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Transkript vom letzten Conference Call (erstellt durch Lanman vom $MAB-Board bei stockhouse.com): Thank you. Thank you everyone for joining us today for Falcons operational and financial update. As for today’s call agenda, I will first provide a financial update. Next, we’ll review Falcons progress in the first stage of this project, and I will address Falcons current status. Then we’ll look ahead at the next phases for completing this project, as we continue our progress. At the end of the prepared remarks, as time permits, we will answer your questions. Yesterday, we filed our quarterly report for the period ending June 30 2007, and distributed a press release outlining the findings of a review completed by the Scotia Group, and independent 3rd party consultant to Falcon. The document provides a review of Falcons operations and accomplishments. I hope you had the opportunity to review Falcons MD&A in the filing on Sedar and the Scotia report that was released yesterday for further details about the status of our operations. Today we issued a press release to provide an update on Falcons operations and finances, which we will discuss with you today. As you saw in our press release, Falcon reported at least $53,000,000 in cash and cash equivalents as of June 30 2007. We also had a net working capital of approx $41,000,000. Moving on to our operations, looking back at what we’ve achieved over the last 18 months, Falcon is extremely pleased at the progress that we’ve made. The goal of Falcons 1st phase of operation in the Mako trough was to delineate the resource and to secure the production license. To that end, Falcon achieved all these critical milestones. To enumerate, in just 18 months from the start of drilling Falcons 1st well in the Mako trough, to the time that Falcon secured its production license from the Hungarian Government, Falcon has drilled six exploratory wells, and discovered what we believe to be a very significant Basin Centered Gas Resource, or BCGA. Among these 6 exploratory wells, Falcon gave priority to completion of delineation wells in order to secure the production license. These edge wells, i.e. the Pusztaszer #1, Szekkutas #1, and the Magyarcsanad #1 well were drilled to show the limits of the BCGA. This was successful and in May of this year Falcon was awarded a long term production license covering all oil and gas in the identified BCGA resource underlying Falcons two exploration licenses. Finally, we recently acquired 1,149 sq kilometers of 3D seismic data. Falcon has invested approximately $17,000,000 to acquire four seismic surveys which collectively cover approximately 72% of the Mako trough and 80% of the area covered by the production license. These surveys have now been merged into one single continuous 3d seismic survey covering approximately 1085 square kilometers. This seismic data set was an essential part of the evaluation of the Mako trough, if we were to understand the variability and reservoir quality such as porosity, permeability, and the identification of sweet spots as well as hydrocarbon presence and type, and the distribution and variability of the pressure cell. Falcon has also engaged eSeis, a widely recognized expert in this area to process the data for the following properties. Lithology fluids, AVO, effective porosity, reservoir quality, absorption, pore pressure and velocity modeling. To summarize, this was a tremendous amount of work to accomplish in a relatively short period of time and Falcon has proven its ability to work in an international environment and close co-ordination with the Hungarian Government to make great progress. I will discuss the status of the exploratory wells that we have drilled in a moment, but before I do that, I want to emphasize that while a discussion of wells is appropriate, we can not loose site of the long term potential of what we are working on in Hungary. As you may already be aware an independent Scotia report dated August 16th 2006 indicated that the Mako trough is potentially a world class resource of approximately 54 TCF. Now, this is a huge project that we are undertaking and it may take a number of years to successfully reach completion. To that end, we view this project in three major phases. The first phase we believe we have successfully completed. This was the exploration and delineation phase which consisted of drilling six exploratory wells, securing the production license, and conducting several 3D surveys to delineate the resource potential. We are now beginning phase two of the project which focuses on the resource evaluation. This phase includes evaluation of the wealth of information we gathered to gain a better understanding of the rock properties and geological environment. Before we can move on to effectively develop this resource, it is absolutely necessary and prudent that we take time to analyze Falcons results to date, along side with information from the 3D seismic program, determine which wells to complete, and how to best complete the wells. During this phase, which we expect to take three