Third quarter July to September
– Net sales for the third quarter amounted to SEK thousands 3661 ( 4098 )
– Operating profit for the third quarter amounted to SEK thousands 10 512 (43 888)
– Of which oil business tSEK 13 412 (45 299) , in which 13,325 comprised of the reversal of previously recognized impairment losses.
– Third quarter profit after tax was tSEK 3 330 (41 449)
– EBITDA for the third quarter amounted to SEK thousands -1 708 (-1 753)
– Of which oil business tSEK 1 191 (-344)
– Earnings per share before dilution amounted to 0.28 ( 4.04)
– Shareholders’ equity per share before dilution amounted to SEK 7.54 ( 10.57 )
Period January to September
– Net sales amounted to SEK thousands 11 554 (14 318)
– Operating profit amounted to SEK thousands 8313 (34 647)
– Of which oil business tSEK 12,849 ( 40,441 ) , where 13325 consists of the reversal of previously recognized impairment losses.
– Profit after tax amounted to SEK thousands -1361 (31 303)
– EBITDA for the period amounted to SEK thousands -1855 ( -9133 )
– Of which oil business tSEK 2678 ( -3343 )
– Earnings per share amounted to SEK -0.10 ( 3.38)
Highlights during the third quarter
Concord Dome Oilfield
Commodity Quest acquired through its wholly owned subsidiary COMQ Services LLC in early July Concord Dome Oilfield ( CDO) . CDO is a 500,000 m2 large producing oil field in Anderson County, Texas . Commodity Quest takes over 100 % of the field and Benchmark Oil & Gas is operator. We expect initial production of approximately 20 barrels / day , with a possible increase of 40-60 barrels / day through a smaller drill programs on three existing oil wells. COMQ Services will have 100 % working interest and 84% net revenue interest .
Reserve Report for Concord Dome on September 19 shows values of over 160 million. A reserve report prepared by the valuation company Ralph E. Davis showing that Concord Dome has estimated proved reserves of more than 120 million. In addition there are probable reserves to the value of 40 million. The two producing wells is valued at 17.8 million.
Ralph E. Davis has calculated the expected and total recoverable reserves for the period. They think we should get started 9 producing wells ; approximately 150 oil barrels per day. This is in line with our own estimates, but believe there is further upside. We have wells that we intend to drill , which are not included in this report.
The report assumes an oil price of 96 USD per barrel , stable production costs 250 000 USD per year and 86 % NRI . Production costs and NRI is the same as the budget, but not in absolute terms, then we are not fully negotiated with landowners .
It is gratifying to be able to acquire a producing oil fields and increase our equity and net worth without diluting our shareholders. We have negotiated for a long time and have achieved good condition .
Securing the sale of future production
Benchmark Oil & Gas included at the end of July, an agreement to sell a portion of future production by Cargill. The sale comprised 1,200 barrels per month through December 2013 from 101USD per barrel + LLS premium and 500 barrels per month through December 2014 for 94USD per barrel + LLS premium. LLS premium has been between 5-20 USD per barrel in the last two years. The recent favorable trend for WTI quality allowed an unusually high price for future production. We believe in larger production increase ahead that means that we will also have sales volumes, which are not secured as above. We continue to plan future sales of this type contracts.
controversy Tax Agency
Commodity Quest as decided by the Tax Agency has become upptaxerad with tSEK 1016 regarding declared VAT deduction in 2012. Costs including any tax amounts to tSEK 1233 of which 1016 have been expensed as of September 30 , 2013. Decision has been appealed.
Events after the reporting period
Commodity Quest decided in mid-October to increase ownership in Benchmark Oil & Gas and oil refining operations. Commodity Quest acquired through non-cash issue 50.000 shares in Benchmark Oil & Gas. The purchase price was 468 000 new shares , equivalent to a price of USD 6.50 per share in the Benchmark Oil & Gas. Commodity Quest after the acquisition will own approximately 72.6 % of the Benchmark Oil & Gas. Essentially conducted oil operations in the U.S. by Benchmark Oil & Gas.
Board of Commodity Quest decided in mid-October to separate the activities that do not affect oil investments. This refers primarily sandprojeket the Philippines. We have founded a company called Delta Minerals Ltd in aiming to put sand project and other investments. This process began in October and the plan is to implement this before the end of the year.
Investors have exercised warrants of series 2013:1 in Commodity Quest AB ( publ). At the board meeting March 21, 2013 approved a private placement of 3,000,000 shares and 3,000,000 warrants. The warrants expire on 30 September 2014, and gives the right to subscribe for one new share for 3.40 SEK . Warrants of series 2013:1 has now exercised to subscribe for 860,000 new shares in Commodity Quest . In addition, there remain 2,140,000 unexercised warrants issued.
