Since it began trading just over one year ago, Baron Energy, Inc., an independent oil and gas production, exploitation, and exploration company headquartered in New Braunfels, TX, has been moving forward with its growth strategies with little hesitation. The end of 2009 not only saw the launch of its new website and the hiring of Brad Holmes to handle all investor relations responsibilities, but also the solidification of business plans for 2010 including the planned merger with Pertex LP.
The merger of Esconde Resources, Inc. and Permian Legend Petroleum, Inc., two affiliated and privately held Texas corporations became effective as of February 22, 2010. With this merger, the management teams from Esconde and Permian joined Baron with Mr. Ronnie L. Steinocher assuming the position of President and CEO of Baron while Ms. Lisa Hamilton became the Executive Vice President and CFO. The two executives had worked together for 17 years and bring to the table more than 60 years of experience in the oil and gas industry. The previous executives of Baron resigned upon completion of the merger to make way for the new team. The merger immediately brought production, reserves and revenue as well as an experienced management team to Baron.
Since the new management has taken control, Baron has maintained a constant push to gain market share and market exposure. The Company has a “Core Area of Operations” encompassing more than 4,000 gross acres in nine counties located in Permian Basin of West Texas and North Central Texas where management has been active for the past 10 years. Operations and future acquisitions will remain in this oil-rich area.
Baron signed letters of intent (LOI) for two acquisitions in the second quarter of this year that meet its “preferred acquisition criteria.” For an acquisition to meet Baron’s “preferred criteria”, the property must be located with the “Core Area of Operations” with current production, reserves and still possess viable locations for future drilling amongst other things.
Due diligence has recently been completed on the second acquisition with Mr. Steinocher stating, “This acquisition is part of our larger plan to continue to acquire producing properties with substantial upside and located within our core area of operations.” Mr. Steinocher also said, “This acquisition will increase our current working interest and make us the operator of the properties. It will not only add to our current production significantly but could include more than 20 future drilling locations; many with stacked pay zones.”
Further expanding on the company’s strategy to grow its portfolio, in April, Baron increased its current working interest and assumed operatorship in properties located in Scurry County, Texas. The properties consist of 100% oil production on more than 800 acres and are part of an oil discovery from several years ago that have never been fully developed, but have substantial potential for drill locations. In-fill drilling programs are targeted for the 3rd quarter this year.
To assist with the financial requirements associated with development and acquisitions, Baron has partnered with Bullfrog Capital. Based in Houston, TX, Bullfrog has assisted clients with more than $350 million of successful transactions and capital arrangement. A large part of this experience has been focused on the oil and gas industry. Mr. Steinocher commented, “We have a number of significant funding initiatives ongoing in support of our high growth business plan. The pace at which we can increase our production and revenue is largely dependent on our ability to source funds in support of producing property acquisitions, drilling programs, and production enhancement projects. This partnership will provide a high level of professional assistance to our various funding initiatives and help keep our business plan on target.”
In a constant effort to maximize production, Baron has completed field operations to increase BOPD (barrels of oil per day). Recent field operations have brought production up to approximately 95% of capacity. A 4 to 6 week long “production enhancement program” began on July 15th. It is anticipated that the completion of the program will increase net production by at least 20% overall.
Although still an emerging company, Baron Energy, Inc. has an experienced management team and a very aggressive growth strategy. Daily oil production is presently at 35 barrels with enhancements expected to increase the number to over 40 barrels per day. Through acquisitions and development, Baron has a year-end goal of 250 barrels per day. The Company has issued year over year revenue projections that are in line with this growth strategy. Based on $70 per barrel pricing, projected revenues for 2010 are in excess of $3 million with that number growing to $13 for 2012.
With oil prices back on the rise and trading over $80 per barrel and Baron’s ambitious goals, BROE is worthy of a closer look. Its share structure is very moderate with only 42 million shares issued and outstanding. The information above coupled with the fact that BROE touched an all-time low of $.10 today could very well lead to investors beginning to take notice.
More information on Baron Energy, its operations and the investment opportunity it presents are located on the Company’s website at www.baronenergy.com.
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