to six months, our in-house experts are working closely with our independent consultants and the Scotia Group onsite, who have recently reviewed all information, advised on the focus of Falcons technical activity and interpretive results available to date. I hope you seen Scotia’s review which we released last night. Because we are not drilling during this phase, non active personnel and machinery are being released, as is prudent to manage costs. The technical and operational review we are undertaking is necessary and the right thing to do in order to put in place the most objective plan for the third phase, which will be the development phase. It is absolutely critical to Falcon, as it is to all our stakeholders, that we take the time to understand information that we have gathered so that there are no mistakes in the crucial stage of development. As required by the Hungarian Government, Falcon is scheduled to submit a development plan before year end 2007. I’ll now update you on the status of Falcons exploratory wells. First I will discuss our delineation of edge wells starting with the Magyarcsanad #1. Since our last conference call at the end of June we executed the fracture stimulation of the Magyarcsanad and began to gather and analyze results. To date, results confirmed the flow of gas and oil from natural fractures. This well has yet to fully clean up, which had to do with the high compression of the rock and sand dictating the rate of cleanup. This is not unusual. Therefore the rates we announced today in our press releases are only initial indications of flow rates. The well is currently shut in for bottom hole pressure evaluation and analyses. We are also evaluating the recent inflow, production and temperature loss. Based on the tests we have so far, we believe the oil is coming out of a natural fracture system. Falcon is examining all potential future completion techniques to develop this fracture play, including, for example, the drilling of horizontal wells that might join up multiple fracture zones. The seismic data should help considerably in defining the fault and fracture patterns in this resource, and these options will be examined as part of the near term technical review period. Now, on to other delineation wells that we have drilled. Through our testing of Pusztaszer #1 we’ve delineated the north-western extent of the Mako Trough, established the presence of mobile gas in the Szolnok, and confirmed the ability to frac at this depth. Regarding the Szekkutas #1 well, we established mobile gas in the north-eastern portion of the basin, and the objective horizons of the Endrod and Szolnok. While the edge wells Pusztaszer, Szekkutas, and Magyarcsanad were critically important to define the edges of the BCGA and secure one of the largest production licenses ever granted in Europe, it’s important to realize that the company believes that the big gas resource is in the center of the basin. And except for one frac job in the middle of the basin, this area has not been touched. Moving on to Falcons other exploratory wells, the Mako 6 was the first deep test of the basin reaching a total depth of 5692 meters. A test of the Synrift was attempted, which was proved tight. An interval at the base of the Basal Conglomerate was tested with initial rates of up to 700,000 cubic feet of gas per day and building, with associated hydrogen sulfide of 400 parts per million and diminishing. The test was aborted prior to cleanup when a suspected down hole failure occurred. Material extracted from plugged tubing was identified as part of a barite plug that had been placed below the test interval. Following a planned evaluation program, the Mako 6 could be re-entered for possible testing in the upper Basal Conglomerate, Endrod and Szolnok formations. The company has not established a timetable for additional work to be performed in the borehole. The Mako 7 was drilled as a deep basin test. Petrophysical and mud log analysis indicated the presence of hydrocarbon in a two and a half kilometer column in the Szolnok, Endrod, and Basal Conglomerate formations. Mako 4 was drilled to the Szolnok formation and is suspended pending completion of the current geologic review. Because Falcon identified the presence of hydrogen sulfide in a number of exploration wells, the future drilling, testing, and extraction plan will be designed to safely manage the presence of hydrogen sulfide in production wells. Falcon is planning to procure appropriate casing for this purpose. I’d also like to bring you up to date on the Strategic Partner Initiative. As we neared the completion of our first phase of exploration, it became clear to us that given the magnitude of this project, the company’s interest and the interest of its stakeholders would best be served by bringing in one or more strategic partners. Since that announcement I’m truly pleased that Falcon has signed confidentiality agreements with a number of potential partners in the double digit range, who have invested their time and effort to get to know Falcon, visit sites, look at data, and familiarize themselves with our