PAMPA, Texas, April 24 /PRNewswire/ -- Chancellor Group Inc. announced today that it has acquired producing oil and gas properties in the Texas Panhandle. The 37 oil and 11 gas leases comprise 631 wells, about 100 of which are currently producing on approximately 8,000 acres in Gray and Carson counties, Texas.
Chancellor made the purchase through its two recently formed wholly-owned subsidiaries -- Gryphon Production Company and Gryphon Field Services. Both are Texas LLC's.
The acquisition includes a 16 acre office/warehouse facility with offices and oilfield equipment including 2 fully operational pulling rigs, 10 pumper and rig hand trucks, backhoe, winch truck, and water truck.
Current production is about 3,000 barrels of oil and 4,000 mcf of natural gas a month. The wells produce 40 gravity light, sweet crude oil and 1,500- 2,000 btu/scf natural gas.
Chancellor also announced today the appointment of Bradley W. Fischer as President, CEO, and a director of the corporation following the resignation of former CEO, Robert Gordon. Mr. Gordon remains on the board of directors. Mr. Fischer will also serve as President and CEO of Chancellor's two Gryphon subsidiaries. Gryphon Production Company, LLC will be the official operator of the new companies.
A Registered Petroleum Engineer, Mr. Fischer brings over 30 years of upstream experience in both domestic and international business. He was formerly President and CEO of CMS Oil and Gas Company and a Senior VP of Ashland Exploration. He also held positions with Mitchell Energy Corporation, Tenneco Oil Company, and Texaco Inc.
Mr. Alan M. Wright takes over as Executive Vice-President and Chief Financial Officer of Chancellor and the Gryphon companies. He has a B. S. from Cornell and was formerly EVP and CFO and Administration Officer on CMS Energy Corp.
Mr. Fischer said today, from the company's headquarters in Pampa, Texas that his initial focus would be well restoration. "We hope to restore to production in the vicinity of 10-20 wells a month."
The acquisition is being financed wholly by debt.
This document contains forward-looking statements, including without limitation, statements concerning potential well restoration, oil and gas production, and oil quality, which involve certain risks and uncertainties. The forward-looking statements are also identified through use of the words "potential," "currently" "about" "approximately" "hope," and other words of similar meaning. Actual results may differ significantly from the expectations contained in the forward-looking statements. These and other significant factors are discussed in greater detail in Chancellor's Report on Form 8-K on April 23, 2007 and other filings with the Securities and Exchange Commission.
Contact: Al Wright 806-688-9697
SOURCE Chancellor Group Inc.
Posts: 2049 | From: Jax,FL,USA | Registered: Nov 2003
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Chancellor Group Inc. principal activities are to acquire, explore and develop natural gas and oil properties. The group further examines opportunities in the fields of power generation, minerals development and environmental engineering and remediation.
*State of Incorporation ... Nevada Tax ID ........... 87-0438647 CIK ................ 0000894544 CUSIP NO ........... 00015883D1
Chancellor Acquires Producing Properties
PAMPA, Texas, April 24 -- Chancellor Group Inc. announced today that it has acquired producing oil and gas properties in the Texas Panhandle. The 37 oil and 11 gas leases comprise 631 wells, about 100 of which are currently producing on approximately 8,000 acres in Gray and Carson counties, Texas.
Chancellor made the purchase through its two recently formed wholly-owned subsidiaries -- Gryphon Production Company and Gryphon Field Services. Both are Texas LLC's.
The acquisition includes a 16 acre office/warehouse facility with offices and oilfield equipment including 2 fully operational pulling rigs, 10 pumper and rig hand trucks, backhoe, winch truck, and water truck.
Current production is about 3,000 barrels of oil and 4,000 mcf of natural gas a month. The wells produce 40 gravity light, sweet crude oil and 1,500- 2,000 btu/scf natural gas.
Chancellor also announced today the appointment of Bradley W. Fischer as President, CEO, and a director of the corporation following the resignation of former CEO, Robert Gordon. Mr. Gordon remains on the board of directors. Mr. Fischer will also serve as President and CEO of Chancellor's two Gryphon subsidiaries. Gryphon Production Company, LLC will be the official operator of the new companies.
