Doxa Energy Ltd. (TSX VENTURE: DXA)(OTCQX: DXAEF)(FRANKFURT: 5D0) -
Dear Valued Shareholders,
I am pleased to provide this first annual "Letter from the
President" of Doxa Energy Ltd. and to share with you my excitement
and positive outlook for the company as we move into 2011, our
first full year of operation.
As you may know, on May 18, 2010 we closed our Qualifying
Transaction and transitioned from a TSXV listed CPC (Capital Pool
Company) to a publicly traded exploration company. During the seven
months of operations since that time, we have been very successful
in terms of making high quality initial investments and creating
impressive shareholder value. In fact, despite the continuing
global economic challenges, particularly relating to the energy
sector, we have been able to transform our company into an oil and
gas production and development company, having already initiated
first production and cash flow. In addition, Doxa shares now trade
in three jurisdictions on two continents (Canada, United States and
Germany). More importantly, we have effectively demonstrated that
many high quality investments are available to Doxa, and will
continue to be available as we move into 2011.
I am happy to report that strong demand for our private
placement in November, 2010 allowed us to exit the year with a
strong balance sheet while maintaining the integrity of our share
structure. Doxa is now in a position to continue to capitalize on
exceptional investment opportunities and is positioned for
long-term growth and expansion of our business.
All of Doxa's managers are fully committed to building a leading
oil & gas company, one that will provide long term value
creation for our shareholders by achieving superior financial and
operating results. We intend to accomplish this by strictly
adhering to our basic investment strategy of investing in a diverse
portfolio of high quality investments, and acting quickly to secure
our position in targeted investments. Representative of this
commitment is that in August, 2010, Doxa's Chairman Arnold
Armstrong and I created a combined personal loan facility for Doxa
in the amount of $1.7 million in order to insure continuation of
the valuable momentum established at inception. Additionally it's
important to note that none of Doxa's Directors, including myself,
have collected salaries or fees thus far; thereby enabling us to
advance our operations more quickly. Collectively Doxa's Board of
Directors own 36% of our company.
In the short term, we are focused on continuing to build the
diverse investment portfolio described below and creating cash flow
and profitability. Toward this end, we are constantly evaluating
additional opportunities in the unconventional (including the Eagle
Ford Shale) and conventional plays throughout south Texas and along
the Gulf Coast. As we grow, I intend to direct the company into
larger percentages of ownership in new projects, as available
capital permits.
On the operational front, we expect our Eagle Ford Shale
projects, including the Peeler Ranch (our Qualifying Transaction),
Epley and others in the planning stage, to generate long term cash
flow and significant development potential. For example, based on
offset Operator development of the Peeler Ranch Project, I
anticipate that 10-14 gross wells could ultimately be drilled on
this project, under which our ownership is a 20% working interest
and a 15% net revenue interest. Our initial well on this project,
the Peeler Ranch No. 1H has been drilled and is scheduled for a
multi-stage hydraulic frac in January, 2011. We also recently
drilled and completed the initial well on the Epley Project, in
which we own a 15% working interest and 11.25% net revenue
interest. Subject to commercially viable results on this project I
expect that up to 5 gross wells may eventually be drilled on this
project. Doxa has acquired interests in several additional Eagle
Ford Shale projects, some of which are slated for commencement of
drilling in 2011.
We have also invested in a variety of conventional projects in
South Texas and along the Gulf Coast, including a relatively small
ownership position in the successful Koehn No. 1 well, being the
initial well on the New Beilau Prospect in Colorado County, Texas.
The Koehn No. 1 well was completed in the Wilcox formation, and
placed on production November 23, 2010. The well initially tested
at a high rate of 1,953 MCFD, 132 BOPD, and 0 BWPD on a 14/64"
choke with 1,750 psi flowing tubing pressure. Another project of
note is the Davis-McCrary Prospect, an Edwards test in Atascosa
County, Texas where drilling operations were recently completed and
based on favorable results from log and core analysis production
casing was run and a completion attempt is currently underway.
Operationally we concluded 2010 with commencement of a 3D
seismic acquisition program on Sarco Creek Project, encompassing 40
square miles (25600 acres) within the Goliad and Bee Counties,
Texas. Our previous successes have allowed us to take a larger
ownership (30%) in this exciting opportunity which is targeting the
Miocene and Frio formations above 5,000'. The program calls for
acquisition, processing and evaluation of new proprietary 3D
seismic. We anticipate completion of preliminary seismic evaluation
and commencement of drilling operations during 2nd quarter,
2011.
Currently, due to a surplus of natural gas and consequently
lower product prices, we continue to focus primarily on oil and
gas/condensate opportunities rather than dry gas projects. We are
reviewing a number of exciting new oil and gas investment
opportunities which are available to Doxa. Several of these
opportunities are further described in our PowerPoint presentation
available on our website (doxaenergy.com).
Capital expenditures for the seven months of operation in 2010
total approximately $6,000,000 (Cdn). As mentioned, our November,
2010 private placement, which was oversubscribed by institutions,
private funds and private investors, raised a total of $3.8
million. After incorporating the effect of this private placement,
Doxa has 28,115,856 common shares outstanding, and 39,918,867
shares outstanding on a fully diluted basis. The warrants
associated with this recent share issuance are subject to a forced
conversion clause which, if fully enacted, would provide an
additional $4,072,821 (Cdn) in working capital to Doxa.
In closing, I would like to reiterate that Doxa is off to a
great start, based on the several months of operations in 2010.
Moving forward I anticipate increasing the company's participation
in future projects to the extent fiscally prudent for our
shareholders' security. I look forward to reporting on our progress
throughout 2011. I would like to thank all of our valued
shareholders for their ongoing support of Doxa.
All of us here at Doxa look forward to the exciting New Year
ahead!
Sincerely,
John D. Harvison, President, Chief Executive Officer
Statements in this press release other than purely historical
information, including statements relating to the Company's future
plans, objectives or expected results, constitute forward-looking
statements. Forward-looking statements are based on numerous
assumptions and are subject to the risks and uncertainties inherent
in the Company's business, including risks inherent in oil and gas
exploration and development, and uncertainties in connection with
anticipated commodity prices for oil and natural gas, growth of
worldwide market demand, exploration capital requirements,
potential drilling targets and gross wells, length of asset life
and availability of qualified personnel, among others As a result,
actual results may vary materially from those described in the
forward-looking statements.
This new release does not constitute an offer to sell or the
solicitation of an offer to buy any securities of the Company in
the United States. The securities of Doxa have not been registered
under the U.S. Securities Act of 1933, as amended, or any state
securities laws, and may not be offered or sold in the United
States or to or for the account or benefit of a U.S. person unless
so registered or pursuant to an available exemption from the
registration requirements of such Act or laws.
Neither TSX Venture Exchange nor its Regulation Services
providers (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Doxa Energy Ltd. Scott Parsons Director 604.642.2625
Doxa Energy Ltd. Paul McKenzie Director 604.642.2625 604.642.2629
(FAX) www.doxaenergy.com
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