New Western Energy Corp. (NWTR)

New Western Energy Corp. (NWTR)

posted in: client-profiles by On December 16th, 2012

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New Western Energy Corp. (NWTR)

Dec. 11, 2012 – Zacks Initiates coverage with an outperform rating and $1.30 price target – view press release and report here

COMPANY OVERVIEW

New Western Energy OilNew Western Energy Corp. is focused on acquiring land leases for properties in the United States that have shown favorable characteristics for the discovery of oil, natural gas and other minerals, and entering into joint ventures to acquire assets in areas in the continental United States. The Company was founded in 2008 and is based in Irvine, Calif.

The Company strategy creates value for its assets and shareholders through:

  • Further exploration of existing properties
  • Property portfolio management
  • Pursuit of strategic transactions
  • Maintenance of financial flexibility
  • Strategic alignment

STRATEGY

New Western Energy OilAs an independent energy company engaged in the acquisition, development, production, and exploration of oil, gas and mineral properties located primarily in North America, NWTR’s primary objective is to increase shareholder value through a strategy that includes:

Further exploitation of existing properties: They seek to add proven reserves and increase production through the use of advanced technologies including detailed reservoir engineering analysis, drilling development wells utilizing sophisticated techniques and selectively recompleting existing wells. The Company also focuses on reducing the operating costs associated with its properties. They believe that the properties they have acquired have significant potential and in certain cases have not been fully developed in the past.

Property portfolio management: The management will evaluate their property base to identify opportunities to divest non-core, higher cost or less productive properties with limited development potential. This strategy allows the Company to focus on a portfolio of core properties with significant potential to increase its proved reserves and production. Pursuit of strategic transactions: They continue review opportunities to acquire producing properties, leasehold acreage and drilling prospects. The management seeks negotiated transactions to acquire operational control of properties that they believe have significant exploitation and exploration potential. The strategy includes a significant focus on increasing holdings in fields and basins in which they already own an interest.

Maintenance of financial flexibility: They believe the Company should be structured and financed so that internally generated cash flows cover all operating expenses, general and administrative expense and interest expense, that drawn borrowing capacity should be used for lower risk development expenditures and that the capital markets should be used to fund acquisitions of producing properties and leasehold acreage, and to fund higher risk development and exploration activities.

Strategic alignment: The management has secured through the alignment with its strategic partnerships a unique ability to analyze and operate both existing properties and future potential acquisitions. When the domestic production has reached a critical mass, they plan to re-evaluate the suitability of adding an exploratory and/or International component to the strategy.

PROJECTS

New Western Energy OilSince its inception, New Western Energy Corp. has acquired working interests in several producing oil wells in the Gulf States, and is in negotiations to acquire land leases for additional properties that have shown favorable characteristics for the discovery of oil, natural gas and other minerals.

The current leaseholds are situated in areas in the United States known for the discovery and production of oil and natural gas.

Oklahoma

Phillips Lease

New Western entered into a joint venture with RC Oil Co. to acquire a 75 percent net working interest in the Phillips Lease on June 27, 2009. The Phillips Lease is a seven-well plus one saltwater injection re-completion project located in Rogers County, Okla. One of the wells on the 150-acre leasehold is a saltwater injection well. The Phillips Lease, similar to the Glass lease, is a recompletion project with plans to produce the Bartlesville formation. According to RC Oil Co., these seven wells are scheduled to be in production by the end of November 2009 and should produce more than two barrels each per-day. This eliminates the risk normally associated with new drills. The lease is located in an area surrounded by proven and long-lasting production. Additionally, with 150 acres to work with, the Philips Lease offers a number of outstanding drilling opportunities. New Western has plans for drilling two new wells on this lease in the near future.

Glass Lease

On May 21, 2009, New Western Energy entered into a joint venture agreement with RC Oil Company, Inc., to acquire a working interest in 14 wells in Rogers County, Okla. Under the terms of the joint venture, New Western agreed to provide funding to RC Oil Co. for operations in return for 75 percent of the net revenue interest (NRI) owned by RC Oil Co. in the Glass leaseholds. The Glass lease covers more than 120-acres in northeastern Oklahoma. Two of the wells on the lease were put into production in mid-June 2009. Further development and production of the lease will consist of a combination of primary and secondary recovery. Secondary recovery efforts will include water flood and the use of a NCO2 machine to re-pressure existing formations and enhance and increase production. In addition, New Western received a right of first refusal to purchase an additional 75 percent in all future wells developed by RC Oil, which RC Oil presently owns.