A Registered Petroleum Engineer, Mr. Fischer brings over 30 years of upstream experience in both domestic and international business. He was formerly President and CEO of CMS Oil and Gas Company and a Senior VP of Ashland Exploration. He also held positions with Mitchell Energy Corporation, Tenneco Oil Company, and Texaco Inc.
Mr. Alan M. Wright takes over as Executive Vice-President and Chief Financial Officer of Chancellor and the Gryphon companies. He has a B. S. from Cornell and was formerly EVP and CFO and Administration Officer on CMS Energy Corp.
Mr. Fischer said today, from the company's headquarters in Pampa, Texas that his initial focus would be well restoration. 'We hope to restore to production in the vicinity of 10-20 wells a month.'
Common stock The Company has 250,000,000 authorized shares of common stock, par value $.001, with 60,755,030 shares issued and outstanding as of December 31, 2006.
Preferred stock Preferred Series B Stock - The Company has provided for the issuance of 250,000 shares, par value $1,000 per share, of convertible Preferred Series B stock ("Series B"). Each Series B share is convertible at into 166.667 shares of the Company's common stock upon election by the shareholder, with dates and terms set by the Board. 48,000 Series B shares have been issued and converted in prior years.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this Report, the stock ownership of each person known by the Registrant to be the beneficial owner of five percent or more of any class of the Registrant's capital stock, each Officer and Director individually and all Directors and Officers of the Registrant as a group. No shares of any class of capital stock other than common stock are outstanding.
Dudley Muth, Director Common 1,110,000 1.83%
Robert Gordon Director Common 4,584,800 7.55%
John C.Y. Lee Director Common 250,000 0.41%
Koala Pictures Proprietary Ltd. Common 22,021,800 36.25%
Axis Network (affiliate of Koala) Common 8,453 -
Directors & Officers as a Group Common 5,944,800 9.78%
Certain Relationships and Related Transactions
The Estate of Charles M. Childers is believed to be the ultimate controlling party in each of the following entities: Pilares Oil & Gas, Inc., Medallion Holdings Limited, Forum Energy Limited, Lichfield Petroleum Limited, and Southwin Financial Inc. Childers' controlling stock position at December 31, 2006 is estimated to be from 14,000,000 - 16,000,000 common shares.
On April 16, 2007, Chancellor Group, Inc. closed an acquisition of assets from Caldwell Production Company, Inc. ("Caldwell"), consisting of 48 mineral leases (the "Caldwell Leases") with 631 wells, and in addition purchased an office warehouse facility, equipment consisting of ten pickup trucks, two pulling rigs, a backhoe, a 1.5 ton winch truck and an 80 bbl water truck (the "Caldwell Equipment", and collectively with the Caldwell Leases the "Caldwell Assets"). We executed two purchase agreements with Caldwell--a Purchase and Sale Agreement, dated as of April 9, 2007, by and between our wholly-owned subsidiary Gryphon Production Company, LLC ("Gryphon Production") and Caldwell, for the purchase of the mineral leases (the "Lease Purchase Agreement"), and a Purchase and Sale Agreement, dated as of April 16, 2007, by and between our wholly-owned subsidiary Gryphon Field Services Company, LLC and Caldwell for the purchase of the equipment (the "Equipment Purchase Agreement"). The purchase price for the mineral leases was $5,000,000, and for the equipment $291,500. The oil and natural gas leases purchased are on approximately 8,000 acres in Gray and Carson Counties, Texas.
We also entered into financing agreements, as described below
Western National Bank Loan Agreement
On April 13, 2007, we closed on a Loan Agreement with Western National Bank ("WNB"), Midland, Texas, for a $5,000,000 senior loan facility (the "WNB Loan Agreement"). At the closing of the purchase of the Caldwell Assets, we drew down $2.3 million under the WNB Loan Agreement and issued a Multiple Advance Term Promissory Note to Western National Bank in the amount of $2,300,000. Amounts advanced under the WNB Loan Agreement are secured pursuant to a first priority Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement on the Caldwell Leases. The interest rate under the WNB Loan Agreement is a variable rate equal to the prime rate as defined in this Agreement plus 2%, but in no event to be less than 9.25%, and not higher than the highest lawful rate as defined in this agreement.
