posted
Apex Resources Group Inc. (OTCBB APXR): is a development stage company. It was incorporated under the laws of the State of Utah on January 27, 1984. The Registrant was initially organized primarily to hold overriding royalties of both producing and non-producing oil and gas properties. However, the Company's articles of incorporation authorize it to engage in all aspects of the oil and gas business and for any other lawful purpose. Website:http://www.ambraresources.com/Posts: 1113 | Registered: Jun 2005
| IP: Logged |
posted
Here's the 10K-SB - APXR(E) will lose it's "E" in a few days.
"..Buy-out.." discussions are currently underway..:
U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1933
For the fiscal year ended June 30, 2005
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File Number 0-11695
APEX RESOURCES GROUP, INC. (Name of Small Business Issuer in its charter) UTAH 87-0403828 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
610-800 West Pender Street, Vancouver, Canada V6C 2V6 (Address of principal executive Offices) (Zip Code)
Issuer's telephone number: (604) 669-2723
Securities registered pursuant to section 12(b) of the Exchange Act: None
Securities registered pursuant to section 12(g) of the Exchange Act: None
Check whether the Issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes [ ] No [X]
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer’s revenue for its most recent fiscal year was: $12,247.
The aggregate market value of the issuer’s voting stock held as of , by non-affiliates of the issuer, based on the price at which the shares were sold, was approximately: $6,363,786.
As of October 17, 2005, the issuer had 92,625,212 shares of its $0.001 par value common stock outstanding.
Transitional Small Business Disclosure Format. Yes [ ] No [X]
Documents incorporated by reference: None
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS 3
ITEM 2. DESCRIPTION OF PROPERTY 7
ITEM 3. LEGAL PROCEEDINGS 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 9
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 9
ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OR PLAN OF OPERATIONS 11
ITEM 7. FINANCIAL STATEMENTS 15
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 15
ITEM 8A. CONTROLS AND PROCEDURES 15
ITEM 8B. OTHER INFORMATION 16
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 16
ITEM 10. EXECUTIVE COMPENSATION 18
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 19
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 20
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K 20
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 21
SIGNATURES 21
2
PART I
FORWARD
This Form 10-KSB contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-KSB that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,”“hope,”“will,”“expect,”“believe,”“anticipate,”“estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainty, and actual results may differ materially depending on a variety of factors, many of which are not within the Company’s control. These factors include but are not limited to economic conditions generally and in the industries in which the Company and its customers participate; competition within the Company’s industry, including competition from much larger competitors; technological advances which could render the Company’s products less competitive or obsolete; failure by the Company to successfully develop new products or to anticipate current or prospective customers’ product needs; price increase or supply limitations for components purchased by the Company for use in its products; and delays, reductions, or cancellations of orders previously placed with the Company.
ITEM 1. DESCRIPTION OF BUSINESS
History and Organization
Apex Resources Group Inc. (the "Registrant" or "Company") is a development stage company. It was incorporated under the laws of the State of Utah on January 27, 1984. The Company was initially organized primarily to hold overriding royalties of both producing and non-producing oil and gas properties. However, the Company's articles of incorporation authorize it to engage in all aspects of the oil and gas business and for any other lawful purpose.
In 1989, the Company transferred its assets in exchange for cancellation of the Company's debt and ceased operations until 1995. Since 1995, the Company has been primarily engaged in the business of acquiring interests in oil and gas properties.
Our executive offices are located at Suite 610 - 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6. Our telephone number is (604) 669-2723. Our website is located at www.apexresourcesgroup.com .
3
Oil and Gas Properties
Beaufort Sea
The Company holds a 3.745% working interest in the Beaufort Sea well Esso Pex Home, et. al. Itiyok I-27, consisting of 640 acres, located at Latitude 70-00', Longitude 134-00', Sections 7, 8, 17, 18, 27, 28 and 37. License No. 55, dated April 22, 1987. During 1982 and 1983 a consortium of companies participated in drilling, casing and testing the area to a depth of 12,980 feet.
The other partners in the project are coordinated by Imperial Oil Resources. It was recently announced that a consortium of oil and gas companies have filed an application to build a natural gas pipeline that could be used to transport gas from the Beaufort Sea region. This area will not be developed until a pipeline is built.
Bastian Bay Field, Plaquamines Parish, Louisiana
The Company owns a 6.25% working interest in the Bastian Bay Field Lease #16152 in Plaquamines Parish Louisiana. Until recently, Royal “T” Oil was the operator of this well. It turned over its interest in the well to Imperial Petroleum, Inc. Prior to Hurricane Katrina, Imperial had decided to work over the well at an estimated cost of $906,800. It was the Company’s understanding that Imperial intended to make a cash call to all participants. The participants in the well would be given the choice to pay the cash call or continue on a non-consent basis under which the non paying participants relinquish half of their working interest after Imperial has recouped its expenditures. The Company had determined to continue on a non-consent basis and not meet the cash call. If the Company fails to meet the cash call, its net revenue interest will be reduced from 6.25% to 3.125%. The Company has not yet learned how Imperial intends to proceed in the aftermath of Hurricane Katrina.
Henry Dome Prospect, Texas
The Company owns 2.5 participation units in the Henry Dome Prospect in McMullen County, Texas, for $12,500. These units give the Company a 1.875% working interest in JB Henry Dome #1 well. Initial flow testing of the well demonstrated flow of 1.2 to 1.4 million cubic feet of gas per day. Following initial testing, acid washing of the well was performed to attempt to increase flow rates. Additional testing is ongoing as the operator has encountered many problems with this well. The estimated life expectancy of this well is at least six years.
Selection of Target Areas for Acquisition
The Company will continue to explore and investigate the acquisition of interests in other oil and gas properties. In most cases, the Company has and will continue to seek to acquire only partial interests in properties thereby diversifying its risk. This will also allow the Company to acquire interests in more properties than it otherwise could if it were to acquire complete interests in properties.
4
Rather than employ the significant staff that would be required to operate the wells the Company may acquire, it will continue to seek out and locate qualified local operators, whom it will contract to manage the daily operations of the particular properties. This aids the Company in keeping its overhead to a minimum.
The Company will seek to purchase interests for cash or in exchange for shares of its common stock, where allowed by law. The purchases made with cash will be made with cash on hand, internally generated capital, financed through conventional loans made by oil and gas lenders or through funds made available through equity financing. The Company may consider issuing common stock to project owners in situations where the project has significant upside potential due to proven reserves that are behind pipe or that are undeveloped and for which traditional financing cannot be obtained.
Market for Oil Production
The market for oil and gas production is regulated by federal, state and foreign governments. The overall market is mature and with the exception of gas, all producers in a producing region will receive the same price. The major oil companies will purchase all crude oil offered for sale at posted field prices. There are price adjustments for deviations from the quality standards established by the purchaser. Oil sales are normally contracted with a "gatherer" which is a third-party who contracts to pickup the oil at the well site. In some instances there may be deductions for transportation from the wellhead to the sales point. The majority of crude oil purchasers do not at this time charge transportation fees, unless the well is outside their service area. The oil gatherer will usually handle disbursements of sales revenue to both the owners of the well (a "working interest owner" ) as well as payments to persons entitled to royalties as a result of such sales ( "royalty owners" ). The Company typically will be a working interest owner in the projects that it undertakes or in which it invests. By being a working interest owner, the Company is responsible for the payment of its proportionate share of the operating expenses of the well. Royalty owners receive a percentage of gross oil production for the particular lease and are not obligated in any manner whatsoever to pay for the cost of operating the lease. Therefore, the Company, in most instances, will be paying the expenses for the oil and gas revenues paid to the royalty owners.
Market for Gas Production
In contrast to sales of oil, the gas purchaser will pay the well operator 100% of the sales proceeds monthly for the previous month's sales. The operator is responsible for all checks and distributions to the working interest and royalty owners. There is no standard price for gas. Prices will fluctuate with the seasons and the general market conditions. It is the Company's intention to utilize this market whenever possible in order to maximize revenues. The Company does not anticipate any significant change in the manner its gas production would be purchased, however, no assurance can be given that such changes will not occur in the future.
5
Competition
The oil and gas industry is highly competitive. Competition for prospects and producing properties is intense. As the Company pursues new opportunities in oil and gas exploration, it will be competing with a number of other potential purchasers of prospects and producing properties, most of which will have greater financial resources than the Company. The bidding for prospects has become particularly intense with different bidders evaluating potential acquisitions with different product pricing parameters and other criteria that result in widely divergent bid prices. The presence in the market of bidders willing to pay prices higher than are supported by the Company's evaluation criteria could further limit the ability of the Company to acquire prospects and low or uncertain prices for properties can cause potential sellers to withhold or withdraw properties from the market. In this environment, there can be no assurance that there will be a sufficient number of suitable prospects available for acquisition by the Company or that the Company will be able to obtain financing for or participants to join in the development of prospects.
The Company's competitors and potential competitors include major oil companies and independent producers of varying sizes. Most of the Company's competitors have greater financial, personnel and other resources than the Company and therefore have greater leverage to use in acquiring prospects, hiring personnel and marketing oil and gas. A high degree of competition in these areas is expected to continue indefinitely.
Governmental Regulation
The production and sale of oil and gas is subject to regulation by state, federal, local authorities, and foreign governments. In most areas there are statutory provisions regulating the production of oil and natural gas under which administrative agencies may set allowable rates of production and promulgate rules in connection with the operation and production of such wells, ascertain and determine the reasonable market demand of oil and gas, and adjust allowable rates with respect thereto.
The sale of liquid hydrocarbons was subject to federal regulation under the Energy Policy and Conservation Act of 1975 that amended various acts, including the Emergency Petroleum Allocation Act of 1973. These regulations and controls included mandatory restrictions upon the prices at which most domestic crude oil and various petroleum products could be sold. All price controls and restrictions on the sale of crude oil at the wellhead have been withdrawn. It is possible, however, that such controls may be reimposed in the future but when, if ever, such reimposition might occur and the effect thereof on the Company cannot be predicted.
6
Approvals to conduct oil and gas exploration and production operations are required from various governmental agencies. There is no assurance when and if such approvals will be granted.
Environmental Laws
The Company intends to conduct its operations in compliance with all applicable environmental laws. The cost of such compliance has been and will be factored into the estimated costs of drilling and production. The effects of applicable environmental laws are to add to the cost of operations and to add to the time it takes to bring a project to fruition.
Employees
The Company currently has no full-time employees. The officers provide services to the Company on an as needed basis. The Company contracts out with consultants to provide all other necessary services.
ITEM 2. DESCRIPTION OF PROPERTY
Oil and Gas Properties
See “ITEM 1. Description of Business”.
Rental Properties
Abbecombec Ocean Village Resort
The Company owns two vacation homes in the Abbecombec Ocean Village Resort located on the shore of Clam Bay, which is 40 miles east of Halifax, Nova Scotia. The Company currently rents the dwellings on a month-to-month basis for $500 per month. During the year, the occupancy rate for these vacation homes has been 100%. The income generated by these properties is subject to a number of factors, including the time of year, occupancy rates among similar properties in the area and economic conditions in general. These properties are not subject to any mortgage or other obligation. At this time the Company has no plans for renovate or otherwise improve the properties. The Company believes these properties are adequately insured.
7
Woodland Valley Ranch, Arizona
The Company owns 37 acres of undeveloped land in Woodland Valley Ranch, located in Apache County in northern Arizona. These parcels are located about 12 miles northeast of St. Johns, Arizona. The Woodland Valley Ranch is comprised of over 32,000 acres of virgin wilderness with elevations ranging from 5,900 feet to 6,800 feet above sea level. The Woodland Valley Ranch borders over 30,000 acres of Arizona State Trust lands. The Company is required to make monthly payments of $255 through December 2019. As of the date of this annual report, the current principal balance is approximately $46,008. The Company is eight months in arrears on its monthly payments on this property, with back payments totaling $2,040. The Company is working with the contract holder to resolve the default. The Company acquired these parcels for investment purposes and has no present intent to develop or improve this property. As undeveloped land, the Company does not believe there is a need to insure the property at this time.
Elk Valley Ranch, Arizona
The Company owns 2 undeveloped lots, totaling 73 acres of real property, in Elk Valley Ranch. Elk Valley Ranch is near the Woodland Valley Ranch and is about 15 miles east of St. Johns, Arizona. The Company purchased the lots for $98,715, including a down payment of $5,020 and monthly payments of $521 for 180 months. As of the date of this annual report, the current principal balance is approximately $93,695. The Company is eight months in arrears on its monthly payments on this property, with back payments totaling $4,168. The Company is working with the contract holder to resolve the default. The Company acquired these properties for investment purposes and has no present intent to develop or improve these parcels. As undeveloped parcels, the Company does not believe there is a need to insure the properties at this time.
Cowichan Lake, Victoria, B.C.
In January 2005, the Company paid approximately $39,000 toward the purchase price for Lot 4 on Upper Point Ideal Road in the Cowichan Lake District in Victoria B.C. In March 2005, the Company paid approximately $42,000 toward the purchase price of Lot 2. Part of the payment covered various fees and taxes, the remainder was applied to reduce the balance of the purchase price. In September 2005, the Company sold Lot 4 for $177,426. The Company used the proceeds from the sale of that property to retire the $87,500 mortgage on Lot 4 and the $78,000 mortgage om Lot 2. The Company is currently attempting to sell Lot 2. The Company acquired these properties for investment purposes and has no present intent to develop or improve these parcels.
The Company also owns approximately 5,254,365 or 5.7% of the outstanding common shares of Omega Ventures Group, Inc., a corporation whose common stock is traded on the Over-the-Counter Bulletin Board, stock symbol “OMGV.”