The share capital of Commodity Quest comes after the registration of the shares for the exercised warrants will be approximately 48,750,974 divided between 14 338 521 shares
In the middle of October started drilling for oil field Concord Dome. TD for the wells is between 4500 – 4800 ft . All drilling is performed on Tomahawk Humble B Unit, which we believe to have lower potential than Unit A. We lack , however, some agreement before we own 100% of Unit A , because some contracts had expired when we bought the field.
Drilling of Tomahawk Humble B # 8 was closed on 22 October, with successful results. The well reached its target depth of 4600ft. Logging subsequently made shows two main zones of oil-bearing sand at a total of about 40ft . We own 100% of this well and has about 85% NRI. Drilling has shown better results than what we were hoping for. The main zone shows more than 20ft of oil bearing sands. In the middle of November ended drilling of Tomahawk Humble B # 10 successfully drilling reached its target depth of 4750ft and logging which is then made showing oil-bearing sand at 25 – 55ft . All wells will now be tested and put into production. We own 100% of this well and has about 85% NRI.
Three wells of three has succeeded, which is very unusual. The last well showing a zone that is well over 25ft and it will according to our calculations have never produced oil before. The infrastructure now needs to be expanded more to quickly see the flows from each well. Further drilling at Tomahawk Humble B Unit, and A Unit planned and we believe there is potential for many more wells in this field . It is the first oil found on Concord Dome since 1961 and the first for our company since 2007. It will be very interesting to see the outcome of the other wells. We will also draw lessons learned from this drill program at our field in Orange . We await prospectus from analyst Geotrace and look at opportunities to drill near old big producing wells.
Commodity Quest sold the rights in Concord Dome at Benchmark Oil & Gas for 25.5 million on October 31. Commodity Quest Benchmark Oil & Gas has signed a letter of intent regarding the transfer of Concord Dome. Payment shall be made half in cash and half in shares. Commodity Quest will receive 200,000 shares and own 76.4 % of the Benchmark Oil & Gas after completion of the deal. The transaction resulted in increased ownership in the Benchmark Oil & Gas, while we fill cashier and open to do new business.
In the middle of November completed the Commodity Quest sale of Concord Dome at Benchmark Oil & Gas and received £ 13,157,820 in cash and stock certificate for 200,000 shares. Commodity Quest now owns approximately 76.4 % of the Benchmark Oil & Gas after the transaction.
Notice of Special General Meeting
Commodity Quest has called an extraordinary general meeting on 13 December.
Meeting is proposed to decide the following:
Decision on distribution of all shares in the subsidiary Delta Minerals Ltd (item 7)
The Company holds a majority stake in its subsidiary Delta Minerals Ltd ( “Subsidiary”). The Board of Directors proposes that the Meeting resolves on a distribution in the form of all of the Company held shares in the subsidiary on the following terms . The proposal provides that shareholders of the Company for one (1 ) existing share in the Company will receive one ( 1) share of the Subsidiary . The record date for dividend entitlement of shares in the Subsidiary shall be 23 December 2013.
The decision to issue new shares (item 8)
The company made 11 January 2012 decision to issue convertible bonds targeted to a small number of investors. Since the decision on issuance was not registered in time of the Issue , the decision has expired and made payment on the convertible constitutes a claim for convertible signatories of the Company. The Board found it appropriate to convertible subscribers are given the opportunity to subscribe for shares in the Company on the same terms as the original convertible terms stated and hereby granted the right to settle their respective claims as payment for subscribed shares. Also proposed that the convertible subscribers are given the right to subscribe for shares against cash payment as compensation for loss of conversion due to the distribution of the shares of Delta Minerals AB.
The Board therefore proposes that the Extraordinary General Meeting of the Company resolve to issue a maximum of 1,638,227 shares with a quota value of SEK 3.40 per share, implying an increase of the share capital by a maximum of 5 569 971.80 SEK. The proposal includes both shares that may be paid by set-off (up to 1,411,764 shares) and shares that may be paid in cash (up to 226,463 shares). Right to subscribe for the new shares will be convertible subscribers with the right and obligation to pay for the shares subscribed for by offsetting their respective claims in respect of convertible bonds subscribed and paid for in cash . For each share subscribed for against payment through set-off given the right to subscribe for about 0.16 shares for cash . Subscription shall take place on 31 December 2013. Subscription price shall be SEK 3.40 per share which is equivalent to the conditions under the convertible .
The Annual General Meeting under item 8 of the agenda shall be subject to Chapter 16 of the Companies Act, the so-called ” Leo Act ” , so it is valid only if it is supported by shareholders representing at least nine tenths of both the votes cast and the shares represented.
Holders of warrants issued by the Company March 20, 2013 which subscribes for shares pursuant to warrants from the issue of this notice will not be able to receive new shares in the Company at such time that the right to receive the distribution of shares in Delta Minerals AB arises. The company will execute the conversion of the shares that each warrant entitles the holder to subscribe for and the subscription price in accordance with the terms of the warrants.