CapWest Resources Loan Agreement
On April 13, 2007, we also entered into a Loan Agreement with CapWest Resources, Inc. ("CapWest"), Midland, Texas, for an advancing line of credit/term loan facility (the "CapWest Loan Agreement"). At the closing of the purchase of the Caldwell Assets, we drew down under this facility $2,700,000 for the balance of the purchase price of the Caldwell Leases, $291,500 for the Caldwell equipment, $111,000 for bank fees, legal expenses and associated costs, and $130,000 for initial working capital. We issued to CapWest Resources, Inc. our Advancing Line of Credit/Term Note at such closing to cover the above advances. The interest rate under the CapWest Loan Agreement is a variable rate equal to the prime rate as defined in this Agreement plus 4%, but not higher than the highest lawful rate as defined in this Agreement.
Under the CapWest Loan Agreement, CapWest has a 2% overriding royalty interest in the Leases. After the payout of CapWest's loan, or in the event that the Company is sold, this overriding royalty interest will convert to a 15% net revenue interest in the Leases. This interest may be purchased by us under a formula specified in this Agreement.
At the closing of the purchase of the Caldwell Assests, pursuant to an Agreement to Issue Warrants, dated April 13, 2007 (the "CapWest Warrant Agreement"), we also issued CapWest a warrant to purchase 2,000,000 shares of our common stock, at a purchase price of $0.001 per share, which warrant is exercisable at any time up to April 13, 2012. CapWest has a put option (the "Put Option") during the period beginning on the first to occur of the following dates (a) the second anniversary of the CapWest Loan Agreement; or (b) the date when the Company shall have paid CapWest's loan in full to put the CapWest warrants to the Company for repurchase at an exercise price of $1,000,000.
Unregistered Sales of Equity Securities
The following table sets forth the sales of unregistered securities since the Company's last report filed under this item.
Date Title and Amount (1) Purchaser -------------------------------------------------------------- April 16, 2007 Warrant to purchase CapWest Resources, 2,000,000 shares of Inc. common stock at any time on and after April 9, 2012, at an exercise price of $.001 per share --------------------------------------------------------------
October, 2006 1,000,000 shares of Corporate Officer common stock --------------------------------------------------------------
April 18, 2007 2,037,751 shares of Corporate Officer common stock --------------------------------------------------------------
Appointment of Officers and Election of Directors
As authorized at a previous meeting of the Board of Directors of the Company, effective April 16, 2007, Mr. Robert Gordon resigned as our Chief Executive Officer and Mr. Bradley W. Fischer was appointed as our President and Chief Executive Officer and was elected a director of the Company to fill a vacancy on the Board. At this Board meeting, effective also April 16, 2007, Alan M. Wright was appointed as our Executive Vice President, Chief Financial Officer, Treasurer and Secretary, and Peter Harris was elected as a director to fill a vacancy on the Board of Directors.
Mr. Fischer, age 60, received a B.S.M.E. degree from the University of Nebraska in 1972, and completed the Program for Management Development from Harvard Graduate School of Business in 1991. Mr. Fischer is a registered professional engineer and has been a petroleum consultant since 2002, providing strategic evaluation services to independent oil companies considering international investment programs, evaluating domestic assets for acquisition and arranging financial backing for start-up companies in the U.S. From 1997 to 2002, he was President and Chief Executive Officer of CMS Oil and Gas Company. Prior thereto, Mr. Fischer held positions with Ashland Exploration, Inc., his final position being Senior Vice President (International and Gulf of Mexico), and with Mitchell Energy Corporation, Tenneco Oil Company and Texaco, Inc.
Mr. Wright, age 62, earned his Bachelor of Science degree in Economics from Cornell University in 1969. He has also completed post-graduate studies in Accounting at the University of West Florida and Stanford University's Executive Management Program in 1982. From 2002 to 2005, he was Senior Vice President - Administrative and Financial Operations and Chief Financial Officer, at Aastrom Biosciences, and served as a director of that company from 2000 to 2005. Prior thereto, from 1991 to 2002, he was Executive Vice President and Chief Financial and Administrative Officer of CMS Energy Corporation and its principal subsidiary, Consumer's Energy.
Peter Harris, age 54, has a Bachelor of Business Administration degree from the Royal Melbourne Institute of Technology University and is completing his Master's of Business Administration at the same university. He is Executive Director of the Uranium Club of Australia, a member of the Advertising Federation of Australia and has been a director of Recycle (Australia) since 1996. He is currently overseeing the planning and implementation of exploration for metals under an exploration license issued by Minerals Tasmania, the minerals arm of the Tasmanian Government in Australia, and is currently in charge of strategy and development for a Melbourne-based investor relations firm specializing in publicly-traded oil and gas companies.