Executive Offices
The Company currently leases 1,500 square feet of executive office space located at 610-800 West Pender Street, Vancouver, Canada, V6C 2V6. The offices are rented on a month-to-month basis for approximately $2,532 per month. The Company believes this space will be sufficient for its needs for the foreseeable future.
8
The Company rents the office furnishings for its Canadian office from Nevada Holdings, for $6,500 per month.
The Company also leases 1,500 square feet of administrative office space located at 136 East South Temple, Suite 1600, Salt Lake City, Utah 84111 for approximately $3,892 per month.
ITEM 3. LEGAL PROCEEDINGS
Subsequent to the fiscal year end, in October 2005, WTRG Corp., filed a Notice of Claim was filed in the Provincial Court of British Columbia in Vancouver, Canada against the Company and John Hickey. The Notice of claim seeks damages in the amount of $18,290 for breach of contract for services rendered to the Company. Prior to filing a response to the Notice of Claim, the Company settled this dispute with WTRG.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of our shareholders during the fiscal year ended June 30, 2005.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed on the NASD OTC Bulletin Board under the symbol “APXR." As of October 17, 2005, the Company had 902 shareholders holding 92,625,212 common shares.
The published closing bid and ask quotations for the previous two fiscal years are included in the chart below. These quotations represent prices between dealers and do not include retail markup, markdown or commissions. In addition, these quotations do not represent actual transactions.
9
BID PRICES ASK PRICES HIGH LOW HIGH LOW 2005-2004 Apr. thru June 2005 .20 .08 .205 .082 Jan. thru Mar. 2005 .281 .17 .29 .183 Oct. thru Dec. 2004 .275 .055 .30 .062 July thru Sep. 2004 .13 .05 .14 .055
The foregoing figures were furnished to the Company by Pink Sheets, L.L.C., 304 Hudson Street, 2 nd Floor, New York, New York 10013.
Dividends
Since its inception, the Company has not paid any dividends on its common stock, and the Company does not anticipate that it will pay dividends in the foreseeable future.
Securities for Issuance Under Equity Compensation Plans
The Company currently has no equity compensation plans.
Recent Sales of Unregistered Securities
During the quarter ended June 30, 2005, the following equity securities, which were not registered under the Securities Act of 1933, were issued.
On May 11, 2005, the Company issued 840,000 restricted common shares to four parties, including 210,000 common shares to John Hickey, the Company Secretary and a director, for services rendered to the Company. The shares were valued at $.10 per share. The shares were issued without registration under the Securities Act of 1933 in reliance on an exemption from registration provided by Regulation S promulgated by the Securities and Exchange Commission.
On June 10, 2005, the Company issued 100,000 restricted common shares to WTRG Corp, for investor relations services rendered to the Company. The shares were valued at $.10 per share. The shares were issued without registration under the Securities Act of 1933 in reliance on an exemption from registration provided by Regulation S promulgated by the Securities and Exchange Commission. 10
ITEM 6. MANAGEMENTS’ DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion is intended to assist you in understanding our results of operations and our present financial condition. Our Financial Statements and the accompanying notes included elsewhere in this Form 10-KSB contain additional information that should be referred to when reviewing this material.
Statements in this discussion may be forward-looking. These forward-looking statements involve risks and uncertainties, including those discussed below, which could cause actual results to differ from those expressed. Please read Forward-Looking Information on page 3.
General
The Company is a development stage company engaged in the exploration of gas and oil. The Company has been engaged in the gas and oil business since 1995.
Liquidity and Capital Resources
The Company currently does not have sufficient cash reserves or cash flow from operations to meet its cash requirements. This raises substantial doubt about the Company’s ability to continue as a going concern. During the year ended June 30, 2005, the Company financed its operations primarily through the issuance of Company securities and loans from related parties. During the quarter ended December 31, 2004, the Company received subscriptions to purchase 18,000,000 shares of its common stock in private placement transactions for cash totaling $2,450,000. As of June 30, 2005, the Company has received $23,000. The Company’s balance sheet reflects the remaining balance as stock subscriptions receivable. During the quarter ended December 31, 2004, the Company caused its transfer agent to issue the 18,000,000 shares. These shares, however, are being held in escrow and will only be delivered out as funds are received by the Company. During the year ended June 30, 2005, the Company issued a total of 9,850,143 common shares in satisfaction of expenses and for services rendered in the total amount of $401,974. The Company issued an aggregate of 5,311,300 shares in satisfaction of debt obligations in the amount of $106,230. The Company also issued 100,000 shares for $10,000 cash.
On June 30, 2005, the Company had cash on hand of $18,507, as cash flows from operating and financing activities only partially offset cash flows used in investing activities.
The Company has plans to further develop its oil and gas properties, which will require substantial additional working capital which the Company does not currently have. Moreover, the Company does not anticipate significant revenue from its operating activities in the upcoming quarter.
11
Results of Operations
Comparison of the year ended June 30, 2005 and the year ended June 30, 2004
The Company sustained a net loss of $738,495 in the year ended June 30, 2005 compared to a loss of $748,280 for the year ended June 30, 2004. The following shows a more detailed comparison of the Company’s expenses during the past two years:
June 30, 2005 June 30, 2004
Travel $ 55,075 $ 37,345 Office Expenses 93,066 104,139 Telephone 29,465 17,930 Professional 36,163 33,431 Consultants 320,054 328,936 Promotional 18,678 10,801 Rent 72,421 28,529 Exploration and Development - Oil and Gas 69,003 177,180 Other 37,706 12,594
Total $ 731,631 $ 750,885
Travel expenses increased $17,730 or 47% to $55,075 during the year ended June 30, 2005 compared to June 30, 2004. This increase is primarily the result of increased travel in connection with increasing operating activities during the year ended June 30, 2005 compared to the same period of 2004. The Company expects travel expenses to remain at or near the levels incurred in fiscal 2005 in the upcoming fiscal year.
Office expenses decreased $11,073 or 11% to $93,066 during the year ended June 30, 2005 compared to the same period 2004. This decrease is the result of decreased activity in the Company’s Salt Lake City office. Office expenses in the upcoming fiscal year should remain fairly consistent with those experienced during fiscal 2005.
Telephone expenses increased 64% from $17,930 to $29,465 during the year ended June 30, 2005 compared to the year ended June 30, 2004. As a result of the investor relations program implemented by the Company during the year, the Company incurred significantly greater telephone expenses. The Company anticipates telephone expenses to remain at or near fiscal 2005 levels during the upcoming year.
Professional expenses also increased from $33,341 to $36,163, an 8% increase during the year ended June 30, 2005 compared to the year ended June 30, 2004. as accounting and legal expenses continue to increase as a result of more stringent compliance obligations imposed by the Sarbanes-Oxley Act of 2002. The Company expects professional fees to continue to increase in upcoming fiscal quarters.
12
Consultants’ fees decreased from $328,936 during the year ended June 30, 2004, to $320,054 during the year ended June 30, 2005. The Company has no employees, rather management retains consultants to provide the services the Company needs. The Company expects consultants’ fees to remain fairly consistent with the expenses incurred during fiscal 2005 during the upcoming fiscal year.
Promotional expenses increased $7,877, or 73% to $18,678 during the year ended June 30, 2005 compared to the year ended June 30, 2004. This increase in promotional expenses is largely the result of the Company’s efforts to keep its shareholders and the market better informed as to the Company’s activities through a coordinated media campaign. The Company expects promotional expenses to continue to increase in upcoming quarters due to the Company’s ongoing investor relations campaign.
Rent expenses increased from $28,529 for the year ended June 30, 2004, to $72,421 for the year ended June 30, 2005. We expect rent expenses to continue at rates similar to those incurred in 2005. We do not anticipate such significant increases in the upcoming year.
During the year ended June 30, 2005, the Company incurred $69,003 in exploration and development expenses, compared to $177,180 during the year ended June 30, 2004. The Company believes this decrease is simply a result of timing issues and anticipates exploration and development expenses in the future will return to the higher levels experienced during the year ended June 30, 2004.
Other expenses nearly tripled from $12,594 during the 2004 fiscal year to $37,706 during the 2005 fiscal year. This increase is primarily due to the increased operating activities of the Company during the 2005 year compared to the 2004 year. While the Company does not anticipate other expenses to continue to increase at such rates in the upcoming year, it does expect other expenses to continue at levels consistent with the year ended June 30, 2005.
Non operating revenue from interest and rents decreased from $26,664 during fiscal 2004 to $12,247 during fiscal 2005. This decrease is due to rents not being received due to remolding at the Company’s Nova Scotia property.
Summary of Material Contractual Commitments
The following table lists our significant commitments as of December 31, 2005.
Payments Due by Fiscal Year
Contractual Commitments Total 2006 2007 2008 2009 Thereafter
Total $ 358,984 $ 94,101 46,312 46,312 15,930 156,329
13
Off-Balance Sheet Financing Arrangements
As of June 30, 2005, we had no off-balance sheet financing arrangements.
Critical Accounting Policies
The Company has identified policies below as critical to its business operations and the understanding of its financial statements. The impact of these policies and associated risks are discussed throughout Management’s Discussion and Analysis and Plan of Operations where such policies affect its reported and expected financial results. A complete discussion of the Company’s accounting policies in included in Note A of the Notes to Consolidated Financial Statements.
Capitalization of Oil Leases Costs
The Company uses the successful efforts cost method for recording its oil lease interests. This provides for capitalizing the purchase price of the project and the additional costs directly related to proving the properties and amortizing these amounts over the life of the reserve when operations begin or a shorter period if the property is shown to have an impairment in value or expensing the remaining balance if it is proven to be of no value. Expenditures for oil well equipment are capitalized and depreciated over their useful lives.
Environmental Requirements
At the report date environmental requirements related to the mineral claim interests held by the Company are unknown and therefore an estimate of any future cost cannot be made.
Foreign Currency Translation
Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translations is recognized. U.S. dollars are considered to be the functional currency of the Company.
Development Stage and Going Concern
The Company is a development stage company and have not yet generated revenue. The Company has accumulated losses totaling $7,742,644 and has incurred debt in the development of its operations. To generate positive cash flow, the Company will require substantial additional funding. Funding which may not be available to the Company on acceptable terms, or at all. Moreover, to obtain additional funding the Company may have to issue significant additional common shares, which could result in dilution to current shareholders.
14
Recent Accounting Pronouncements
The Company has considered recent accounting pronouncements and does not expect that such pronouncements will have a material impact on its financial statements.
ITEM 7. FINANCIAL STATEMENTS
See Financial Statement listed in the accompanying index to the Financial Statements on Page F-1 herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On February 5, 2004, the Company dismissed Sellers & Andersen, from it position as its independent accountants and engaged Madsen & Associates, CPAs, Inc., as the Company’s registered independent public accounting firm.
This change in accountants was reported in a Current Report on Form 8-K filed on February 10, 2004, as amended, and that Current Report is incorporated herein in its entirety by this reference.
ITEM 8A. CONTROLS AND PROCEDURES
Our principal executive officers and our principal financial officer (the "Certifying Officers" ) are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Such officers have concluded (based upon their evaluations of these controls and procedures as of the end of the period covered by this report) that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in this report is accumulated and communicated to management, including the Certifying Officers as appropriate, to allow timely decisions regarding required disclosure.
15
The Certifying Officers have also indicated that there were no significant changes in our internal controls over financial reporting or other factors that could significantly affect such controls subsequent to the date of their evaluation, and there were no significant deficiencies and material weaknesses.
Our management, including the Certifying Officers, does not expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any systems of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
ITEM 8B. OTHER INFORMATION
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLAINCE WTH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth our directors, executive officers, promoters and control persons, their ages, and all offices and positions held. Directors are elected for a period of one year and thereafter serve until their successor is duly elected by the stockholders. Officers and other employees serve at the will of the Board of Directors.
16
Name Age Positions Held Director Since
John R. Rask 55 President March 2003 Director August 1996
John M. Hickey 63 Secretary March 2003 Director October 1996
Robert Gill 26 Director March 2003
Each director of the Company serves for a term of one year or until his successor is elected at the Company's annual shareholders' meeting and is qualified, subject to removal by the Company's shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until his successor is elected at the annual meeting of the board of directors and is qualified.
Set forth below is certain biographical information regarding each of the Company's executive officers and directors.
John R. Rask . Since the early 1980's Mr. Rask has been owner and operator of Ray’s Income Tax Service, a company which specialized in bookkeeping and the preparation of income tax returns. Mr. Rask is the President and a director of the Company. Mr. Rask is also an officer and director of Omega Ventures Group, Inc..
John M. Hickey . From 1995 to present Mr. Hickey has worked for the Company. Mr. Hickey began with Apex Resources as the General Manager and is currently the Secretary and a Director of Apex Resources. Mr. Hickey is also President and a director of Omega Ventures Group, Inc.
Robert Gill . Mr. Gill earned a Bachelors of Science degree from Simon Fraser University located in British Columbia majoring in Computing Science and minoring in business in June of 2003. Since 1996 Mr. Gill has owned and operated a web development and technical support company and has worked as a software engineer for several companies. Mr. Gill is also an officer and director of Omega Ventures Group, Inc.
The Company intends to, but has not yet adopted a code of ethics for its principal executive, financial and accounting officers or controller or for person performing similar functions.
Compliance with Section 16(a) of the Exchange Act
Directors and executive officers are required to comply with Section 16(a) of the Securities Exchange Act of 1934, which requires generally that such persons file reports regarding ownership of and transactions in securities of the Company on Forms 3, 4, and 5. Form 3 is an initial statement of ownership of securities. Form 4 is to report changes in beneficial ownership. Form 5 is an annual statement of changes in beneficial ownership.
