Then they found the Inverness property that brought Neutrino additional production of about 300 barrels a day. With the deal in the bag, the company turned its attention to raising cash to finance exploitation of the property.

Neutrino found two farm-in partners who provided 90 per cent of the cash needed to drill three horizontal extensions to existing wells at a cost of $800,000 each. The completed wells increased production by about 200 barrels a day although Neutrino's share was a scant 20 barrels.

"It wasn't big growth for us, but the field production increased 40 per cent," Arsenych says. "It didn't result in a huge amount of cash flow, but it did validate the concept of horizontal drilling at Inverness and there are 30 to 40 more wells that are re-entry candidates.

Original investors had been promised it would go public within two years. Arsenych and his partners considered floating a public offering, but investment dealers told them they would have to discount the company heavily to attract buyers.

"So we thought a merger with a public company would be a more appropriate route," Arsenych says. Neutrino looked at 28 potential merger partners before finding two at almost the same time.

Last month Neutrino swapped one of its own shares for every 10 shares of TSE-listed Red Oak Resources which produces about 100 barrels daily.

At the same time, Neutrino merged with Alberta Stock Exchange- listed Maxon Energy, issuing one share for each two Maxon shares in a deal that added about 800 barrels a day to Neutrino production. During September, Neutrino's output reached 1,710 barrels a day.

Arsenych says the mergers added reserves at a cost of $3.38 a barrel of oil equivalent, compared to an industry average during the past five years of $7.84 a barrel.

The company plans to spend a cautious $200,000 on exploration next year, compared to $3.2 million budgeted for horizontal drilling of 11 existing vertical wells.

Neutrino expects to spend $20 million on acquisitions during the next two years. A joint venture partner, Houston-based Fountain Oil, will provide as much as $9 million, $3 million will come from cash flow and $8 million from bank debt.

"We see a niche for a company our size to purchase selected acquisitions that are undervalued both in terms of increasing production and reducing operating costs. Five years from now, I'd like to see us at $5 a share and we should be in the 15,000 barrel- a-day range."

On behalf of Neutrino Resources Inc. we are looking forward to hearing from you.

CONTACT: Neutrino Resources Inc.

Jeff Arseynch or David Beckwermert, 403/264-8188
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Publication:Business Wire
Date:Nov 29, 1995
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