operations. We believe that world leading oil companies are well represented in this potential group of partners. To be clear, the term sheet outlying the potential partnership was discussed with potential partners before confidentiality agreements were signed. In the agreement they signed, a standstill agreement, explicitly prohibits them from trading in Falcon stock for several years. Each of these potential partners has indicated they are interested in a joint venture in terms of its potential to offer strategic material upside to all partners. It is important to mention here that this is not an effortless or cost free undertaking for the potential partners. It has required sincere interest in the resource and progress Falcon has made for these companies to review what we have done and to consider potential partnership with us. Back to what I said earlier. One reason strategic partners are and will be interested in working with us is not because of the results of any single frac job, but because of potential opportunity for the entire resource under our production license. Now we don’t have a definitive timeline for when we will have a strategic partner that we can announce, but I can tell you that I’m truly excited about the quality of the companies that have expressed an interest in working with us as partners. We want to identify the right partner that would be best positioned to contribute to the development of this resource. It’s also possible that our search may result in one or more partners, each of which brings different value to Falcon in its long term development. We believe this is the right approach and is in the best interest of our shareholders. To recap, we’ve outlined that the types of partners that we’re interested in having discussions with will provide various types of support to Falcons operations over the long term, such as oil field service companies that might want to secure long term alliance with Falcon related to the development on our production license, or, major oil and gas companies with large scale development capabilities, midstream companies with expertise in gas transportation, gas processing and infrastructures, companies with access to end markets for gas consumption, and, companies with experience in establishing unconventional plays. While we believe that we’ll be able to reach partnership agreements that benefit both parties, in the event Falcon isn’t able to make a deal that doesn’t serve the companies interests and that of its shareholders, then we are prepared to continue on our own. Before I turn the call over to your questions, I want to address one other item. As you might have read in our proxy filed last week, we are proposing an expansion of our board of directors from four to nine members, and I’ve nominated five new independent directors. You can read more about them in the proxy, but I’ll provide a few highlights now. Igor Akhmerov is from Kilchberg, Switzerland. He is the Chief Executive Officer of Avalar Energy Group, and advisor to the executive director of TNK-BP. David E. Fisher is from Bridel, Luxembourg. He is a director of Terra Industries and director and chairman of Real Associates limited. Darryl H. Gilbert is from Calgary Alberta. Some of you might recognize Darryl as one of the leading petroleum engineers in Canada. Jan Van Holsbeeck is from Luxemburg. He is an investment advisor and director of Plaza Luxembourg SA. Professor Ferenc Horvath is from Hungary, he is director of the Institute of Geography and Earth Sciences at Eotvos Lorand University, and head of the Department of Geophysics. The new nominees represent a geographically diverse set of leaders with experience in energy, natural resources, business and geophysics. I look forward to working with this distinguished group. In summary, let me close with the closing paragraph of the Scotia Report, an independent third party which has validated our progress to date, and I quote: “Falcon has done a great deal of significant evaluation in a relatively short period of time. The results to date are positive and very encouraging. All objective formations of the basin have tested hydrocarbons, thus proving the existence of mobile oil and gas within the objective horizons.” We are pleased that Scotia noted in its review that as an independent advisor to Falcon since 2006 they are of the opinion that Falcon has been diligent and prudent in its operations to date. With that, we’d be happy to take your questions. Also with me for the Q&A period are Sam Swift, consultant, Evan Wasoff, CFO, Mike Sumptner, country manager in Hungary, James Edwards, Chief Operating Officer, Rod Wallis a Falcon geologist, Roger Young, Chief Technical Officer of eSeis, and Lonnie McDade, Vice President of the Scotia Group. Ladies and Gentlemen, given the number of calls with us today, please limit your inquiry to one question each. Alan Stepa of Dundee Securities: I was curious, you talked about your cash position as of the end of June. I’m curious based on the spending in July and so far in August, how much cash do you currently have? MAB: We’re not able to give you that