17
Based solely on a review of Forms 3 and 4 and amendments thereto furnished to the Company during its most recent fiscal year, and Forms 5 and amendments thereto furnished to the Company with respect to the most recent fiscal year, to the Company’s knowledge, it appears that John Hickey failed to file Form 4s reporting seven transactions during the year.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the compensation paid or accrued to its executive officers and directors during the past three fiscal years.
Summary Compensation Table
Annual Compensation Long Term Compensation Awards Payouts Name & Principal Other Annual Restricted Stock Options LTIP Payout All Other Position Year Salary Bonus Compensation Awards /SARs # ($) Compensation
John M. Hickey 2005 60,000 -0- -0- -0- -- -0- -0- Secretary, Director 2004 60,000 -0- -0- -0- -- -0- -0- 2003 60,000 -0- -0- -0- -- -0- -0-
Employment Agreements with Executive Officers
We have no formal employment agreements with any of our executive officers.
Compensation of Directors
We have no arrangements pursuant to which your directors are compensated for any services provided as a director, or for committee participation or special assignments.
Termination of Employment and Change of Control Arrangement
There are no compensatory plans or arrangements, including payments to be received from us, with respect to any person named in cash compensation set forth above that would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person's employment with the company or its subsidiaries, or any change in control, or a change in the person's responsibilities following a changing in control of the Company.
18
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The term "beneficial owner" refers to both the power of investment (the right to buy and sell) and rights of ownership (the right to receive distributions from the company and proceeds from sales of the shares). Inasmuch as these rights or shares may be held by more than one person, each person who has a beneficial ownership interest in shares is deemed the beneficial owners of the same shares because there is shared power of investment or shared rights of ownership.
The following table sets forth as of October 17, 2005, the name and number of shares of the Company's common stock, par value $0.001 per share, held of record or beneficially by each person who held of record, or was known by the Company to own beneficially, more than 5% of the 92,625,212 issued and outstanding shares of the Company's Common Stock, and the name and share holdings of each director and of all officers and directors as a group.
Title of Class Name of Beneficial Owner Amount and Nature of Beneficial Ownership Percentage of Class
Common Robert Gill 2,367,655 2.6% 1075 Groveland Road West Vancouver, B.C. V7S 1Z3
Common John M. Hickey 1 5,795,480 6.2% 1601-1415 West Georgia Street Vancouver, B.C. V6G 3C8
Common John R. Rask 907,825 0.9% 1909 Monroe Ave. Butte, Montana 59701
Common All Officers and Directors as a Group: 9,070,960 9.7% (3 persons)
1 In addition to the 4,355,480 shares Mr. Hickey holds in his own name, he may also be deemed to be the beneficial owner of 1,440,000 common shares held of record by Manhattan Communications, Inc.
19
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year the Company made no interest, demand loans to Omega Ventures Group, Inc., of $148,004. Omega Ventures Group, Inc., is related through common management. The total outstanding balance of demand loans made by the Company totaled $156,072 at June 30, 2005. As of the date of this annual report, the Company has not demanded repayment of these loans.
During the year, the Company issued 1,855,480 restricted common shares to John Hickey, for services and reimbursement of Company expenses paid by John Hickey on behalf of the Company. The shares were valued at the current market price at the time the shares were issued.
In December 2004, the Company issued John Hickey a bonus of 700,000 restricted common shares bonus in recognition of the contributions he has made to the Company over the past ten years.
On June 30, 2005, the Company had accrued accounts payable to related parties, including officers and directors in the amount of $147,074.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K.
None.
(b) Exhibits. The following exhibits are included as part of this report:
Exhibit 21.1 List of Subsidiaries
Exhibit 31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1 Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2 Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
20
ITEM 14. PRINCIPAL ACOUNTANT FEES AND SERVICES
Madsen & Associates, CPA’s Inc., served as our independent registered public accounting firm for the years ended June 30, 2005 and 2004, and is expected to serve in that capacity for the current year. Principal accounting fees for professional services rendered for us by Madsen & Associates for the years ended June 30, 2005 and 2004, are summarized as follows:
2005 2004
Audit $ 15,250 $ 14,675 Audit related - - Tax $ 300 $ 450 All other - -
Total $ 15,550 $ 15,125
Audit Fees . Audit fees were for professional services rendered in connection with the Company’s annual financial statement audits and quarterly reviews of financial statements for filing with the Securities and Exchange Commission.
Board of Directors Pre-Approval Policies and Procedures . At its regularly scheduled and special meetings, the Board of Directors, in lieu of an established audit committee, considers and pre-approves any audit and non-audit services to be performed by the Company’s independent accountants. The Board of Directors has the authority to grant pre-approvals of non-audit services.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.
APEX RESOURCES GROUP, INC.
Date: November 4, 2005 By: /s/ John R. Rask John R. Rask, President and Director Officer
Date: November 4, 2005 By: /s/ John Hickey John Hickey, Secretary and Director Officer
Date: November 4, 2005 By: /s/ Robert Gill Robert Gill, Director Officer
21
APEX RESOURCES GROUP, INC.
(A Development Stage Entity)
FINANCIAL STATEMENTS
For the year ended June 30, 2005
TABLE OF CONTENTS
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2005 Balance Sheets F-2 Statement of Operations F-3 Statement of Stockholders’ Equity F-4 Statement of Cash Flows F-6 Notes to Financial Statements F-8
F-1
Board of Directors
Apex Resources Group, Inc.
Vancouver, B.C., Canada
Report of Independent Registered Public Accounting Firm
We have audited the accompanying balance sheet of Apex Resources Group, Inc.( a Development Stage Company) as of June 30, 2005 and the related statements of operations, changes in stockholders’ equity and cash flows for the years ended June 30, 2005 and 2004 and for the period January 27, 1984 (date of inception) to June 30, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used, significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these financial statements referred to above present fairly, in all material aspects, the financial position of Apex Resources Group, Inc. as of June 30, 2005 and the results of its operations and cash flows for the years ended June 30, 2005 and 2004 and for the period January 27, 1984 (date of inception) to June 30, 2005 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company will need additional working capital for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in the notes to the financial statements. These financial statements do not include any adjustment that might result from the outcome of this uncertainty.
Madsen & Associates CPA’s, Inc.
October 15, 2005
Salt Lake City, Utah
F-2
APEX RESOURCES GROUP, INC.
(Development Stage Company)
BALANCE SHEETS
June 30, 2005
ASSETS
CURRENT ASSETS Cash $ 18,507 Total Current Assets $ 18,507
PROPERTY AND EQUIPMENT - net of accumulated depreciation 191,005
OTHER ASSETS Accounts receivable - affiliates 156,072 Oil leases 67,913 Land 83,600 Available-for-sale securities 2,428 Land - Canada 222,234 $ 532,247
$ 741,759
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES Notes payable - land $ 214,118 Accounts payable 36,766 Accounts payable - related parties 323,604 Total Current Liabilities 574,488
STOCKHOLDERS' EQUITY Common stock 400,000,000 shares authorized, at $.001 par value; 92,625,212 issued and outstanding 92,625 Capital in excess of par value 10,983,235 Less stock subscriptions receivable (2,427,000 ) Deficit accumulated during the development stage (8,481,589 ) Total Stockholders' Equity 167,271
$ 741,759
The accompanying notes are an integral part of these financial statements.
F-3
APEX RESOURCES GROUP, INC.
(Development Stage Company)
STATEMENT OF OPERATIONS -
For the Years Ended June 30, 2005 and 2004 and the
Period January 27, 1984 (date of inception) to June 30, 2005
June June Jan 27, 1984 to 2005 2004 June 30, 2005 REVENUES Other non operating income $ 12,247 $ 26,664 $ 362,944
EXPENSES Exploration, development and administrative - Note 9 731,631 750,885 10,025,625
Depreciation 24,000 24,059 148,102
755,753 774,944 10,173,849
NET LOSS - before other Income (743,506 ) (748,280 ) (9,810,905 )
Gain on sale of assets 4,561 - 1,329,316
NET LOSS $ (738,945 ) $ (748,280 ) $ (8,481,589 )
LOSS PER COMMON SHARE
Basic and diluted $ (0.01 ) $ (0.02 )
AVERAGE OUTSTANDING SHARES - (stated in 1,000's)
Basic 68,186 42,947 The accompanying notes are an integral part of these financial statements.
F-4
APEX RESOURCES GROUP, INC.
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period January 27, 1984 (Date of Inception) to June 30, 2005
Capital in Common Stock Excess of Accumulated Shares Amount Par Value Deficit
Balance January 27, 1984 (Date of Inception) - $ - $ - $ - Issuance of common stock from inception to June 30, 1998 1,610,838 1,611 2,120,660 Net losses from operations for the six years ended June 30, 1989 - - - (38,910 ) Capital contribution - expenses - - 752 - Net losses from operations for the six years ended June 30, 1998 - - - (1,641,468 ) Issuance of common stock for the year ended June 30, 1999 1,943,798 1,944 1,344,079 - Net loss from operations for the year ended June 30, 1999 - - - (1,607,517 ) Issuance of common stock for the year ended June 30, 2000 3,318,058 3,318 2,948,196 - Net loss from operations for the year ended June 30, 2000 - - - (1,029,239 ) Issuance of common stock for the year ended June 30, 2001 1,034,500 1,034 778,467 - Net loss from operations for the year ended June 30, 2001 - - - (807,576 ) Issuance of common stock for services & expenses - August 31, 2001 105,000 105 62,894 - Net loss from operations for the year ended June 30, 2002 - - - (1,216,953 ) Issuance of common stock for services at $.001 - April 14, 2003 6,380,000 6,380 - - Issuance of common stock for cash at $.001 - April & June 2003 15,650,000 15,650 - - Issuance of common stock for services at $.01 - June 3, 2003 2,500,000 2,500 22,500 - Issuance of common stock for services at $.05 - June 30, 2003 1,680,000 1,680 82,320 - Net loss from operations for the year ended June 30, 2003 - - - (652,701 ) Issuance of common stock for purchase of land at $.03 - Nov 17, 2003 300,000 300 8,700 - Issuance of common stock for payment of debt at $.03 - Nov 25, 2003 7,095,666 7,095 205,774 -
Issuance of common stock for cash at $.02 - Nov 6, 2003 2,500,000 2,500 47,500 - Issuance of common stock for cash at $.15 to $.04 - Jan & Feb 2004 2,501,820 2,502 49,657 - Issuance of common stock for cash at $.05 - March 2004 367,665 368 18,014 - Issuance of common stock for services at $.001 - April 2004 500,000 500 - - Issuance of common stock for payment of debt at $.03 - June 2004 2,376,234 2,377 68,910 - Issuance of common stock for services and expenses $ .03 - Nov 2003 & Jun 2004 8,400,000 8,400 243,600 Net loss from operations for the year ended June 30, 2004 - - - (748,280 )
Balance June 30, 2004 - audited 58,263,569 58,264 8,002,023 (7,742,644 ) Issuance of common stock for expenses at $.02 - Sept 2, 2004 1,717,785 1,718 30,137 - Issuance of common stock for payment of debt at $.02 - Sept 2, 2004 311,500 311 7,789 - Issuance of common stock for expenses and services at $.02 - Sept 24, 2004 2,800,000 2,800 81,200 - Issuance of common stock for cash and note receivable at $.02 - Sept 27, 2004 5,000,000 5,000 95,000 - Issuance of common stock for land at $.016 to .02 - Sept 29, 2004 1,100,000 1,100 16,900 - Issuance of common stock for stock subscriptions receivable at $.05 to $.20 November & December 2004 18,000,000 18,000 2,432,000 - Issuance of common stock for expenses at $.05 - December 21, 2004 4,392,358 4,392 215,226 - Issuance of common stock for cash at $.10 - December 2, 2004 100,000 100 9,900 - Issuance of common stock for payment of debt at $.10 - May 11, 2005 840,000 840 83,160 - Issuance of common stock for expenses at $.10 - June 15, 2005 100,000 100 9,900 - Net loss from operations for the year ended June 30, 2005 - - - $ (738,945 )
The accompanying notes are an integral part of these financial statements.
F-5
APEX RESOURCES GROUP, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS -
For the Years Ended June 30, 2005 and 2004 and the
Period January 27, 1984 (Date of Inception) to June 30, 2005
June June, January 27, 1984 2005 2004 to June 2005 CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (738,945 ) $ (748,280 ) $ (8,481,589 )
Adjustments to reconcile net loss to net cash provided by operating activities Loss of mineral properties - 131,657 - Depreciation 24,000 24,059 124,386 Common capital stock issued for services & expenses 345,473 270,882 5,322,093 Gain on sale of assets - - - (Increase) decrease in accounts receivable (7,140 ) (56,370 ) (156,072 ) Increase (decrease) in liabilities 468,879 279,792 947,128 Net Cash used by Operations 92,267 ( 98,260 ) (2,244,054 )
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments - 200 - (2,428 ) Purchase of property & equipment (221,701 ) (74,600 ) (616,225 ) Purchase of oil & gas leases and mining claims - - (67,913 ) Net proceeds from sale of assets - - - (221,501 ) (74,600 ) (6856,566 )
CASH FLOWS FROM FINANCING ACTIVITIES Notes payable - land - 71,183 -
Net proceeds from issuance of capital stock -133,000 102,159 2,949,127 133,000 173,342 2,949,127
Net increase (decrease) in cash 3,766 482 18,507 Cash at beginning of year 14,741 14,259 -
Cash at end of year $ 18,507 $ 14,741 $ 18,507
The accompanying notes are an integral part of these financial statements.
