Bpi (AMEX:BPG)
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BPI Energy Holdings, Inc. (AMEX: BPG), an independent energy company
engaged in the exploration, production and commercial sale of coalbed
methane (CBM) in the Illinois Basin, today announced it has entered into
a lease agreement with Western Fuels of Illinois, Inc., for the rights
to Herrin and Springfield coalbed methane (CBM) and coal mine methane
(CMM) gas over an area of approximately 5,600 acres. The newly acquired
acreage is contiguous, with 2,320 acres overlapping BPI’s
Delta field in Saline County, Ill., where it currently has wells and is
producing CBM from lower coal seams. This lease provides access to two
new seams in those wells. The new acreage increases BPI’s
leasehold assets in Saline County to approximately 13,280 acres, and BPI’s
gross leasehold interest to approximately 534,280 acres.
“The Herrin and Springfield coal seams are the
two thickest seams in the Delta area and offer uncommonly high methane
saturation for the Illinois Basin,” said James
G. Azlein, BPI president and CEO. “Furthermore,
the area is the site of previous exploration, and our existing
production and gas-gathering systems are already in place.
“In the area where we currently produce and
sell CBM at our Delta Project, both the Herrin and Springfield surface
seams have typically been mined,” Azlein
continued. “On the acreage related to this
new lease, however, only underground mining has occurred, creating mine
voids where gas gathers in sealed chambers. Mine wells will be drilled
to exploit this ‘gob gas,’
which has accumulated and will continue to desorb into these voids.
“There are also some areas on this new
acreage where we will drill and produce gas from the Herrin and
Springfield seams where no mining has taken place. The wells we plan to
drill on this acreage are shallow, and with our current infrastructure
already in place, the wells will be low-cost contributors to sales
volume in the near term,” Azlein concluded.
At April 30, 2008, BPI had 120 producing wells. Current plans call for
BPI to drill a total of 24 new CBM and CMM wells on the new lease. The
Company will additionally initiate production from the new seams in 10
of its existing Delta wells. BPI internal analysis estimates that the
Western Fuels lease has a pv 10 value of $1.87 million to the Company.
BPI has made a funding request for this development from its advancing
term credit facility with GasRock Capital.
As disclosed in its 10-Q quarterly report for the fiscal quarter ended
April 30, 2008, BPI is evaluating other potential options, which include
additional advances under the credit agreement with GasRock, which are
at the discretion of GasRock; issuance of new debt and/or equity
securities; joint ventures or other mergers/combinations; asset sales;
or a combination of these alternatives.
To be added to BPI Energy’s e-mail
distribution list, please click on the link below: http://www.clearperspectivegroup.com/clearsite/bpi/emailoptin.html
About BPI Energy
BPI Energy (BPI) is an independent energy company engaged in the
exploration, production and commercial sale of coalbed methane (CBM) in
the Illinois Basin, which covers approximately 60,000 square miles in
Illinois, southwestern Indiana and northwestern Kentucky. The company
controls a large CBM acreage position in the Illinois Basin at
approximately 534,280 acres.
News releases and other information on the company are available on the
Internet at: http://www.bpi-energy.com
Some of the statements contained in this report that are not
historical facts, including statements containing the words “believes,”
“anticipates,” “expects,”
“intends,” “plans,”
“should,” “may,”
“might,” “continue”
and “estimate” and
similar words, constitute forward-looking statements under the federal
securities laws. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or the conditions in our industry,
on our properties or in the Basin, to be materially different from any
future results, performance, achievements or conditions expressed or
implied by such forward-looking statements. Some of the factors that
could cause actual results or conditions to differ materially from our
expectations, include, but are not limited to: (a) our inability to
raise the funds necessary to satisfy our existing accounts payable and
accrued liabilities; (b) a refusal by GasRock Capital LLC (“GasRock”)
to make any additional advances under the GasRock Credit Agreement,
which are at GasRock’s discretion; (c) our
inability to repay or refinance the amounts advanced to us by GasRock
when such amounts become due on January 30, 2009; (d) a breach by us of
a covenant under the GasRock Credit Agreement or other event of default
that allows GasRock to accelerate our outstanding obligations; (e) our
inability to obtain sufficient financing, close an offering of debt or
equity securities, or complete a merger/combination, joint venture,
asset sale, selling of rights relating to our litigation against
Drummond or other transaction that would enable us to fund our future
operations; (f) our failure to accurately forecast CBM production; (g) a
decline in the prices that we receive for our CBM production; (h) our
failure to accurately forecast operating and capital expenditures and
capital needs due to rising costs or different drilling or production
conditions in the field; (i) our inability to attract or retain
qualified personnel with the requisite CBM or other experience; (j)
unexpected economic and market conditions, in the general economy or the
market for natural gas; (k) limitations imposed on us by the GasRock
Credit Agreement; and (l) potential exposure to losses caused by our
derivative contract. We caution readers not to place undue reliance on
these forward-looking statements.