Texas

Swenson Lease

In early 2011, our wholly-owned subsidiary, New Western Texas Oil and Gas Corp. entered into a joint venture agreement with 3-M Production, a Texas-based operator, to acquire a working interest in the Swenson Lease, a 160-acre property in Jones County, Texas that is surrounded by wells with a history of oil production. Productive oil fields in the surrounding areas include the Griffin Field (approx. 3/4 miles west of the property area), and the Iron Mountain – Avoca Pool field (located 1/2 mile northeast of the property), which have produced approximately 19.6 million barrels of oil combined; and the Jones County Regular Field (located approx. 1000 feet southeast of the prospect area), which has produced 40,578 barrels of oil. All of the elements needed for establishing oil production are present on the Swenson Lease: a trapping mechanism, reservoir rock and the presence of hydrocarbons. The initial test well was drilled in March 2011 to a depth efficient enough to determine the sand and rock formation of the area. Based on a geological study on the property, at least one additional well on the Swenson Lease and possibly one well to the south will be needed in order to complete the drainage of the oil field.

Reves Lease

Adjacent to the Swenson Lease, the Reves Lease comprises 84+/- acres in Jones County, Texas. New Western Energy acquired the Reves Lease in October 2011 primarily because the leasehold’s strategic location allows New Western to seamlessly increase its acreage in the region. Formations on the Reves Lease include Swastika Sand, Flippen Sand and Gunsight Lime, with formation depths of between 1,000 and 3,000 feet.

 McLellan Lease

The McLellan lease is adjacent to the Company’s Swenson and Reves leaseholds. The McLellan Lease comprises 160+/- acres in Jones County, Texas. Formations on the McLellan Lease include Swastika Sand, Flippen Sand and Gunsight Lime, with formation depths of between 1,000 and 3,000 feet. The Griffin Field (3/4 miles west) and Iron Mountain Avoca Pool Field (1/2 mile northeast) have produced approximately 19.6 million barrels of oil combined; Jones County Regular Field (located approximately 1000 feet from prospect area) has produced 40,578 barrels of oil from the Swastika Sand and Flippen Sand formations in the region.

 Trice Lease

The 580+/- acre Trice Lease is located in Shackelford County, Texas, and was acquired by New Western Energy as part of the Company’s acquisition of its wholly-owned subsidiary Royal Texan Energy Co. There are currently 24 oil wells, and six water injection wells on the Trice Lease. All the wells on the Trice Lease are in the King Sand formation, which is a series of sandstone channels producing from depths of between 500 ft. and 700 ft.

 Moran Lease

The 680+/- acre Moran Lease is located in Shackelford County Texas, and was acquired by New Western Energy as part of the Company’s acquisition of its wholly-owned subsidiary, Royal Texan Energy Co. There are currently 12 oil wells on the Moran Lease. The Moran Leases produce from four different zones. The “Moran Sand”, which is another series of sandstone channels with depths ranging from 1900′-2000′. These sands typically yield a primary recovery rate of 20%-25% and drain an area of 10-15 acres on average in the surrounding area. The “Bend Conglomerate” is an unconformity in the “Caddo Limestone” that resulted in conglomerate channels within the limestone. This formation ranges in depths from 3600′-3800′ and yields a primary recovery rate of ~33.3%. The formation typically drains an area of 15-20 acres in the surrounding area. The “Duffer Chert” is an unconformity found in the upper portion of the “Mississippian Limestone” that resulted in silica development which brought forth changes in porosity and permeability. This formation occurs at depths from 3800′-3900′ and yields a primary recovery rate of 25%-30%. The formation also typically drains an area of 15-20 acres in the surrounding area. The “Ellenberger” is a limestone that has porosity and permeability zones in its upper section. This limestone’s porosity in this area is found at depths ranging from 4000′-4250′. The “Ellenberger” drains an area of 20 acres and has a recovery rate of ~35% in the surrounding area.

Kansas

B&W Ranch

New Western Energy acquired a 90 percent working interest in the 1,700+/- acre B&W Ranch Lease in Chautauqua County, Kansas in March 2012. The leasehold is located in the Chautauqua Arch. To the south, the Central Oklahoma platform merges with the Cherokee basin of southeastern Kansas, in which some of the first commercial discoveries for the mid-continent region were made. The reservoir rock on the B&W Oil and Gas Lease is comprised of the Weiser Sands and some Wayside. The depth of the reservoir is approximately 600-800 feet. Among the famous producing sands in this region are Iola Sands, Layton Sands, Redd Sands, Wayside, Weiser Sands, Oswego Lime, Mississippi Chat, Mulky Shale, and Arbuckle. The objective of this project has been to exploit the Mulky Shale gas and Weiser oil. The depositional environment on the leasehold is considered as fluvial-dominated deltaic system. According to a 2011 report on the property, there is potential for discovery of three to four oil formations, as well as three to four gas formations throughout the lease. Both of the production zones are above 1,000 feet, which provides economical drilling costs to the Company.