F-6
APEX RESOURCES GROUP, INC.
(Development Stage Company)
STATEMENT OF CASH FLOWS (Continued)
For the Period January 27, 1984 (Date of Inception) to June 30, 2005
SCHEDULE OF NONCASH OPERATING, INVESTING, AND FINANCING ACTIVITIES
Issuance of 1,154,073 common shares for assets, services and expenses - from inception to June 30, 1998 $ 1,500,765
Issuance of 1,549,875 common shares for assets, services and expenses - for the year ended June 30, 1999 1,157,000
Issuance of 1,242,781 common shares for assets, services and expenses - for the year ended June 30, 2000 1,240,093
Issuance of 784,500 common shares for services and expenses - for the year ended June 30, 2001 629,500
Issuance of 105,000 common shares for services and expenses - for the year ended June 30, 2002 62,999
Issuance of 10,560,000 common shares for services and expenses - for the year ended June 30, 2003 115,380
Issuance of 9,267,655 common shares for services and expenses - for the year ended June 30, 2004 270,882
Issuance of 9,010,143 common shares for assets, services and expenses for the year ended June 30, 2005 345,473
The accompanying notes are an integral part of these financial statements.
F-7
APEX RESOURCES GROUP, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2005
1. ORGANIZATION
The Company was incorporated in the State of Utah on January 27, 1984 with authorized capital stock of 50,000,000 shares at a par value of $0.001. On May 17, 1999 the authorized was increased to 100,000,000 shares and on March 3, 2000 the authorized was increased to 400,000,000 shares with the same par value. On March 26, 2003 the name of the Company was changed from “Ambra Resources Group, Inc. to “Apex Resources Group, Inc.”
The company has been in the development stage since inception and has been engaged in the business of the acquisition of mining and oil property interests and other business activities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of accounting.
Dividend Policy
The Company has not yet adopted any policy regarding payment of dividends.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity, at the time of purchase, of less than three months, to be cash equivalents.
Property and Equipment
The Company’s property and equipment consists of the following:
Office equipment is depreciated on the straight line method over five and seven years and the residential rentals are depreciated on the straight line method over forty years.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.
F-8
APEX RESOURCES GROUP, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2005
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Capitalization of Oil Leases Costs
The Company uses the successful efforts cost method for recording its oil lease interests, which provides for capitalizing the purchase price of the project and the additional costs directly related to proving the properties and amortizing these amounts over the life of the reserve when operations begin or a shorter period if the property is shown to have an impairment in value or expensing the remaining balance if it is proven to be of no value. Expenditures for oil well equipment are capitalized and depreciated over their useful lives.
Environmental Requirements
At the report date environmental requirements related to the mineral claim interests acquired are unknown and therefore an estimate of any future cost cannot be made.
Foreign Currency Translation
Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translations is recognized. US dollars are considered to be the functional currency.
Financial Instruments
The carrying amounts of financial instruments are considered by management to be their estimated fair values due their short term maturities.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
At June 30, 2005, the Company had a net operating loss available for carry forward of $8,470,402 . The tax benefit of approximately $2,541,121 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful because the Company is unable to establish a predictable projection of operating profits for future years.
The net operating loss carryovers will expire beginning in the years 2005 through 2025.
Revenue Recognition
Revenue is recognized on the sale and transfer of properties or services and the receipt other sources of income.
F-9
APEX RESOURCES GROUP, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2005
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Advertising and Market Development
The company expenses advertising and market development costs as incurred.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentration of credit risk consists
primarily of cash and account receivables. Cash balances are maintained in accounts that are not federally insured for amounts over $100,000 but are other wise in financial institutions of high credit quality. Accounts receivable are unsecured, however management considers them to be currently collectable.
Other Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting pronouncements to have any
material impact on its financial statements.
3. OIL LEASES - BEAUFORT SEA PROJECT
On June 9, 1997 the Company purchased a 3.745% working interest, for $67,913, in the Beaufort Sea well Esso Pex Home et al Itiyok I-27 consisting of 640 acres and is located at Latitude 70-00', Longitude 134-00', Sections 7, 8, 17, 18, 27, 28, and 37, License No. 55, dated April 22, 1987. During 1982 and 1983 a consortium of companies participated in the drilling, casing, and testing the area to a depth of 12,980 feet. A review of the well data and geological prognosis indicates that the area would contain proven recoverable gas reserves of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB.
The lease is shown at cost, which is considered by management to be its estimated fair value.
The other partners in the project are controlled by Exxon Oil Corporation, however there is no
immediate plans to develop the area until a gas pipe line becomes available.
F-10
APEX RESOURCES GROUP, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2005
4. PURCHASE OF LAND
The Company is obligated under installment sales contracts for the purchase of land. The contracts have balances of $214,118 at June 30, 2005, including accrued interest, on which $126,105 was due December 31, 2004 (unpaid) and the balance of $88,013 due over 25 years in monthly payments, including interest of 11%. The payments due are in arrears.
5. ISSUANCE OF COMMON CAPITAL STOCK
During the year ended June 30, 2005 the Company issued 5,000,000 restricted common shares for cash and note receivable for $100,000. Also, during the year ended June 30, 2005, the Company issued 9,010,143 restricted common shares for services for $345,473, 1,151,500 restricted common shares for payment of debt for $92,100, 1,100,000 restricted common shares for land of $18,000, 18,000,000 restricted common shares for subscriptions receivable for $2,450,000 and 100,000 common shares for cash in the amount of $10,000..
6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officers-directors and their controlled entities and a consultant have acquired 21% of the outstanding common stock of the Company and have received the restricted common capital stock issued to them as outlined in note 5.
On June 30, 2005 the Company owed certain shareholders, directors and officers the sum of $323,604.
The Company has made no interest, demand loans to affiliates of $156,072. The affiliations resulted through common officers between the company and its affiliates, and the Company owns 13% of the outstanding stock of one of the affiliates.
7. GOING CONCERN
The company will need additional working capital for its future planned activity and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining sufficient working capital to be successful in that effort. The management of the Company has developed a strategy, which it believes will accomplish this objective, through additional short term loans, and equity funding, which will enable the Company to operate for the coming year.
F-11
APEX RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2005
8. SCHEDULE OF EXPENSES
Following is a summary schedule of the expenses shown in the statement of operations under exploration, development, and administrative.
June, 2005 June, 2004
Travel $ 55,075 $ 37,345 Office expenses 93,066 104,139 Telephone 29,465 17,930 Professional 36,163 33,431 Consultants 320,054 328,936 Promotional 18,678 10,801 Rent 72,421 28,529 Exploration and development - oil and gas 69,003 77,180 Other 37,706 12,594
$ 731,631 $ 750,885
F-12
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF APEX RESOURCES GROUP, INC.
The Company has no subsidiaries.
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, John Rask, certify that:
(1) I have reviewed this Annual Report on Form 10-KSB of Apex Resources Group, Inc. (the “Company”);
(2) Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;
(3) Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Annual Report;
(4) The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the Company, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this Annual Report based on such evaluation; and
(d) Disclosed in this Annual Report any change in the Company’s internal controls over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting; and
(5) The Company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons fulfilling the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
Date: November 4, 2005 /s/ John Rask John Rask, Principal Executive Officer
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, John Hickey, certify that:
(1) I have reviewed this Annual Report on Form 10-KSB of Apex Resources Group, Inc. (the “Company”);
(2) Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;
(3) Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Annual Report;
(4) The Company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the Company, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this Annual Report based on such evaluation; and
(d) Disclosed in this Annual Report any change in the Company’s internal controls over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting; and
(5) The Company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons fulfilling the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.
Date: November 4, 2005 /s/ John Hickey John Hickey, Principal Financial Officer
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Apex Resources Group, Inc. on Form 10-KSB for the year ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report" ), the undersigned, John Rask, Principal Executive Officer of Apex Resources Group, Inc., certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: November 4, 2005 /s/ John Rask John Rask, Principal Executive Officer
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Apex Resources Group, Inc., on Form 10-KSB for the period ending June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report" ), the undersigned, John Hickey, Principal Financial Officer of Apex Resources Group, Inc., certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: November 4, 2005 /s/ John Hickey John Hickey, Principal Financial Officer End of Filing
-------------------- Sometimes its easier to beg for forgiveness than ask for permission. Posts: 234 | From: pa USA | Registered: Nov 2004
| IP: Logged |
posted
The odds are that this stock will be back up to $0.10+ by Monday's CLOSE; ..certainly by the time the "E" comes off in a couple of days. Then comes the "..n$/share Buy-out.." from the negotiations that have been going on for over a month..!!!
I think this is going to be a Mega "..YeeeeeeeeeeeeeeeeeHaaaaaaaaaaaw................
My recommendation for Monday at the OPEN is "...BUY or CRY..."!!!
u said the 10ksb was filed,, anyone can file one,, but was it good
where do u see something about a buy out,,, i read over ur DD and didnt see it,,, maybe i missed it,,,
i did do research on ur other pics,, and they all were green to me,,,, so u seem to know what ur talking about,,
-------------------- Sometimes its easier to beg for forgiveness than ask for permission. Posts: 234 | From: pa USA | Registered: Nov 2004
| IP: Logged |
posted
well i studied the charts and got in at .065 and so far i am in the green,, i have my sell set at .15
i am hoping it reaches that early this week,, i wanna throw my money into a good pick i have a good feeling on,,,
how comes yellow sub,,, u dont accept private messages or stars????????/
-------------------- Sometimes its easier to beg for forgiveness than ask for permission. Posts: 234 | From: pa USA | Registered: Nov 2004
| IP: Logged |
posted
Apex Resources Reports on Updated Engineering Report for Beaufort Sea Well 11/10/2005 4:31:15 PM
SALT LAKE CITY, Nov 10, 2005 (PRIMEZONE via COMTEX) -- Apex Resources Group Inc. (APXR), today reports on updated Engineering Report on the Itiyok I-27 Well in the Beaufort Sea.
On October 25, 2005 Citadel Engineering of Calgary released the report to reflect the current gas and oil prices.
In June 1997, Apex Resources Group purchased a 3.745% working interest in the Beaufort Sea Area known as the Itiyok 1-27 Well, which was drilled in 1983. A review of the well data and geological prognosis indicates that a 640 acre area would contain proven recoverable gas reserves of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB working interest net reserves of 4.04 Bscf and 336 MSTB. Seismic data indicates a structure closure of approximately 40 square KM with a gross potential reserve of 1.16 TCF and 160 MMSTB (working interest net - 34 Bscf and 4.7 MMSTB). The lands in which the Apex Resources Group Inc. owns an interest comprise of 21.54 square KM containing gross potential reserves of 625 Bscf of gas and 86 MMSTB of oil (working interest 23.4 Bscf of gas and 3.2 MMSTB of oil).
With oil at approximately US$60.00 per barrel and gas close to US$12.00 per cubic feet, Apex interest in proven reserves would be US$68.640 million and with an additional potential to be drilled out would represent US$1.231 billion.
This will be a tremendous asset to Apex if and when the Mackenzie Valley Pipeline is completed.
The following proven, probable and possible gas and oil reserves are taken from the Engineering report.
Without a decision on the pipeline Apex 3.745% of the Itiyok I-27 Well is reduced at US$2,895,000 for proven reserves. After a decision to move forward with the pipeline this value will increase significantly.
Itiyok I-27
Part 1 - Proven Gas & Oil Reserves: (640 acre area) --------------------------------------------------- Total: - A) 108 Bscf - Gas B) 8.976 MM STB - Oil
Apex Working Interest - (3.745%) -------------------------------- A) 4.04 Bscf - Gas * US$12.00/ft3 = US$48.480 Million (Gas) B) 336,000 STB - Oil * US$60.00/B = US$20.160 Million (Oil) ------------------------ US$68.640 Million (Gas & Oil)
Part 2 - Probable Gas & Oil Reserves: (40 square KM) ---------------------------------------------------- Total: - A) 1.16 TCF - Gas B) 160 MM STB - Oil
Apex Working Interest - (3.745%) -------------------------------- A) 34 Bscf-Gas * US$12.00/cubic ft = US$408.000 Million (Gas) B) 4.7 MM STB - Oil * US60.00/B = US$282.000 Million (Oil) ------------------------ US$690.000 Million (Gas & Oil)
Part 3 - Possible Gas & Oil Reserves: (21.54 square KM) ------------------------------------------------------- Total: - A) 625 Bscf - Gas B) 86 MM STB - Oil
Apex Working Interest - (3.745%) -------------------------------- A) 23.4 Bscf-Gas * US$12.00/cubic ft = US$280.800 Million (Gas) B) 3.2 MM STB - Oil * US60.00/B = US$192.000 Million (Oil) ------------------------ US$472.800 Million(Gas & Oil) ----------------------------------------------------------------- Total of All 3 US$1.231 Billion Gas & Oil
About The Mackenzie Valley Pipeline
In a speech to the Canadian American Business Council in Calgary the President Mr. Rex Tillerson of Exxon Mobil stated he still expects the stalled Mackenzie gas pipeline to become a reality. "My expectation is the Mackenzie pipeline will go forward. I think there's been good progress made in dealing with a number of longstanding issues regarding aboriginal claims and benefits and compensation that they expect."
Mr. Rex Tillerson goes on to say, "I think it's a long process and there's a lot of interests that need to be addressed but we continue to make good progress and my expectation is we will ultimately get across the finish line with this thing," he said.
Exxon Mobil, the world's largest publicly-traded energy company, has a key stake in the Mackenzie project through its majority ownership of Calgary-based Imperial Oil.