number, but what I can tell you is that we finished our drilling operations in the middle of May, and most of our expense was not just the cost of the rig itself but the associated consulting firms and other equipment and materials. That’s been gone since the middle of May, so our burn rate has drastically decreased. Richard Craig of Smith and Williams: Although your original Mako 6 plumbed the ultimate depth of the basin, presumably as you go forward into the development phase your not looking to go down to anything like that depth. It may be a bit early to sort of guess how deep you’re likely to go but do you have any sort of theories as to what depth you might be developing your resources and what cost per well is most likely to be? MAB: I think what is most likely to determine that is the evaluation process and the interpretation of the 3D seismic, and tying that data set into what we’ve done so far. I think it’s premature to say we wouldn’t drill wells to that depth, in fact we’re very bullish about what we’ve seen so far at that depth. Rod Wallis, do you have any comments that maybe add to what I just said? RW: That’s absolutely correct. We certainly are still quite excited about the Basal Conglomerate as well as the Endrod and Szolnok formations and wouldn’t be writing them off. One of the things to note about the Basal Conglomerate is that it’s extremely high pressure, that makes it very difficult to handle, but one thing that I get excited about is the gas expansion from that very high pressure. So a very small amount of gas coming into the well bore at that depth and pressure is a lot of gas when it expands at the top of the well bore, and can give you some very high rates, so no, I’m certainly not saying we are not going to be going down to the Basal Conglomerate as part of the development. Jamie Somerville of Genuity Capital Markets: My question is in regards to the Magyarcsanad well. What are the forward requirements exactly, in terms of any more fracture treatments planned, and when you might release any fracture stimulation equipment and crews if you are planning to do so. MAB: I think right now, again, Jamie, we plan to evaluate the data that we’ve gathered so far and continue to gather on that well, but one of the real critically important things here is the interpretation of the 3D seismic, and we do have Roger Young with us, from eSeis, I hope there are some questions for him, but my belief is that at this time, with the information we have, we’re looking at a fracture play and the oil is coming out of the fractures, so the most likely case, again we have to wait to see what the interpretation is going to be, but the most likely way forward, would be to drill horizontally to intercept more of the fractures than we’ve already intersected here. So that would be the most likely case. But we really wouldn’t have an idea of where to go until we see the orientation of the fractures with the 3D seismic, so we can figure out what the azimuth should be. Sam Swift, would you have any comments more associated with the fracture play that might give Jamie a better idea of what we consider to be the fracture play in the Magyarcsanad? SS: I might just add a couple of things. We’re absolutely certain of the one fracture at 4060 in the Magyarcsanad, and we strongly suspect that the so called loss of circulation zone down at 4245 meters is probably a second fracture, so we have pretty strong evidence to believe that there are a family of these fractures in that Endrod formation. MAB: Thank you Sam. I hope that answered your question Jamie. Paul Moase of Griffith, Moase, and Partner Good morning, a couple of questions sir, one is cash and cash equivalents, can you confirm that none of that cash is in these asset backed collateralized paper? MAB: Thanks Paul, Evan Wasoff would you answer that question please? EW: Our cash and cash equivalents are in exclusively cash and Canadian government backed securities. They are all extremely liquid and very minimal risk involved. The bulk of our cash does sit in Canada, we do keep our cash in Canada and obviously over the last couple of years it has been very beneficial to the company. Kevin Carter of S and H capital dot com ??? I just wanted to know you mentioned that you were going to continue working to get a JV, how long will you work on that before you decide to go on your own? MAB: Well Kevin, I believe with the group of people that we have I feel very comfortable about making a deal. I would be very disappointed if we didn’t have a deal here within, say, anywhere between 60 to 120 days. Norman Giles, a private investor. I would like to know what circumstances your production license can be forfeited. And this is a comment, I find it incredible that you or your CFO won’t release how much money you have today. MAB: Let me just say this. I’d love to tell you, but the lawyers say without audited statements, not just the cash but the liabilities associated with it, we can’t do it, because I would love to tell you, but I cant, alright? Now what was the other part of this question? Umm, the licenses. All we really need to do at