Executive Employment Agreement
On April 18, 2007, our Board of Directors ratified an employment letter effective April 16, 2007, with Bradley Fischer, our President and Chief Executive Officer that provides for an initial salary of $300,000 per annum and issuance to Mr. Fischer of an aggregate of 3,037,751 shares of common stock. In the event of a change in control of the Company during the term of the agreement, and Mr. Fischer's employment be terminated as a result of this change of control, he would be entitled to three years' salary, three years' bonuses, if any, at 100%, full vesting in any stock not vested, three years medical insurance coverage and tax re-payment if any of the total package falls under some kind of excess taxation penalty.
ITEM 5.05. Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics.
(a) On April 18, 2007, our Board of Directors adopted The Chancellor Group and Gryphon Production Code of Conduct, which is filed as an exhibit with this report.
(b) In addition, our Board of Directors approved a waiver of Section 8-Conflicts of Interest- of our Code of Conduct so as to permit the hiring of an oilfield consultant related to our Chief Executive Officer.
Acquisition of Caldwell Oil and Gas Assets
On April 16, 2007, we closed the acquisition of assets from Caldwell, consisting of 48 mineral leases with 631 wells, of which approximately 100 are producing wells and 531 inactive well bores equipped with necessary production equipment, and related operating facilities and equipment including an office warehouse facility, ten pickup trucks, three pulling rigs, a backhoe, a winch and a water truck. The purchase price for the mineral leases was $5,000,000, and for the equipment $291,000.
The oil and natural gas leases purchased are on approximately 8,000 acres in Gray and Carson Counties, Texas, with a well spacing of 10 acres, and are in the Panhandle Field, discovered in 1920. This field produces from Pennsylvanian and Permian age granite wash and brown dolomite. The field covers 200,000 acres in eight Texas counties.
Our estimated proved developed producing reserves are 750,000 barrels oil equivalent. The current production from our producing wells is approximately 3,000 barrels per month and approximately 4,000 mcf of natural gas per month. Our wells produce 40 gravity West Texas Intermediate crude oil and 1,600 - 2,400 btu/scf natural gas.
Our primary focus is will be to operate our properties and to restore 10-20 wells per month to production. A typical well restoration we estimate will cost $2,500 to $5,000. To supplement our growth, we may also consider mergers and acquisitions, although we have no acquisitions contemplated or under discussion at this time.
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Posts: 2049 | From: Jax,FL,USA | Registered: Nov 2003
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The natural gas production run at half of the total max capacity, is 95,850(MCF) per month.
Take a look here. If CHAG were ONLY a natural gas production company your intrinsic value is as follows:
$4 profit per (mcf) is $383,400 per month, and $4,600,800 per year from natural gas production.
$4,600,800 divided by the O/S 60,755,030 is $0.075 multipled by 4x's earnings is $0.30 per share value.
Run a full capacity, you could be looking at $0.60 PPS
And I thought the natural gas production was just an added bonus.
Oil Revenue
The properties we just acquired are currently producing 3,000 barrels of oil per month. Only 100 of the 631 wells are currently producing and the CEO stated "We hope to restore production in the vicinity of 10-20 wells a month."
Should we not begin to assume that total oil production could be in the 18,000 barrels of oil per month range? Once all of the wells have been restored that is.
That puts Chancellor on pace for revenue in the neighborhood of one million per month ($65 oil) by my estimate. And this is only the oil production and does not factor in natural gas production.
That is $12,000,000 in oil revenue alone, annually.
Current market cap for Chancellor is $12,151,006 * $0.20 per share.
If it were to trade 4x's earnings, we get an intrinsic value of $0.76 per share.
What's more?
Oil reserves in the range of 750,000 barrels. At $60 dollars per barrel wholesale you have an estimated value in the ground of $45,000,000.00
$45,000,000.00 divided by the O/S of 60,755,030 = intrinsic value of $0.74 per share
Conclusion:
With a conservative perspective, I see around $15,000,000 full year after EBITDA.
$15,000,000 divided by the O/S is $0.246 multiplied by 4x's earnings is $0.987 PPS.Posts: 2049 | From: Jax,FL,USA | Registered: Nov 2003
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