Imperial is the lead on the Mackenzie project along with partners Shell Canada, ConocoPhillips, Exxon Mobil and the native-owned Aboriginal Pipeline Group.
The $7-billion pipeline would carry natural gas from three discovered fields in the Mackenzie Delta across the Northwest Territories to join the existing gas pipeline system in northwestern Alberta.
The members of the consortium are expected to give an update to regulators about future plans for the pipeline later this month. Mr. Tillerson praised a decision by the Canadian government to provide $500 million over the next 10 years to deal with the socio-economic impact of the proposed pipeline project.
The next 25 years will be a critical time for the oil and gas sector, said Tillerson, who estimated energy demand will grow by 50 percent during that time. Eighty percent of that growth will come from developing nations, he said.
Other Business
The Company has been served with a Notice of Claim in Small Claims Court of British Columbia by WTRG Corp. The claim was served on October 12, 2005 by Rene Pidgeon, a representative of WTRG Corp. The claim states a Breach of an Agreement over payments.
The Agreement was for 100,000 Apex shares and $1000.00 per month for Investor Relations service. On June 15, 2005 the Company issued 100,000 restricted shares to WTRG Corp. as per the agreement. On October 31, 2005, the company had the restriction removed and delivered 100,000 free trading shares to WTRG Corp. on November 1, 2005. The receipt was signed by Maureen Bortnak, a representative of WTRG Corp.
Further, the Company owed $3000.00 for services rendered. The Company never denied owing the money.
On October 25, 2005 the Company issued a Bank Draft to WTRG in the amount of $3000.00. The receipt was signed by Maureen Bortnak representing WTRG.
In the opinion of the Company, all stock and monies have been paid as per the Agreement of June 1, 2005. Although the Company never received proof of the services performed by WTRG Corp., Mr. Alex Pidgeon is demanding a minimum of US$0.12 per share based on the share price during the summer of 2005. The current share price is $0.06 per share. On October 11, 2005 with the share price at US$0.12, WTRG Corp. issued a news release announcing the Claim that was posted on the Apex Resources Group Inc. website. This had a negative impact on Apex and could have contributed to the steady decline in the Company share price in the past 21 trading days.
Further, WTRG Corp. represented by Alex Pidgeon, Rene Pidgeon, Maureen Bortnak, and Jaime Sanders has refused to drop the Claim and Mr. Alex Pidgeon is continuing to make threats to Apex Resources Group Inc. and its representative Mr. John M. Hickey. This has left Apex with no other option but to pursue with a counter Claim for damages and possible extortion.
Apex management would like to thank all shareholders for their continuing support and will endeavour to build the Company back to strength in spite of this setback.
By the Board of Directors,
APEX RESOURCES GROUP INC. Investor Relations: Roger Reynolds 136 East South Temple, Suite 1600 Salt Lake City, Utah 84111 USA TEL: 801.363.2599 Web Site: www.ApexResourcesGroup.com
John M. Hickey Director
This news release was distributed by PrimeZone, www.primezone.com SOURCE: Apex Resources Group Inc. Apex Resources Group Inc. (801) 363-2599
posted
APXR (..to be bought-out..) related Pipeline news:
Negotiator sees Arctic Canada pipeline moving ahead By Jeffrey Jones - Reuters - Saturday, November 12, 2005
<b>CALGARY, Alberta (Reuters) - A C$7 billion Canadian Arctic gas pipeline is expected to take a big step closer to reality as early as next week because disagreements over access to native lands are being ironed out, a top aboriginal negotiator said on Thursday.</b>
Imperial Oil Ltd., lead company in the Mackenzie Valley Pipeline group, is slated to tell the National Energy Board on November 18 how close it is to putting the public-hearing process for the delayed development back in motion.
"Many of the items they felt that they had to get off the table are getting close to finalization," said Nellie Cournoyea, chief executive of the Inuvialuit Regional Corp., which represents native communities on a large portion of Northwest Territories land.
"With the effort the aboriginal groups are putting into trying to resolve those issues and get an access and benefits agreement ... it looks like they could be in a situation in a matter of a short period of time to say, 'Yes we've got enough that we know what the agreements are going to be'."
Cournoyea's comments, made to reporters after a luncheon in Calgary, were the second positive ones this week for the stalled proposal to tap badly needed deposits of gas on the Beaufort Sea coast and ship it to Canadian and U.S. markets.
On Tuesday, Rex Tillerson, president of Mackenzie partner Exxon Mobil Corp., said he believed there had been progress on major sticking points and that he expected the group will move the project "across the finish line."
In April, Imperial Oil put the brakes on all physical work on the development, saying the partners needed to address spiraling cash demands from native groups in exchange for allowing the pipeline to cross their lands.
The companies also wanted to find ways to cut the costly regulatory labyrinth of approvals and have asked Ottawa for a royalty regime the reflects the project's high initial cost.
Cournoyea, a former Northwest Territories premier, said she did not know the state of talks on the royalty and tax issue, but stressed she and other negotiators are optimistic a positive announcement is near.
"We want to get on with the pipeline, and we feel a lot of the issues that are important to us have been dealt with," she said.
Imperial cautioned there is no "mystique" about the November 18 date, and that the company may simply inform the regulator that it needs more time before deciding on moving forward or not.
Regulators have said they would take 60 days from getting a positive notice from the oil companies to prepare for the start of lengthy public hearings into the pipeline, which could ship up to 1.9 billion cubic feet a day.
Hearings had initially been expected to start by September, but the partners pushed the date back to solve the key issues.
Imperial spokesman Pius Rolheiser acknowledged progress has been made since October 6, when Tim Hearn, the company's chief executive, warned the project could be stalled for years unless the financial issues were sorted out in short order.
Hearn had said more delays could allow another project, the much larger Alaska Highway pipeline, to overtake Mackenzie.
Cournoyea said she did not believe that to be possible.
"Even though we have some difficulties, they (Alaska proponents) have a great deal more to come though, and even if they were told, 'Yes, go ahead today,' I would say it takes seven to eight years just to get where we are," she said.
She is also a director of the Aboriginal Pipeline Group, which has the right to acquire up to a third of the Mackenzie Valley Pipeline. The other partners are Shell Canada Ltd. and ConocoPhillips.
China's three biggest state-owned companies are seeking to buy oil reserves and assets around the world.
China National Petroleum Corp., the nation's biggest oil producer, last month completed a $4.18 billion takeover of Calgary-based PetroKazakhstan Inc., in China's biggest purchase of energy assets.
The acquisition was a victory for China, whose quest for reserves to supply the world's fastest-growing economy had a setback in August, when Cnooc Ltd. scrapped an $18.5 billion bid for Unocal Corp. because of opposition by U.S. lawmakers.
China National Petroleum, parent of overseas-listed PetroChina Co., China Petrochemical Corp. and Cnooc, are continuing to buy oil assets even as oil prices remain high, Kong told Bloomberg News, declining to elaborate.
``We have the chance to buy overseas oil assets only when oil prices are high'' because that is when ``foreign companies like Unocal prefer to sell assets,'' Kong said. ``These companies consider it more profitable to sell assets instead of extracting the oil themselves. We have to seize right opportunity when it arises.''
does that have to do with the buyout u were talking about before,,,,,
????
-------------------- Sometimes its easier to beg for forgiveness than ask for permission. Posts: 234 | From: pa USA | Registered: Nov 2004
| IP: Logged |
posted
Good news for Mackenzie gas pipeline expected soon, says Nellie Cournoyea Bill Graveland - Canadian Press - Friday, November 11, 2005
CALGARY (CP) - Evidence is continuing to mount suggesting the $7-billion Mackenzie pipeline, stalled since last April, will get the green light next week from members of its consortium.
"We have been negotiating on benefits agreements and I guess the best I can tell you right now is we are very close and we really expect on Nov. 18 there's going to be a positive announcement," said Nellie Cournoyea, former chairman of the Aboriginal Pipeline Group and a one-time premier of the Northwest Territories.
"That leaves other greater beings to say and give you the final results," said Cournoyea to a business audience at the Calgary Chamber of Commerce on Thursday.
Imperial Oil (TSX:IMO) is leading the Mackenzie project consortium along with partners Shell Canada (TSX:SHC), ConocoPhillips (NYSE:COP), Exxon Mobil (NYSE:XOM) and the native-owned Aboriginal Pipeline Group which holds a one-third stake in the proposed line and represents numerous N.W.T. aboriginal groups.
The partners were initially hoping to have the pipeline up and running by the end of the decade. But last April, the energy companies said they were shutting down most of the work on the line, saying they were being asked to pay hundreds of millions of dollars for social programs and land access rights that the various governments should be covering.
Cournoyea, the chair and CEO of the Inuvialuit Regional Corp., is negotiating with Imperial to resolve the access and benefits arrangements. Her reason for optimism stems from a belief that most of the negotiations are near to completion.
"Certainly from the effort that has been put into those negotiations it looks like we will be ready to see a positive announcement," she said.
Her remarks support comments made by the president of Exxon Mobil Tuesday.
"My expectation is the Mackenzie pipeline will go forward. I think there's been good progress made in dealing with a number of longstanding issues regarding aboriginal claims and benefits and compensation that they expect," said Exxon president Rex Tillerson.
"My expectation is we will ultimately get across the finish line with this thing," he said.
The pipeline would carry natural gas from three discovered fields in the Mackenzie Delta across the Northwest Territories to join the existing gas pipeline system in northwestern Alberta.
The members of the consortium are expected to give an update to regulators about future plans for the pipeline later this month.
For Cournoyea it's not a matter of if but when the project gets underway.
"It never did seem to me that there was a possibility that the Alaska pipeline was going to be coming in before the Mackenzie Valley," said Cournoyea.
-------------------- Sometimes its easier to beg for forgiveness than ask for permission. Posts: 234 | From: pa USA | Registered: Nov 2004
| IP: Logged |
posted
APXR-related MAcKenzie Gas Pipeline News...:
Ottawa releases terms of possible participation in Mackenzie Gas pipeline Bob Weber - Canadian Press - Friday, November 18, 2005
(CP) - Days before Imperial Oil (TSX:IMO) is expected to announce its plans for proceeding with the Mackenzie Valley gas pipeline, the company says the federal government has answered one of its two main concerns about the project.
A letter from Deputy Prime Minister Anne McLellan to Imperial vice-president Randy Broiles, released Thursday, has eased the proponent's worries about the pipeline's fiscal framework, said company spokesman Pius Rolheiser.
"Our concerns on fiscal terms have been largely addressed," he said. "We've certainly been encouraged by this development."
In the letter, McLellan lays out several options for Ottawa to improve the project's economics and ensure it goes ahead.
"Given the broad benefits of the project for all Canadians, and residents of the Northwest Territories in particular, and taking into account Canada's financial interests in the potential royalty revenues from this resource, the Government of Canada is prepared to consider supporting the (pipeline) on terms that Canada considers commercially reasonable," she writes in the letter released Thursday.
"The Government of Canada has also committed to work with you with respect to your request for fiscal enhancements."
Options under consideration include lower royalty rates during the first years of the project and higher rates down the road; taking payment in gas instead of cash and investment in one or more components of the project.
The letter also reassures Imperial over access to the land over which the pipeline would run.
"The Government of Canada believes that it would be in the public interest that no party should impede the timely access to land required for the project to proceed," it says.
Although communities in one section of the pipeline's route have begun voting on access and benefits agreements, three other sections continue to negotiate. In addition, the Deh Cho region in the southwestern N.W.T. hasn't even signalled its approval of the pipeline.
McLellan also says Ottawa will consider guaranteeing a loan allowing aboriginal groups to take a one-third share in the project.
"I can assure you that the Government of Canada will continue to give this issue serious consideration," she writes.
Although the project proponents have asked for $1.2 billion worth of "enhancements," McLellan ruled out any kind of direct payments.
Outside the House of Commons, McLellan emphasized any federal moves had to make business sense.
"We are willing to consider the request for fiscal enhancement but anything that we do has to be commercially viable and anything we do cannot be a subsidy," she said.
McLellan also sunk the idea of aboriginal governments collecting property tax on the pipeline.
Thursday's developments were widely welcomed.
"This is a major step forward for the project," said N.W.T. Industry Minister Brendan Bell. "The willingness to say this project is important for Canada - not only northerners but all Canadians, that's the monumental aspect of what's gone on here today."
Clive Mather, president and chief executive of Shell Canada (TSX:SHC), which also has a stake in the project, expressed optimism.
"I am a supporter of this project, I'm very clear about that," said Mather, who's company has set aside $45 million to move the pipeline through the regulatory process.
"We have made provision in the budget on the assumption that this project will go ahead."
It's been a good week for the pipeline proponents.
When Imperial announced last spring it was cancelling preparatory work on the pipeline, it cited uncertainty over fiscal terms and the lack of progress negotiating access and benefits agreements as the reason.
On Wednesday, the first four communities along the route began voting on access and benefits agreements. With Thursday's letter, the fiscal concern has also been removed.
On Friday, Imperial was expected to tell regulators whether it's ready for public hearings on the project so the National Energy Board could go ahead with a scheduled planning conference.
However, in a letter to the board on Thursday, the company asked for an extension until Nov. 23.
Northwest Territories premier says Alaska gas line not competition Canadian Press - Friday, November 18, 2005
ANCHORAGE, Alaska (AP) - The premier of the Northwest Territories said public hearings on a Mackenzie Valley natural gas pipeline could begin as soon as January, inching the $8-billion construction project closer to a 2008 start date.
