Last part of Keith's email:
Back to us being secretive. We WILL NEVER jump up and down and yell "look at us, look at us" before we have completed a position at the level we want it. The oil patch has the same basic fundamentals as stocks or real estate...if the word gets out and suddenly a rush hits, the prices go up. In our case, lease acreage goes up in price, royalty owners have more options and negotiate from a position of power, service prices go up, equipment and personnel wages go up and availability goes down.... it cuts across the spectrum why we must be secretive. THIS IS ALSO WHY WE DO NOT TAKE ON PARTNERS OR JOINT VENTURES! They are a potential information liability, and yes, we would be exponentially much more wealthy if we did take on partners and jv's. But why risk it if we don't have to? Anyhow, we make the disclosures after the fact and when we feel it is in our best interests of both the company and the investors. The proverbial balancing act, which I have not mastered. There are no right or wrong answers. We are doing nothing different at .02 than we were at .40, but investor fear has ruled the market due to our silence, even though the PPS did not affect our operations in the least and the reason for last weeks PR... this PPS was starting to look like a bad joke and enough is enough, for the investors sake.
We will continue making disclosures. We will keep turning our cards over so the investors truly see what we/they have. I hope in the end, the readers take ALL THE PR's and read them like chapters in a book and have a complete picture of what they own.
For instance you made me nervous with just disclosing our drilling $50,000 turn key wells. Why? We are economic driven. We are not chasing "the elephant" or conducting rank wild catting in the oil patch. To put it into perspective a little: a $50k well that comes in 20 BoD @ $53 a Barrel (I am being extremely conservative) pays back in less than 60 days. If it came in 30, 40 or 100 BoD, that is a very realistic and sweet ROI! These types of wells are few and far between, so what competitor wouldn't want this kind of a program? We've had this for years and I know what can happen with the competition, because we have had "corner shots" and "claim jumpers" following us for years. Financial disclosures could reveal something operational that we would prefer to not have revealed before we are ready. Trust me? Nah...I am not asking that, its just the way it is going to have to be for a while longer.
Let me qualify what I am saying about our O&G secrecy and silence that has nothing to do with Hemi. Take a guess at the hottest area of the US Domestic oil patch right now. (no fair peeking because it isnt where you think)
STOP READ NO FURTHER UNTIL YOU TAKE A GUESS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Its New York State! You know why you have never heard that? The majors have a serious lock down on information and the promotors have not discovered it yet, Google New York oil development/production/exploration or (something similar) and you will get bits and pieces of information from Oswego, Buffalo, Syracuse and other Western NY areas of activity. Enough to get a layman idea of what is going on up there. We aren't up there and have no intentions of ever being there. Simply trying to make a point.
This recently discovered region gets even more interesting! Back a few years ago a small private company similar to ours happened across a geological study and drill results by Standard of Ohio? New Jersey? Conducted in 1901? 1902? They drilled a well near Oswego NY that came in at 300 BoD. Standard determined the well was "un-economical" (by early 1900's standards) because of the lack of rail and other infrastructure to get the oil to market. Natural gas was a nasty waste product then and there was a large amount of NG in the oil. Anyhow, Standard decided to plug and abandon the well and focus a 100 miles south in Pennsylvania it was cheaper to operate. This Standard file lay dormant until 1990's, when the small company found the file, researched it, and proceeded to drill near the old Standard well with new technology and the well came in at 1,000 BoD. Yeah a 1,000 BoD! (too bad they talked it up and generated all the competition) So the silent New York O&G stampede is on. Only industry people have a clue as to what is going on in New York State. Could this be the same reason we are in Kansas? Who knows? But we aren't saying... for now. LOL
Finally back to stock "dilution" and operations, when we lease we have a very attractive lease program, for the land/mineral owners. We pay the land/mineral owners an initial "rental fee per acre" to lease the property over a set amount of time (1 year to 10 years), in order to develop the land. If we make a well the lease goes into in-perpetuity. On top of the rental fee, we also concede industry standard royalties to this owner... usually between 12.5 and 15%. The royalties and fees are determined by our negotiating skills, how savvy the mineral owner is and the desirability of the lease. We structure the royalties so that the oil purchaser (PAA) pays the royalties directly, so we never have issues with the mineral owner's money. They love this program. We also sweeten the bargaining process by offering to train the land owner or who ever they want (son, daughter, cousin and so forth) to work as a field pumper on the lease. For instance, farmer Les Purcell is a pumper on the Purcell lease. This is allowing the land owner to farm his land and our wells. This makes the theft of oil practically nil and is like having a pit bull chained to our pay tanks. If someone in a non-company vehicle goes on the land, they are stopped by the landowner/employee.
This program usually rapidly makes us one of the preferred operators in the area and is key to us being able to compete with the majors. How, you ask? Once we are established in an area, the locals usually know what is going on (small town gossip) and many times approach us with offers to lease their land. The smarter or more astute ones will "suggest" taking stock as part of the "leasing fee" to compliment the other benefits they get by dealing with us. Generally if we are interested in leasing a certain piece of land, we will tell them they have the option of cash or 2 year restricted stock (calculated on a 5 day moving average or something similar) or cash for the land... their choice. Of course we have not done this for a while, simply because stock prices this low is kind of embarrassing. So we have been paying cash lately.
I will tell you that all the above benefits forms a bullet proof leasing program, the land/mineral owners make mail box money (royalty checks) pay checks and if they work hard and if the production keeps increasing, in theory they get an additional benefit of an increasing stock price, just like any other investor. Is this dilution? I don't know, that is for you to decide. Also, I am not aware of a land owner/mineral owner that has sold a share, they are out making oil every day or at the local coffee shop gossiping and they know what is going on! Dilution or good will? I don't know. That is for you investors to decide, but it is something we do and it works very well.
Ok I am done with my long rambling Sunday Email, throw this out on IHUB and give your guys something to chew on. If an investor doesn't like what they see, well, there are a lot of other higher profile companies to invest in.
Keith A.
to make a million bucks over night" 