this point is put forward our development plan. There are no obligations or forfeitures that we have to drill a certain number of wells or do completions. We just have to put forward the development plan that we want. So we’re really not under the gun to be able to loose this license. Al [Champ ??] of Midsouth Capital I joined the conference a little bit late. I’m an investor and also a broker, I have some clients as well as myself, and also I have investments in PetroHunter and Galaxy, and I’m just concerned that this situation will turn out to be like Galaxy and PetroHunter, that is a market disaster, in fact it has been already, and while we might be doing great things on an operating basis, my sense is that the ways these companies have been financed has just been a disaster. And really the Bruner name has certainly been tarnished, especially in my eyes and probably in the eyes of other people as well. I’d like some reaction to that comment. MAB: As far as I’m concerned, we’re talking about Falcon here, and I think we’ve been doing the right things at Falcon. I might ask Lonnie of the Scotia Group to comment on the operations of Falcon and what we’ve done to date. Lonnie you there? Lonnie: Yeah Marc, I’m here. As I said in your report, you’ve accomplished a great deal in a relatively short period of time. You are dealing with a very complicated resource that is going to take a lot to understand, you’re taking the right steps to do that. A very encouraging point is that everything that you have tested has tested mobile hydrocarbons, which we think is phenomenal at this point. MAB: Thank you Lonnie. Paul Maose of Griffith, Maose and Partner Hi Marc, I actually have two questions, one is tell me about how your new board is going to help you and also I would like to know why you are so excited about the results you have got from the Magy well here. MAB: I think we have from a technical side the pre-emanate scientists in Hungary that can help us, and I think from a technical side as well I might comment that Daryl Gilbert, I’ve known him for some time, Daryl was the senior partner at Gilbert Laustsen Jung and Associates, which is the largest independent oil and gas evaluation company in Canada. He, between four and five years, did the evaluation work for Ultra Petroleum when I was the Chairman of Ultra, and I can’t think of anyone that is more qualified in unconventional gas than Daryl. We’re going to be using Daryl as well as the consultants to help us with the negotiations and strategic planning for those negotiations with the strategic partners, as well as consulting with us in working with Scotia in our reserve calculations and evaluations. I think from that standpoint we’re well served. Igor in Switzerland is well versed in being able to understand gas marketing in Europe, and can help us with that. Dave Fisher has been CFO of one of the largest mining companies in the world and he has a lot of experience helping in corporate finance type matters, so I think we have a well versed group of people that can help us, a lot of new directors can be very helpful to us. From a standpoint of what we see, over in the Magyarcsanad, we have evidence that there’s fractures in the cores that we have taken, and we believe there is a fracture system out here much like the Austin Chalk or the Barnett Shale play of Texas, and if the fractures are like the one we intersected, instead of one lets assume we would have twenty or more, they could be better or they could be worse than what we’ve found, we could have a situation here where we don’t need to frac the wells at all, we could just drill the wells, and produce the oil as we intersect the fractures while drilling. So this would lower the cost and we could have very quick payout, it is possible we could even have payout while we’re drilling the wells. So, we had to frac the wells here to understand that the oil was coming out of the fractures not out of the matrix. Sam Swift, is that pretty accurate what I’ve just said? SS: That’s pretty accurate. The exciting thing about the Magyarcsanad is that we’ve defined exactly what that one fracture is. Now extrapolating that to twenty fractures I think is a good extrapolation but that’s all it is, just like you said, they could be better, they could be worse, could be more, could be less. MAB: Sam, if we drilled a new well, that’s if we maybe drilled a horizontal leg in the future in the Magyarcsanad, but if we drilled a new well, we could actually drill four different laterals could we not? SS: There’s really no limit and of course there’s definite advantages operationally using a new well, we could have larger casing and a lot of advantages we don’t have in the Magy well. MAB: OK thank you Sam. Ladies and Gentlemen thank you so much for having the opportunity to be able to answer your questions and bring you up to date. Thank you. --- Conference Call Mitschnitt: http://falcon.hrwrl.com/Quarterly_Investor_Call.mp3
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Autor (Datum des Eintrages):	dontsushi  (13.09.07 13:28:40)
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