Smith Lease

New Western Energy completed the acquisition of a 90 percent working interest in the 550+/- acre Smith Oil and Gas Lease in Chautauqua County, Kansas in May 2012. The Smith Oil & Gas Lease is contiguous to Company’s existing B&W Oil & Gas Lease, which is located in the Chautauqua Arch. To the south, the Central Oklahoma platform merges with the Cherokee basin of southeastern Kansas, in which some of the first commercial oil and gas discoveries for the mid-continent region were made. In the northern part of this district, as in the Cherokee basin, the emphasis is on Cherokee (Pennsylvanian) sand reservoirs. Here the strata are dipping westward so that the depths to these reservoirs become greater from east to west. In the southern part of the Chautauqua Arch, the greater part of the production comes from pre-Pennsylvanian reservoirs. The reservoir rock is the Weiser Sands and some Wayside Sands, which also lies within the Pennsylvanian Cherokee shale. Among the famous producing sands with the Cherokee Shale are the Iola Sands, Layton Sands, Redd Sands, Wayside Sands, Weiser Sands, Oswego Lime, Mississippi Chat, Mulky Shale and the well-known Arbuckle. The production strategy of current oil & gas companies in the region has been the production of Mulky Shale gas and some Weiser oil.

Pennsylvania

Wellsboro Lease

In June 2009, New Western Energy acquired a 100 percent working interest in the Wellsboro Lease in Tioga County, Penn. The lease includes approximately 23-acres located on a glacial aged kame terrace. According to a 1985 study, the property was inferred to contain approximately 900,000 cubic yards of borrow material. The terrace sands, gravels and other finer sediments were deposited in response to blockage by glacial ice. The potential usable deposit may be significantly larger, however. The property is also believed to be part of the Marcellus shale formation, which has shown favorable characteristics for the discovery of a large reserve of natural gas. Pennsylvania’s Marcellus Shale natural gas producers operate approximately 50,000 wells and deliver more than 158 billion cubic feet of natural gas.

STRATEGIC PARTNERSHIPS

Royal Texan Energy Co. (wholly-owned subsidiary)

New Western Energy acquired 100 percent of Royal Texan Energy Co. in January 2012. Royal Texan owns oil and gas leases covering approximately 1,280 acres in Shackelford and Stephens County, Texas, which are now owned by New Western Energy. The acquisition of Royal Texan also provides the Company with additional equipment, expertise and manpower to maximize the value of our projects in Texas, while decreasing operational costs and strengthening our exploration program.

Petroleum Energy Management Co. (“PEMCO”)

PEMCO was formed in 2004 to work within the mid-continent marginal well market. PEMCO’s team is comprised of oil and gas industry veterans with 65-years of combined experience in petroleum geology and engineering, well stimulation, drilling, and oil recovery. PEMCO also works with its clients to manage day-to-day operations of leases, develop growth strategies, and evaluate potential acquisition opportunities. PEMCO manages the day-to-day operations at the Company’s leaseholds in Oklahoma.

Carroll Energy, LLC

Carroll Energy, LLC, Independence, Kansas, is a family-owned company with over 30 years of experience in the oil and gas industry led by Terry Carroll Sr. who has supervised and provided daily management and operations for numerous oil and gas companies, partnerships and private investors involved in the drilling and completing of thousands of wells, constructing, operating, and maintaining hundreds of miles of natural gas gathering pipeline, compression and dehydration facilities, cumulatively producing more than 15 BCF of gas and 750,000 BBLs of oil.

LEADERSHIP

The New Western Energy senior management team is comprised of highly trained professionals from different areas of expertise. Each officer possesses years of experience at successfully developing projects, teams, departments, and companies. The combined efforts of our management team have contributed to raising capital and launching successful public, and private companies.

Javan Khazali, President

Javan Khazali has been President and Founder of New Western Energy Corp. since November 2008. From 2008-2009, Mr. Khazali served as President and Chief Executive Officer of Global 8 Environmental Technologies, Inc., a publicly traded, multi-disciplinary environmental solutions company, where he was responsible for business development, marketing and operations. From 2006-2008, Mr. Khazali served as Chief Operating Officer for Financial Media Group, Inc., a publicly traded financial communications and media company, where he was responsible for corporate governance, compliance, business development and operations. Mr. Khazali was responsible for implementing several new operational strategies that directly resulted in increased sales and market capitalization for Financial Media Group, Inc. during those years. Mr. Khazali also worked for Cypost Corporation, initially as Vice-President of Administration in 2001 and later as Chief Executive Officer of Cypost from 2002 to 2003. In 2003, the directors of Cypost filed a Chapter 7 Bankruptcy. During the bankruptcy proceedings, Mr. Khazali assisted Cypost in financial distress negotiations, bankruptcy litigations and helped resolve disputes between Cypost and debt holders, lenders, bank groups, and equity holders. From 1985 to 2000, Mr. Khazali held numerous senior level positions in the food service sector including as a managing partner of two successful restaurants located in Western Canada. He also served as the director of operations of privately held restaurant chain located in various cities of United States and Western Canada having over 300 employees.