Premier Joseph Handley said Thursday he hoped negotiations with Imperial Gas, one of several companies interested in the line, could be concluded within the next few days. "Work is progressing well," Handley said.
"It is clear that the economy of the Northwest Territories will be powered over the long term by the production of natural gas."
Handley has said the pipeline could be operating by 2010.
The Mackenzie line is not racing with Alaska's proposed $20-billion North Slope natural gas line, he said.
But he said because Alaska's project is much larger, the Mackenzie line would "fall behind" if development were delayed.
"I know there's a connection in people's minds but I don't see us as competitors," Handley said.
Like neighbouring Alaska, the Northwest Territories has sought for decades to bring its natural gas to market. Active drilling in the Mackenzie River delta, along the Arctic Ocean coast, slowed after the federal government recommended no development more than 30 years ago, in part because aboriginal lands claims were not settled.
Now that most claims are resolved, Handley said, interest has renewed in a roughly 1,000-kilometre line slicing through virgin lands and connecting with an existing gas pipeline at Fort Saskatchewan. From there, natural gas would be delivered to a pipeline hub in Alberta for sale to the United States and eastern Canada.
Handley, who is part-Cree, also announced Thursday aboriginal groups had secured a minimum one-third equity interest in the proposed line along with $68 million financing from TransCanada Pipelines.
The agreement is "precedent-setting," the premier said.
"Its importance to the Northwest Territories will transcend the construction of the pipeline," he said.
Handley spoke in Anchorage at a conference organized by the Resource Development Council.
Covering more than one million square kilometres, the Northwest Territories is home to roughly 45,000 people, one-half of whom are aboriginal. Mining, government and tourism are key employers. Besides Ontario-based Imperial, a subsidiary of Exxon Mobil, producers eyeing the Mackenzie Valley project include Conoco, Shell, Exxon and several smaller companies.
A logger's son from northern Saskatchewan, Handley is the Territories' former finance minister and today lives outside of Yellowknife in a home where he must generate his own power.
"I'm fascinated by the opportunities and change in the Northwest Territories," he said.
"I'm not interested in maintaining things. The biggest project in Canada is the Mackenzie Valley pipeline."
In a prepared statement Thursday, Deputy Prime Minister Anne McLellan said the federal government would not subsidize the gas line but would consider assuming a greater share of the project's risks if it were able to increase its share in potential financial rewards.
Eyes on aboriginals on eve of Imperial's Mackenzie pipeline hearing decision Bob Weber - Canadian Press - Tuesday, November 22, 2005
(CP) - Imperial Oil says land deals with aboriginals are front and centre on the eve of its decision whether to move forward with a $7-billion Mackenzie Valley pipeline proposal.
"The key remaining issue that still needs to be resolved is negotiations on access and benefits agreements," Imperial (TSX:IMO) spokesman Pius Rolheiser said Tuesday.
But at least one aboriginal leader said all the deals won't be signed until Ottawa stops worrying about a federal election long enough to make progress on self-government and land claims.
"We're willing to come on board, but there's still some issues here that need to move forward," said Grand Chief Herb Norwegian of the Deh Cho First Nation, which claims land that accounts for about 40 per cent of the pipeline's planned route.
"They're just too worried about the damned political curtains dropping in Ottawa and everybody scrambling for an election."
Imperial has told the National Energy Board that it will announce Wednesday if it's ready for public hearings on the project.
Analyst Wilf Gobert at Peters & Co. in Calgary expects a "yes."
"It would be a shock for them to say, 'We're not ready to proceed,' " he said.
Further delay might give the rival Alaska Highway project higher priority for gas producers, Gobert added. That project would connect gas fields along Alaska's North Slope to southern markets via a route that would follow the highway.
If Imperial decides to proceed, it would be the first major step forward since the company stopped preparatory work on the project last spring.
That work was stalled over Imperial's concerns about royalties and taxation, the regulatory process and deals with aboriginals on land access.
Since then, moves by the federal government have removed the first two obstacles, said Rolheiser. Those include a letter last week from Deputy Prime Minister Anne McLellan suggesting fiscal terms under which Ottawa proposes to work with the proponents.
That has left all eyes on Imperial's high-stakes talks with the four main aboriginal groups along the pipeline's projected route.
"It's fair to say that we have seen significant progress on both the regulatory and fiscal fronts," said Rolheiser. "You can draw your own conclusions from that."
Most aboriginal negotiators have been close-mouthed about the talks, except to say deals are close.
The four main communities in the Sahtu region west of Great Bear Lake have already discussed a proposed agreement.
Nellie Cournoyea, head of the Inuvialuit Regional Corp. in the northwest corner of the Northwest Territories, has said talks are almost complete.
Norwegian said his negotiators are talking with Imperial. But an access and benefits deal has become tangled up with talks over the Deh Cho's comprehensive land claim.
"Imperial Oil is telling our guys at the ground level that the only time they'll be able to enter into access and benefits agreements is if Canada actually gives Imperial Oil a letter saying that, yes, Canada recognizes the Deh Cho having treaty and aboriginal rights."
"That's ludicrous. It's not up to Canada to give us those rights. We presently enjoy them."
Rolheiser has said Imperial doesn't need signed agreements to proceed to hearings. Significant progress would do.
But Norwegian said political uncertainty in Ottawa is blocking even that.
"You don't know who the hell you're dealing with. They're flip-flopping. They're scrambling over each other. It's one messy ordeal."
Rolheiser tried to play down the significance of Wednesday's announcement.
"It's not going to be a green light to the project or a halt to the project," he said.
"If we indicate that we're not ready (for the hearings), that is not a shelving of the project. It may just be an indication we're not ready yet and we need more time."
Gobert agreed.
"This just gets the train rolling out of the yard, it doesn't get them to the destination. But you've got to start somewhere and it starts with getting it moving through the regulatory process."
The pipeline's significance to the N.W.T. - and Canadian - economy is significant.
Estimates of its contribution to the national GDP range up to $59 billion. The federal government stands to take in anywhere from $6 billion to $13 billion.
N.W.T. Industry Minister Brendan Bell said the project would open up the whole Mackenzie Valley to energy exploration, bringing jobs and revenue for decades to come.
"Once you have this conduit to get gas to market, we're going to open up this basin," he said.
posted
Apex Reports Revised Value Estimates for Beaufort Sea Well 11/23/2005 6:00:32 AM
SALT LAKE CITY, Nov 23, 2005 /PRNewswire-FirstCall via COMTEX/ -- Apex Resources Group Inc. (APXR), today reports revised value estimates for Beaufort Sea Well.
On October 25, 2005 Citadel Engineering of Calgary released the report to reflect the current gas and oil prices. In June 1997, Apex Resources Group purchased a 3.745% working interest in the Beaufort Sea Area known as the Itiyok 1-27 Well, which was drilled in 1983. A review of the well data and geological prognosis indicates that a 640 acre area would contain proven recoverable gas reserves of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB working interest net reserves of 4.04 Bscf and 336 MSTB. Seismic data indicates a structure closure of approximately 40 square KM with a gross potential reserve of 1.16 TCF and 160 MMSTB (working interest net -- 34 Bscf and 4.7 MMSTB). The lands in which the Apex Resources Group Inc. owns an interest comprise of 21.54 square KM containing gross potential reserves of 625 Bscf of gas and 86 MMSTB of oil (working interest 23.4 Bscf of gas and 3.2 MMSTB of oil).
With oil at approximately US$58.68 per barrel and gas close to US$11.50 per cubic feet, Apex interest in proven reserves would be $66.176 Million US Dollars and with an additional potential to be drilled out would represent $1.189 Billion US Dollars.
This will be a tremendous asset to Apex if and when the Mackenzie Valley Pipeline is completed.
The following proven, probable and possible gas and oil reserves are taken from the Engineering report.
Without a decision on the pipeline Apex 3.745% of the Itiyok I-27 Well is reduced at US $2,895,000 for proven reserves. After a decision to move forward with the pipeline this value will increase significantly.
Itiyok I-27
Part 1 -- Proven Gas & Oil Reserves: (640 acre area)
Total: -- A) 108 Bscf - Gas B) 8.976 MM STB - Oil
Apex Working Interest - (3.745%)
A) 4.04 Bscf - Gas * US$11.50/ft3 = US $46.46 Million (Gas) B) 336,000 STB - Oil * US$58.68/B = US$19.716 Million (Oil) US$66.176 Million (Gas & Oil)
Part 2 -- Probable Gas & Oil Reserves: (40KM2)
Total: -- A) 1.16 TCF - Gas B) 160 MM STB - Oil
Apex Working Interest - (3.745%)
A) 34 Bscf - Gas * US$11.50/ft3 = US$391.000 Million (Gas) B) 4.7 MM STB - Oil * US58.68/B = US$275.796 Million (Oil) US$666.796 Million (Gas & Oil)
Part 3 -- Possible Gas & Oil Reserves: (21.54 KM2)
Total: -- A) 625 Bscf - Gas B) 86 MM STB - Oil
Apex Working Interest - (3.745%)
A) 23.4 Bscf - Gas * US$11.50/ft3 = US$269.100 Million (Gas) B) 3.2 MM STB - Oil * US58.68/B = US$187.776 Million (Oil) US$456.876 Million(Gas & Oil)
Total of All 3 US $1.189 Billion Gas & Oil
About The Mackenzie Valley Pipeline
Reports out of Calgary indicate that the consortium behind the CDN$7-Billion Mackenzie gas pipeline are on the verge of making deals with Ottawa and aboriginal communities, paving the way for key public hearings to begin on the massive venture.
After months of negotiations, a consortium of oil companies headed by Imperial Oil Ltd. was close yesterday to finalizing a so-called "letter of comfort" with the federal government that would lay out fiscal terms for the project in broad terms, sources said.
Three aboriginal communities along the pipeline route were scheduled to hold meetings last week to ratify access and benefits agreements.
"I am very optimistic that things seem to be coming together," said Brendan Bell, Energy Minister for the Northwest Territories, after meeting with Cabinet ministers in Ottawa. "We are very hopeful that Imperial will come out with a very strong positive announcement in the coming days and weeks."
The consortium of Imperial Oil Ltd., and partners Shell Canada Ltd., ConocoPhillips and the Aboriginal Pipeline Group, wanted to secure the deals before moving forward with lengthy public hearings that would bring the project back on track.
Negotiators have been working frantically so the agreements could be in place tomorrow, allowing Imperial to meet a deadline imposed by the National Energy Board. The federal regulator asked project backers to let it know by Nov. 18 whether they were ready to move forward, so it could hold pre-hearing conferences before the end of the year. Eight to ten months of hearings would then start in the New Year in of locations across the Northwest Territories and in Alberta. Regulators would then rule on whether the project can proceed.
The 1,220-kilometer pipeline would move to market by the turn of the decade badly needed natural in the Mackenzie Delta and fuel oil and gas in Canada's Arctic.
Three Sahtu communities -- Tulita, Fort Good Hope and Deline -- have reached agreements with Imperial on allowing the oil companies access to their lands in exchange for benefits. Negotiations are continuing with other groups affected by the project -- the Inuvialuit, Gwich'in and Deh Cho.
Pius Rolheiser, spokesman for Imperial, said it was premature to say whether backers would move forward with public hearings without having all aboriginal agreements in place.
"Our intent would be to have benefits and access agreements in place or a clear path forward to achieving them," he said. "We are in discussions with all communities and we are working as hard as we can."
The potential is significant. Devon Energy Corp. next month will start drilling in the Beaufort Sea and hopes to hit a target as large as the biggest field in the nearby Mackenzie Delta, a discovery controlled by Imperial.
By the Board of Directors,
APEX RESOURCES GROUP INC. Investor Relations: Roger Reynolds 136 East South Temple, Suite 1600 Salt Lake City, Utah 84111 USA TEL: 801.363.2599
Talks down to the wireWednesday, November 23, 2005CALGARY - Negotiations between Imperial Oil Ltd. and aboriginal groups along the proposed Mackenzie gas pipeline route went down to the wire yesterday with no clear indication they'd be finalized in time for today's noon deadline.
As of late yesterday, two of the groups affected by the $7-billion project -- the Inuvialuit and the Gwich'in -- had tentative deals on access and benefits agreements. The Sahtu were still in talks over several issues, including a demand for a bigger stake in the Aboriginal Pipeline Group, the aboriginal enterprise that can earn a third interest in the project.
Discussions with the Deh Cho were ongoing but making little progress. The Deh Cho are the most militant of the four groups along the 1,220-kilometre right of way from the Mackenzie Delta to Alberta and the only one without a land-claim settlement with the federal government. If there is no agreement, government sources say they face expropriation.
Imperial and partners Shell Canada Ltd., ConocoPhillips and the APG reached an agreement with Ottawa on fiscal terms last week, but held back making a decision on whether to proceed with public hearings in the new year until today.
Agreements with aboriginal communities in the North are the last major hurdle to the project, which would bring to market ample gas reserves found in Canada's Arctic decades ago. The first Mackenzie gas pipeline was killed 30 years ago by aboriginal opposition.
Aboriginal deals seemed close last week, but Imperial spokesman Pius Rolheiser said yesterday the firm may ask the National Energy Board for yet another delay today if it doesn't feel it has the backing it needs."
We said all along that our intent is to find agreements or a clear path forward with all of the districts prior to the start of regulatory hearings," said Mr. Rolheiser. "In the absence of that, we have to make decisions accordingly. I am not going to speculate on how many [deals] would be enough."
Already, the federal government has attempted to warm up aboriginals to the project by pledging $500-million for social programs in the North over 10 years, paid the Deh Cho $31.5-million for economic development to end litigation, and is in negotiations with the APG for loan guarantees on about $400-million, which would double their dividends from the APG by reducing borrowing costs.
