Imperial Resources Inc (OTC:IPRC) has been an interesting Company to watch in the last month, its chronological progression of press releases starting on August 9 that announced its Green Tide Salt Water Disposal Facility was expecting a drilling rig to arrive any day through its September 8 release noting that the rig had not only arrive, but had begun deepening the Ellenburger formation well.
The process, though common I’m sure for devotees of basic materials and followers of independent oil and gas developers, was quite educational for new buyers, both individuals and institutions, on how to actually get a rig ‘in the works’ and take the idea of a dig to actual drilling; quite fascinating.
Imperial Resources Inc (OTC:IPRC), through its wholly owned subsidiary, Imperial Oil & Gas, Inc has a highly focused, risk-averse strategy of building a substantial onshore portfolio of oil and gas assets. The Company has assembled five primary projects to build on and the great news is that one of the five is already producing substantial revenues; enough to keep current operations funded while it looks at other possibilities.
A lot of Oil & Gas concerns would love to be in that position as they began making themselves known to the investment community. The “Green Tide” project is working off of a promissory note to fund the operations and with minimal debt on the Company books; that was a good call by management.
Some Business Unit Structure…
Imperial Resources Inc (OTC:IPRC) was founded in 2007 and is based in Austin, Texas. Its subsidiary, Imperial Oil & Gas Inc, a Delaware company, was formed on January 8, 2010 and its Big Dig Operating Inc was formed June 13, 2011 for the purpose of operating a salt water disposal facility, and is a wholly owned subsidiary of Imperial Oil & Gas, Inc. Green Tide Water Disposal, Ltd. was formed on June 15, 2011, as a limited partnership with Imperial owning a 99% limited partnership interest, and Big Dig owning a 1% general partnership interest.
The Five Primary Projects…
The Company holds a 14.9% working interest in the Cochran #1 Well, operated by the El Paso Corp as part of the Greater Garwood hydrocarbon exploration project, which covers an area of approximately 2,244 acres and is located in Colorado County, Texas. This is the business unit THAT IS ALREADY PRODUCING REVENUES. Having produced gas since the start of 2009, the Cochran #1 Well has been in production for almost two years and the production has flattened out nicely and become increasingly steady.
The Company has an agreement to acquire 50% of the working interest in the Chisholm Trail Prospect in Oklahoma; and has obtained 100% of the Salt Water Disposal Project. This is a fifteen (15) horizontal well development program including an acreage position of 5,000 acres.
And this is what all the news was about in getting a rig into place from August 9 through September 8…
All wells in the Barnett Shale (the biggest gas producing structure in Texas) must be fractured and the water used pushed back up to the surface by the gas. The well produces this water for years. The water picks up salt and other contaminants that require the water be disposed of in a safe and ecological manner, the most efficient way being sending the water back into the ground to a salt water disposal well.
The Imperial Resources Inc (OTC:IPRC) Green Tide Salt Water Disposal Facility ("SWDF") well has been successfully cased without incident and cemented in place from a depth of 7,500 feet back up to 5,700 feet. The last stage of drilling has now begin using a 4-3/4 inch bit with the intention of deepening the well by an additional 350 to 650 feet targeting several high porosity strands within the Ellenburger formation to maximise potential disposal capacity.
Company management noted, "(They were) delighted that the deepening operation has progressed to this point so smoothly. This is testament to the great care taken by the Imperial's operating company, Big Dig Operating Inc to avoid the critical issues experienced at the SWDF prior to Imperial's ownership."
The Green Tide SWDF is conveniently located for the disposal of large volumes of salt water generated from essential fracture stimulation operations on Barnett Shale gas wells. There are approximately 6,000 such Barnett wells within 20 miles of the SWDF.
The fourth primary project on the boards for Imperial Resources Inc (OTC:IPRC) is a lease agreement with the mineral owner of approximately 35 acres and the Nunnelly #1 Wellbore in Montague County Texas. The Agreement provides for the development of the lease area and the existing well, known as Nunnelly #1. Deepening of the existing Nunnelly #1 wellbore is the Company’s first planned option. However, the Company may decide, as works progress, that the most cost effective course would be to drill a new well to access the Project’s potential reserves.
The fifth project at the Company is a “Farmout Agreement” for the right to earn acreage in the Stateline Infill Development Project in the existing Sawyer Field, in Lea County, New Mexico. The acreage is sufficient to accommodate 4 vertical infill wells under current acreage spacing requirements in the Sawyer Field, targeting the San Andres Formation. Planned infill wells are relatively shallow at 5,000 feet and are expected to produce oil and gas.
There are a number of management principals in effect at Imperial Resources Inc (OTC:IPRC) which really lend themselves to being ‘key’ to potential stock buyers.
Take the Nunnelly #1 well for example: The well offers a very low entry cost opportunity into a relatively low risk well that could, if successful, produce early revenues for the Company with no critical exposure. And that’s the principal: provide solid cash flow at a very minimum risk to strengthen the balance sheet of the business. Or the Green Tide SWDF example: the Well has the potential to generate significant cash flow at relatively low operating costs.
Another good equation… To ensure operational management operates most efficiently, management and consultants are predominantly motivated by a success based structure, on a project by project basis, as opposed to receiving salaries and consultancy fees regardless of success. This directly aligns the interests of the Company’s operational team with the interests of our investors: Management is rewarded when the Company performs.
The Balance Sheet, Money and Shares…
There are approximately 42 million shares of the Company stock outstanding; 39 million in the float: Currently trading in the $0.37 range; that makes for an approximate market cap of $15.67 million.
For the quarterly period ended June 30, 2011, Imperial Resources Inc (OTC:IPRC) had Total assets of$ 1,264,982; Total liabilities of $633,705, and Total shareholders’ equity of $631,277. The Producing well equaled $313,266.
The Company has no off-balance sheet arrangements, no legal proceedings underway, and is a fully reporting issuer with the Securities and Exchange Commission's EDGAR database; its CIK # is 0001435394.
The Imperial Resources Inc (OTC:IPRC) web site is http://www.imperialresourcesinc.com and it has a very friendly Investors Relations team at 888-575-4772; well worth a call.
I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.