Haris Baha, Executive Vice President

Haris Baha is an experienced marketing and finance professional. Prior to joining New Western Energy Corporation in 2009, Mr. Baha served as a Sales Manager for Equity 1 Lenders Group, a position he held from 2000-2007. Mr. Baha was responsible for managing a team of loan officers, and was involved in the firm’s planning, goal setting, and customer and vendor relations on a daily basis. Mr. Baha was instrumental in expanding the firm’s sales operation to four times what it was when he joined the firm. Equity 1 Lenders Group was named one of the fastest 50 growing companies in Southern California in 2005. Prior to joining Equity 1 Lenders Group, Mr. Baha served as the Manager for the San Diego-based Avco Financial Services, where he was responsible for managing client accounts, and maintaining profitability. From 1992-1993, Mr. Baha served as a securities sales agent for Thomas James and Associates in San Diego. Haris Baha earned his Bachelor’s Degree in Corporate Finance from San Diego State University.

Terry L. Carroll, Director

Mr. Carroll currently serves as the Operating Manager for Carroll Energy, LLC, a privately owned Kansas Limited Liability Company engaged in the exploration and development of Coalbed Methane Gas in Kansas and Oklahoma. Prior to founding Carroll Energy in 2001, Mr. Carroll served as President, Chief Executive Officer, and Chief Financial Officer of a publicly traded oil and gas company. During his six-year tenure between 1990 and 1996, Mr. Carrol stewarded the growth of the company from assets of approximately $4mm to over $14mm, while leading the company�s up-listing from an Over the Counter exchange to the NASDAQ Exchange. The company later traded on the American Stock Exchange with assets in excess of $36 million before being purchased by a private entity in 2004 for approximately $53 million. In 1985, Mr. Carroll founded Argas, Inc., a privately owned oil field development and operating company, which participated in the drilling of more than 100 oil and gas wells, and the operation of eight natural gas gathering systems. Argas, Inc. also served as an operator for several public companies, limited partnerships, and private investors. From 1984 to 1994, Mr. Carroll worked at T.L. Carroll Enterprises, Inc., a privately owned exploration, development and oil field service company that provided geological evaluation, turnkey drilling and pipeline construction services to oil field producers in Kansas and Oklahoma. T. L. Carroll Enterprises, Inc., drilled over 750 oil and gas wells and constructed seven separate natural gas gathering systems, encompassing over 80 miles of natural gas pipeline. From 1981-1986, Mr. Carroll worked at Windgate Oil, Inc., a company he founded, engaged in the exploration and development of oil and gas properties, which served as the General Partner for the drilling and completion of more than 75 oil and gas wells. Mr. Carroll holds a Bachelor of Science degree in Business Administration and Finance from California State University, Hayward.

Amir Eskarous, Director

Amir Eskarous was appointed to the board in March, 2011. He is an accomplished financial professional with more than a decade of experience in risk management and corporate accounting. Mr. Eskarous has experience with Oil & Gas, alternative energy, information technology and software industries. Mr. Eskarous began his career in 2000 as a Staff Auditor for Grant Thornton International where he performed detailed audit work for a variety of business including manufacturing, hotel and other service industries and not-for-profit organizations. From 2005-2006, he worked as a staff auditor for a mid-size Los Angeles-based accounting firm, where he performed detailed audit and review work for public and private companies in the software, construction, pharmaceutical, and service industries. From 2006-2008, Mr. Eskarous was a senior auditor for Stonefield Josephson, Inc., where he was in charge of audit and review engagements for public and private companies with revenue between $10 million and $100 million in software, information technology, alternative energy and retail industries. From 2008-2010, Mr. Eskarous served as a senior auditor for Burr, Pilger & Mayer, LLP, where he was in charge of audit and review for public and private companies with revenue of between $25 million and $2 billion in information technology industry. From 2010-2012, Mr. Eskarous served as an audit manager at Goldman, Kurland and Mohidin, LLP in Los Angeles for oil and gas, alternative energy, manufacturing and services industries. He currently serves as a Senior Auditor with Ernst and Young in charge of audit of publicly traded pharmaceutical companies. Mr. Eskarous earned his bachelor’s degree in Business Administration with emphasis on accounting from Ain Shams University in Cairo, and is a Certified Public Accountant in California.

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