APG president Bob Reid said the Sahtu were close to a deal, but their request for a bigger stake in the APG would mean other aboriginal communities have to settle for less."
The Sahtu have decided the APG is a very good thing, so they want more of it," Mr. Reid said. "That's a board matter and that's something that is under consideration and we will see how it shakes out."
Ownership in the APG, Canada's largest aboriginal enterprise, is distributed roughly based on the distance of the pipeline would run through each region. The Inuvialuit have 4%, the Gwich'in 20%, the Sahtu 34%. Another 34% has been set aside for the Deh Cho, which so far have refused to join, and 8% for groups off the right of way.Herb Norwegian, grand chief of the Deh Cho, said his community remains steadfast in its demand to charge the oil companies property taxes. The strategy was dropped by the other communities after Ottawa said they don't have the right to do it.
"We want to be treated like a government," Mr. Norwegian said. "We need to be in a position to get our payout. We need to be compensated for this."
He said the Deh Cho are aware their lands could be expropriated to make way for the project. "We have the ability to stop them," he argued. "We have a number of options that we have available to us. My people are standing together on this one."
posted
Imperial Oil moves forward with public hearings on Mackenzie pipeline project
Canadian Press - Wednesday, November 23, 2005
CALGARY (CP) - After months of delay and uncertainty, Imperial Oil says its $7-billion Mackenzie Valley pipeline project is ready to move to public hearings.
That doesn't necessarily mean pipeline construction will go ahead.
But the decision marks the project's first real step forward since Imperial cancelled preparatory work last spring.
The announcement in Calgary follows months of talks between the company, federal and aboriginal officials.
Ottawa has given proponents assurances on a fiscal and royalty structure.
And talks with aboriginals in the region have resulted in enough progress for the company to proceed.
Imperial (TSX:IMO) officials have played down the significance of the decision, calling it just one more part of the regulatory process.
But the company has said a letter from Deputy Prime Minister Anne McLellan last week gave them what they need to make the project economically viable.
The letter spelled out the terms under which Ottawa will work with the proponents to reduce their risk and was the latest in a series of federal efforts to get the stalled project rolling again.
The terms include a 10-year, $500-million funding pledge for communities along the proposed 1,220-kilometre route to deal with social impacts, as well as a $31.5-million out-of-court settlement for a lawsuit brought by the Deh Cho First Nation.
The Deh Cho, however, are still not on board with the project.
But three other aboriginal groups in the Northwest Territories are members of the Aboriginal Pipeline Group, which intends to take a one-third ownership share.
Those three groups - the Inuvialuit in the territory's northwest corner, the Gwich'In to the south and the Sahtu east of Great Bear Lake - are said to be close to signing agreements on how pipeline crews will gain access to the land and how local communities will benefit.
The Deh Cho, who claim land amounting to 40 per cent of the pipeline's route, are also negotiating a comprehensive land claim with the federal government. Those talks have complicated their dealings with Imperial.
The National Energy Board has planned a conference in early December to prepare for hearings, which could begin by mid-January.
posted
Everyone should take a real good look at APXR. Their wells, properties, and rights are smack dab on the route of the MacKenzie Gas Pipeline to be built in Canada to serve the USA. The pipeline project has just been revived, and APXR (..or at least those wells, etc..) is the object of Buy-Out discussions by several large Oil companies, including the Chinese.
posted
thnx for the tip from before although i waited till it dipped to .06 bought in sold at .09
thnx
but my new question is,,,, when DO YOU THINK the buyout will occur,,,, thnx again,,
fab4 rule
-------------------- Sometimes its easier to beg for forgiveness than ask for permission. Posts: 234 | From: pa USA | Registered: Nov 2004
| IP: Logged |
VANCOUVER, British Columbia (Reuters) - Political leaders in Canada's far north have revived calls to build a permanent road to the country's Arctic coast to develop the region's huge energy and mineral resources.
The building the Mackenzie Valley Highway would cost about C$700 million, but could be partly paid for with tolls or fees on oil and natural gas development, according to a report released this week by the Northwest Territories government.
The report said the time was right for Canada to revive a long-stalled plan for the all-weather road that would eventually link the Arctic port of Tuktoyaktuk, N.W.T., with the territory's existing road system more than 800 km (500 miles) to the south.
"The political and economic difficulties that impeded the completion of the Mackenzie Valley Highway over three decades ago have improved," Premier Joseph Handley and Transportation Minister Michael McLeod said in the proposal's introduction.
It would replace the existing "winter roads" that have trucks drive on ice-covered rivers and frozen ground during that season to deliver freight -- a system the report's authors warned was threatened by global warming.
"The existing limited transportation window makes development and exploration activities expensive and inefficient," the report said.
The plan links the road's construction to the proposed development of natural gas in the Mackenzie Valley on the Beaufort Sea and a C$7 billion, 1,350 km (850 mile) pipeline that would move the gas south to markets in Canada and the United States.
The territory is asking the federal government to issue loan guarantees, and proposes the C$700 million debt be paid off over 35 years. Ottawa would be responsible for 75 percent of the debt, with the territorial government paying 25 percent.
Ottawa proposed a road to the Arctic coast in the late 1950s. Some construction began in 1972 but was stopped in 1977 when a 10 year moratorium was imposed on oil and gas development in the far north.
Territorial officials said the road would also strengthen Canada's claim of control over the Northwest Passage across the top of North America, through Canada's Arctic archipelago.
"A highway to the Arctic would help assert Canadian sovereignty over Canadian Arctic waterways as shipping routes become increasingly accessible," the report said.
posted
Critics "astonished" by N.W.T. letter of comfort Last updated Dec 1 2005 08:32 AM CST - CBC News
Members of the legislature and environmentalists in the N.W.T. say the territory's premier has made promises to the Mackenzie Valley pipeline proponents that will cost the government millions of dollars in lost royalties.
Just before Imperial announced last week it was ready to go to public hearings on the $7 billion pipeline, Handley and Roland sent a "letter of comfort" to the five gas producers promoting the Mackenzie Gas Project.
In it, the N.W.T. government promises that if it takes control of land and resources in the Territories through the devolution process, the government would not increase resource royalties the companies would pay, and had no plans to raise property taxes, relative to other parts of Canada.
Some critics say Joe Handley and his finance minister Floyd Roland bowed to intense pressure from the proponents to make sure the project moved forward.
"We're basically giving away our whole hand here," says Great Slave MLA Bill Braden, who says the premier and finance minister "missed the boat".
"We should've held out for a decent royalty sharing deal, before signing this letter of comfort, giving the pipeline and the gas producerss our assurance that we're not going to do anything at all to make it a better deal for us."
Yellowknife MLA Sandy Lee is also upset MLAs only heard about the letter as it was on its way out to the proponents.
"We are not the first to know, and we don't have a say, or any real input into these negotations, and how a letter like this is written up," she says.
A public policy group in the territory, Alternatives North, says this letter could cost northerners hundreds of millions of dollars in lost royalties, without a word of debate.
Spokesperson Kevin O'Reilly points to Indian and Northern Affairs website, the department currently in charge of northern resources.
"'We have a globally competitive royalty regime'. Just replace the word competitive with low, low or lowest, and we know that those resources are just being given away. And the territorial government has now locked ourselves into that regime nine, 15 years into the future," he says.
"That's just astonishing that they would agree with this at the same time they're complaining about not having any sort of authority or jurisdiction over it – it's quite amazing."
Premier Handley was returning to the capital from Inuvik on Thursday, and couldn't be reached for comment.
posted
Here is a good driver for the MacKenzie Gas Pipeline from the NWT to the USA..:
ExxonMobil, BP, Shell Step Up Natural Gas Exploration in US
AFX News Limited Tuesday, November 29, 2005
The world's three largest energy companies are intensifying their hunt for natural gas in the U.S., reversing a years-long trend, according to a media report Tuesday.
Exxon Mobil Corp. , BP Plc and Royal Dutch Shell Plc have been drawn back to the U.S. by high natural-gas prices, advances in extraction technology and increasing competition for resources abroad, The Wall Street Journal
In the past few months, BP and Exxon have committed to long-term development of U.S. fields they have held for years but haven't given much attention, the Journal reported, while Shell is acquiring new fields to establish larger U.S. natural-gas holdings, according to The Journal.
Big Oil's new interest highlights significant changes in the U.S. onshore energy industry, The Journal reported. In their latest U.S. push, the big oil companies are facing more competition than in the past in regions already crowded with competitors, The Journal said.
And instead of huge crude oil deposits, the majors are homing in on unconventional gas fields, where gas is locked in giant swaths of coal, sandstone or shale, The Journal reported.
Now companies can use new technologies - independents already are using the processes - to crack the rock formations and extract large quantities of gas. Making the economics more compelling is the fact that, unlike oil, the large quantities of gas needed by the fuel-hungry North American market can't be transported from overseas, The Journal noted.
In 2004, Exxon, BP and Shell, spent $6.9 billion on U.S. production, according to John S. Herold, although Gulf of Mexico projects accounted for much of the total. The companies are expected to spend considerably more in 2005 as they move ahead with new projects and exploration costs rise, The Journal said.
The high price of natural gas in the U.S. makes investment in new gas reserves attractive, The Journal said.
In New York, natural gas has been trading well above $10 per million British thermal units since late August, more than quadruple its price at the beginning of the decade. Prices are expected to stay high.
posted
Forging ahead with the MacKenzie Gas Pipeline...:
Handley blasts "letter of comfort" critics Last updated Dec 2 2005 03:34 PM CST - CBC News
N.W.T. Premier Joe Handley launched a broadside at his critics Friday, labelling people who say he sold out to the pipeline proponents as "scaremongers".
Handley says the "letter of comfort" he sent to pipeline producers last week didn't tie the territorial government's hands in resource negotiations, nor sold rights to the producers at bargain-basement prices.
"The letter is a letter of assurance that we're not going to do anything goofy here," says Handley.
"That we're going to be responsible and that we're going to continue with a very competitive environment here."
Critics said earlier this week that the letter of comfort Handley and Finance Minister Floyd Roland wrote on Nov. 22 would limit the revenues the government could collect off the pipeline and gas fields for up to 15 years. They wondered why the government would make such assurances when talks for the transfer of resources from Ottawa to the N.W.T. are still underway.
Several MLAs were also angry they were only briefed about the letter's contents as it was being sent to Imperial Oil, the chief pipeline proponent.
* FROM DEC. 1, 2005: Critics "astonished" my N.W.T. letter of comfort
Handley questioned the motives of people who criticized the letter.
"There are always people who are going to be consistently against the pipeline, they're going to raise these things, they're going to try to scaremonger," he says. "[Saying] that this is a letter with a bunch of concessions, it isn't. It's a letter of assurance.There are no concessions in it."
Handley says the letter only promises not to raise taxes and royalties on the three anchor gas fields that justify the pipeline.
He said the letter was a necessary guarantee to give to the pipeline proponents to satisfy them their investment of billions of dollars was safe. The day after receiving the letter, Imperial announced it was prepared to hold public hearings on the pipeline early in the new year.
Handley said he had no complaints about the letter from people who actually live along the pipeline route, and in Inuvik "had more people shaking my hands over us coming to the table at this, making a deal."
"It's easy for people in Yellowknife to sit and criticize the pipeline, but they won't do it with things in their own backyard" with the diamond mines, Handley said.
Billions and billions lost?
But many critics remain unbowed.
Petr Cizek, a Yellowknife environmental consultant who's done work for the Dehcho First Nations and Canadian Arctic Resources Committee, says the N.W.T. government has never publicly discussed its options.
He compared Alberta's royalty rates to the N.W.T.'s current rates, and applied them to the gas fields referred to in the letter.
"So we're looking at a loss of about $850 million per year," he says. "Multiply that by 22 years, this letter has just given away billions upon billions of dollars."
The territorial government is currently negotiating with the federal government for control of resource management, and one of the parties to the talks is the Aboriginal Summit.
Its negotiator, Jean-Yves Assiniwi, says that with the letter, the government is breaking its promise to keep the options open once a deal with the federal government is done.
"The GNWT is flying solo, they're ignoring what we're negotiating on a bilateral basis," he says.
"It contradicts what we've agreed to so far."
Assiniwi says what makes it worse is that the N.W.T. government has other sources of revenue, while aboriginal governments have no secure funding systems in place.
The Dehcho MLA, Kevin Menicoche, describes Handley's "compromise" as more of a giveaway.
"It certainly impacts the amount of money that's eligible to the GNWT, and all northern governments, who we maintain are equal in the north," he says.
Another of the premier's legislature critics, Yellowknife MLA Bill Braden, said he now understood why Handley sent the letter he did. But still maintains the territorial government "painted itself into a corner" with the territory's oil and gas revenues for years to come.
posted
Apex Reports Update on Beaufort Sea Well and Mackenzie Valley Pipeline 12/5/2005 6:00:35 AM
SALT LAKE CITY, Dec 05, 2005 /PRNewswire-FirstCall via COMTEX/ -- Apex Resources Group Inc. (APXR), today reports revised value estimates for Beaufort Sea Well.
Apex Resources Group in June 1997, purchased a 3.745% working interest in the Beaufort Sea Area known as the Itiyok 1-27 Well, which was drilled in 1983. A review of the well data and geological prognosis indicates that a 640 acre area would contain proven recoverable gas reserves of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB working interest net reserves of 4.04 Bscf and 336 MSTB. Seismic data indicates a structure closure of approximately 40 square KM with a gross potential reserve of 1.16 TCF and 160 MMSTB (working interest net -- 34 Bscf and 4.7 MMSTB). The lands in which the Apex Resources Group Inc. owns an interest comprise of 21.54 square KM containing gross potential reserves of 625 Bscf of gas and 86 MMSTB of oil (working interest 23.4 Bscf of gas and 3.2 MMSTB of oil).
With oil at approximately US$58.70 per barrel and gas close to US$13.00 per thousand cubic feet, Apex interest in proven reserves would be $72.243 Million US Dollars and with an additional potential to be drilled out would represent $1.282 Billion US Dollars.
This will be a tremendous asset to Apex when the Mackenzie Valley Pipeline is completed.
The following proven, probable and possible gas and oil reserves are taken from an Engineering report update on October 25, 2005 by Citadel Engineering.
Itiyok I-27
Part 1 - Proven Gas & Oil Reserves: (640 acre area)
Total: - A) 108 Bscf- Gas B) 8.976 MM STB - Oil Apex Working Interest - (3.745%) A) 4.04 Bscf - Gas *US$13.00/ft3 = US$52.52 Million (Gas) B) 336,000 STB - Oil *US$58.68/B = US$19.723 Million (Oil) --- US$72.243 Million (Gas & Oil) Part 2 - Probable Gas & Oil Reserves: (40KM2) Total: - A)1.16 TCF - Gas B) 160 MM STB - Oil Apex Working Interest - (3.745%) A) 34 Bscf - Gas * US$13.00/ ft3 = US$442.000 Million (Gas) B) 4.7 MM STB - Oil * US58.70/B = US$275.890 Million (Oil) --- US$717.890 Million (Gas & Oil) Part 3 - Possible Gas & Oil Reserves: (21.54 KM2) Total: - A) 625 Bscf - Gas B) 86 MM STB - Oil Apex Working Interest - (3.745%) A) 23.4 Bscf - Gas *US$13.00/ft3 = US$304.200 Million (Gas) B) 3.2 MM STB - Oil *US58.70/B =US$187.840 Million (Oil) --- US$492.040 Million(Gas & Oil) Total of All 3 US $1.282 Billion Gas & Oil
Mackenzie Valley Pipeline Public Hearings to Proceed
In a letter to the National Energy Board, on November 23, Imperial Oil said sufficient progress has been made in a number of key areas to proceed to the formal hearings, which could start in mid-January.
Imperial Senior Vice President Randy Broiles said the progress has been achieved in clarifying the regulatory process, negotiating benefits and land access agreements with aboriginal regions.
A Nov. 18 letter from Deputy Prime Minister Anne McLellan to Imperial provides sufficient confidence that outstanding matters will be addressed.
That letter presented options for fiscal concessions and a possible commercial role for the Canadian government.
It is hoped that recently negotiated benefits and access agreement terms with aboriginal groups will be fully ratified and executed in December.
Reports out of the Northwest Territories suggest the Inuvialuit, Sahtu and Gwich'in are close to signing deals, but the Deh Cho remain a steadfast holdout.
Deh Cho Grand Chief Herb Norwegian has told reporters his region insists on being treated like a government -- and want the right to collect property taxes from the pipeline.
Moving into the hearing phase is not a final decision to proceed with construction.
Imperial Oil and the consortium partners are working on obtaining the necessary approvals and permits, negotiating final benefits and access agreement and fiscal terms.
By the Board of Directors,
APEX RESOURCES GROUP INC. Investor Relations: Roger Reynolds 136 East South Temple, Suite 1600 Salt Lake City, Utah 84111 USA TEL: 801.363.2599 Web Site: http://www.ApexResourcesGroup.com John M. Hickey Director SOURCE Apex Resources Group Inc. John M. Hickey, Director of Apex Resources Group Inc., +1-801-363-2599
posted
APXR - (O&G) - You really need to pay attention to what's happening here..............
(..From the Washington Post..): More progress on the MacKenzie gas pipline..........
A 'Great Pipeline Race' in Canada - Two Plans to Send Natural Gas to U.S. Would Transform Pristine Land
By Doug Struck - Washington Post Foreign Service - Monday, December 5, 2005; Page A01
[b]FORT SIMPSON, A wind prickly with ice bit at Jonas Antoine, the gray-haired native elder. The sting brought a broad grin to his face. "I feel like a wolf in this weather, ready to hunt," he said, leaning against the driving chill. ]/b]
The cold thrill of sneaking toward a keen-eared moose or snaring a lynx calls him, but Antoine spends days in a stuffy gymnasium, debating with chiefs and elders the looming invader from the north: a huge pipeline from the Arctic that all agree would irrevocably change this land.
Soaring energy prices and profits have revived plans for two massive pipelines -- the biggest private construction projects in North America -- to bring natural gas hundreds of miles south from the frozen Arctic Ocean, through vast untouched forests and under wild rivers, to the United States.
The plans would flood isolated areas of Alaska and Canada with thousands of construction workers, pump billions of dollars into poor native economies, and bring the roar of heavy cranes and bulldozers to pristine areas where it is now quiet enough to hear the hoots of snowy owls and the rustle of pine boughs.
The projects are crucial to keep up with the growing thirst for energy in the United States, say oil company officials and energy analysts. Supporters and opponents agree that the projects would affect Canada's sparsely populated north on a scale larger than the Alaska oil pipeline in the 1970s, and unleash a rush of new exploration and drilling.
"Every square inch is going to be opened to diamonds, sapphires, gold, oil and gas," Michael Miltenberger, the Northwest Territories minister of natural resources, said in an interview in the territories' capital of Yellowknife. "There's an insatiable demand. And the critical first step is the pipeline."
There are daunting obstacles before any construction begins: The two pipeline projects are in competition for workers and capital -- only one can be built at a time. Native groups in Canada have not yet given access rights; environmentalists fret over caribou and the permafrost; and the pipeline companies face a mountain of regulatory red tape and promised lawsuits.
But the huge profits in the energy business, and the unquenchable demand for energy in the United States, have given the projects an impetus that may make one -- or both -- projects unstoppable.
"The time and events are right. It would be very hard to turn your back on this kind of supply," Miltenberger said.
Pipe Dreams No More
Of the two lines, the Alaska Gas Pipeline is the behemoth. Its most likely route would stretch 1,700 miles from Alaska's Prudhoe Bay to Canada's Alberta province. The line would cost $20 billion and take a decade to build, but the project has picked up momentum under the whip of Alaska Gov. Frank H. Murkowski (R) and $18 billion in loan guarantees approved last year by Congress.
The second line, the Mackenzie Valley Pipeline, would start 250 miles east of the Alaska line, on Canada's portion of the Beaufort Sea. It would snake 800 miles through forests of spruce and pine along the Mackenzie River -- one of the world's longest with no bridge or dam. This all-Canada route would cost $6 billion and is predicted to take three years to complete once construction begins.
Both projects have been pipe dreams for three decades. Drillers who flocked to the cold deserts of Alaska's North Slope after oil was discovered in 1968 also found vast deposits of natural gas. But there has been no way to move the gas to markets; it cannot flow in the oil pipeline. Oil producers proposed both the Alaska and Mackenzie gas pipelines in the 1970s, but the plans died under the weight of rising construction costs, dropping natural gas prices and -- in Canada -- opposition from native groups.
That has changed. Natural gas prices are now at all-time highs, greatly enhancing the lure of profits. Every energy forecast shows a yawning gap between supply and the rising demand. More natives of the north now see economic opportunity in the pipelines, and their necessity is reluctantly being conceded by even environmental groups.
"The economics are right. Everyone needs this supply to come on line," said John Duncan, a member of the Canadian Parliament and the Conservative Party's expert on natural resources. "The real question is which is going to be built first."
Industry analysts say the projects would require so much capital, steel and skilled labor that it would be impractical to build both at the same time. The projects have been jostling for position, sparking what former Alberta energy minister Murray Smith has called "the great pipeline race." Oil company officials would prefer the shorter Mackenzie line to go through first, but delays have jeopardized that possibility.
Four reserves of Indians -- known as First Nations here -- are involved in negotiations to permit the Mackenzie line to cross their land. The four oil companies behind the project have agreed to give First Nations a one-third share of the line, and the federal government in July offered $425 million for native social programs as an incentive. But the bands are split over the proposal.
Native Claims
Antoine, 64, is a member of the Deh Cho, a band of about 4,000 members on land centered at Fort Simpson, a quiet town on an island accessible by ferry in the summer and by a road carved on the river ice in the winter.
He grew up hunting caribou and moose, snaring rabbits and cutting holes in the ice to fish in the winter. He remembers a hard life, remembers being hungry when the game disappeared. But he is wary of the coming pipeline, and the change it will bring.
A lone caribou walks across the Dalton Highway near the Trans-Alaska oil pipeline. A lone caribou walks across the Dalton Highway near the Trans-Alaska oil pipeline.(Al Grillo - AL GRILLO PHOTOGRAPHY) "You can still have freedom to roam here. You can travel for 100 miles without running into any other tracks, camping wherever you want, drinking out of any stream," he said of the Deh Cho lands.
Herb Norwegian, the blunt chief of the Deh Cho, said his people see no reason why they should not get what they want from oil companies making huge profits. He has asked for fees, royalties and jobs, but his fundamental demand is of the government, which has yet to settle Deh Cho land claims.
"If the pipeline is going to pass through our land, the government has to treat us like the landlords," Norwegian said.
Not all agree with him. Harry Deneron, 63, a member of the Deh Cho group of chiefs, said change already has come, and the First Nations people should benefit.
"Our people will be the first to complain if their hot-water heater goes up," he said with a laugh. "We should accept the pipeline, with conditions. We have to compromise. This has gone on too long."
Either project would march a small army of construction workers into the north for several years. They would carve roads, haul steel, dig a trench through the permafrost and bury the pipeline before departing. The Alaska Pipeline project alone would be more than double the size of the 800-mile-long trans-Alaska oil pipeline finished in 1977, which took 21,000 construction workers three years to build.
Towns along the pipeline routes grimly expect the construction to bring inflation, drugs and crime along with the economic boost for their rural economies. In Yellowknife, two new diamond mines have sent rents soaring and brought cocaine to the streets. Last month, the town experienced its first drive-by shooting.
"We know things are not going to work perfectly. They never do," said Bill Braden, a member of the territorial assembly in Yellowknife. "But the pipeline would give the communities and people of the Mackenzie Valley and Delta hope for the future. Right now, if I was a teenager, I wouldn't see a whole lot of reason to stay in the area."
Making a Choice
Dog sleds are typical in Fort Simpson, along the route of a proposed natural gas line. Town officials say pipelines would bring an economic boost, but also drugs and crime. Dog sleds are typical in Fort Simpson, along the route of a proposed natural gas line. Town officials say pipelines would bring an economic boost, but also drugs and crime. (Photos By Doug Struck -- The Washington Post) Related Coverage
* Environmentalists Make Last Stand On Alaskan Drilling * Alaska Oil Field's Falling Production Reflects U.S. Trend * Alaska Town Split Over Drilling in Wildlife Refuge * Where Oil Is Mined, Not Pumped * TIDEPOOL | News for Salmon Nation * Manufacturers Blog * The Truthseeker
The bigger footprint, after the construction crews have left, will be in opening the mineral-rich area to further exploration and development.
Mostly for that reason, some environmentalists favor the Alaska Pipeline, which follows the route of the existing oil pipeline and Alaska Highway.
"We think it's the lesser environmental evil," said Stephen Hazell, a director of the Sierra Club of Canada. Environmental groups have largely bowed to the inevitability of at least one of the projects.
"Natural gas is clearly better than coal or oil," said Peter Ewins, a director of the World Wildlife Fund of Canada. "In principle, we are not opposed, if the development is done in a properly planned and well-balanced way."
The natural gas from either line would be fed into a grid of pipelines in Alberta that connects the United States and Canada into a largely seamless single market. Oil company officials say the soaring demand is in the United States, and that is where the gas would go.
But some environmentalists suspect that the Mackenzie pipeline, in particular, would feed the huge oil-sands project in Alberta. There, natural gas is used to cook strip-mined tar sludge into recoverable oil, a process environmentalists say is energy-inefficient and increases global warming.
"If we were convinced the gas was going to be used in people's homes to replace coal-fired energy, we would be much more sanguine about it," said Hazell.
Despite its much larger size, the Alaska Gas Pipeline could move more quickly. The oil pipeline and highway along the proposed route already have cleared the way with access rights, aboriginal land claims and environmental reviews. Since the 1970s, the TransCanada pipeline company has held rights to one route in Canada, and has laid groundwork on the Alaskan side as well.
"The gas market in North America really quite desperately needs this gas," TransCanada Chief Executive Hal Kvisle, said by phone from Calgary. "We think it would be quite foolish not to use" the company's access rights to speed up the project.
This quiet town on an island of the Mackenzie River, already wrapped in the gloom of winter.
Speed is what Alaska's Gov. Murkowski wants. He has made it a personal goal to find a way to get Alaska natural gas to market, foreseeing a second wave of the riches that poured into the state with the oil pipeline. All Alaskans still receive a yearly dividend check from the oil pipeline royalties.
"We are approaching an historic moment -- moving from 30 years of trying, to the reality of a gas line," the governor told reporters recently. He has proposed a novel sharing of ownership in which Alaska would have a 20 percent stake in the line.
"We're going to do it right this time," the governor said by phone from Anchorage after emerging from negotiations with the Prudhoe Bay producers Exxon-Mobil and BP. He already agreed to terms in October with a third company, ConocoPhillips. "The country needs the gas," he said. "This is the time."
UBBFriend: Email this page to someone!
Printer-friendly view of this topic
