QOGT Quorum Oil &Gas

 

TIDMQOGT 
 
RNS Number : 3042P 
Quorum Oil and Gas Tech. Fund Ld 
14 July 2010 
 

  Not for release, publication or distribution in, or into, the United States, 
                          Canada, Australia or Japan. 
 
 
+------------------------------+------------------------------+ 
| Press Release                |                 14 July 2010 | 
+------------------------------+------------------------------+ 
 
 
                   QUORUM OIL AND GAS TECHNOLOGY FUND LIMITED 
 
                    NAV ESTIMATE AND INVESTEE COMPANY UPDATES 
 
 
Quorum Oil and Gas Technology Fund Limited (LSE:QOGT) gives guidance that the 
diluted net asset value as at 30 June 2010 is estimated to be US$10.66 per 
participating redeemable preference share, based on the following fair value 
estimates of the investee companies: 
 
+-------------+--------------+-------------+-----+--------+--------+ 
| Investment  |       Fair Value Estimate        |      6 |  Notes | 
|             |                                  |  Month |        | 
|             |                                  | Change |        | 
+-------------+----------------------------------+--------+--------+ 
|             |  30 Jun-10   |  31-Dec-09  |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| Strata      | $46,740,372  |$41,890,372  |   $4,850,000 |        | 
| Energy      |              |             |              |    (1) | 
| Services    |              |             |              |        | 
| Inc.        |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| WellPoint   | $17,534,539  |$17,538,857  |     ($4,318) |        | 
| Systems     |              |             |              |    (2) | 
| Inc.        |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| SQFive      | $11,111,728  |$10,971,728  |     $140,000 |        | 
| Intelligent |              |             |              |        | 
| Oilfield    |              |             |              |        | 
| Services    |              |             |              |    (1) | 
| Ltd.        |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| Quorum MENA |  $3,138,901  | $6,698,168  | ($3,559,267) |        | 
| Limited     |              |             |              |    (1) | 
|             |              |             |              |    (3) | 
+-------------+--------------+-------------+--------------+--------+ 
| Ambercore   |  $2,592,584  | $4,350,000  | ($1,757,416) |        | 
| Software    |              |             |              |    (1) | 
| Inc.        |              |             |              |    (3) | 
+-------------+--------------+-------------+--------------+--------+ 
| Seismic     |  $1,600,000  |  $500,000   |   $1,100,000 |        | 
| Reservoir   |              |             |              |        | 
| 2020 Inc.   |              |             |              |    (1) | 
+-------------+--------------+-------------+--------------+--------+ 
| Total       | $82,718,124  |$81,949,125  |     $768,999 |        | 
| Portfolio   |              |             |              |        | 
| Value       |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| Cash and    |  $5,204,536  | $4,697,440  |     $507,096 |        | 
| other net   |              |             |              |        | 
| assets      |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| Net Asset   | $87,922,660  |$86,646,565  |   $1,276,095 |        | 
| Value       |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
|             |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| Shares in   |    10.20m    |    9.59m    |              |    (4) | 
| issue       |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
| Net asset   |    $10.66    |   $11.59    |      ($0.93) |        | 
| value per   |              |             |              |        | 
| Share       |              |             |              |        | 
+-------------+--------------+-------------+--------------+--------+ 
|             |              |             |     |        |        | 
+-------------+--------------+-------------+-----+--------+--------+ 
 
 
(1) Change in valuation results from follow-on investment. 
(2) Change in valuation results from currency effects 
(3) Change in valuation results from revaluation as discussed below 
(4) Taking into account the warrants actually exercised on 1 April 2010 and 
assuming the exercise of all management share options 
(5) $ denotes US dollars 
 
Investee Company Updates 
 
Strata Energy Services Inc. 
Strata's underbalanced drilling services continue to be in demand from the 
industry and utilisation rates remain high.  However, slower than anticipated 
capital commitments in Mexico and current equity market conditions have led 
Strata, in consultation with Evolution Securities, to postpone its preparations 
for a potential initial public offering. Strata is also exploring significant 
opportunities in the Middle East and is confident that operations in Mexico will 
increase later this year. 
Sefton Partners LLP (the "Interim Investment Manager") is working with Strata's 
management and working capital lender to resolve concerns about certain aspects 
of its capital structure, and specifically its debt-to-equity and current 
ratios.  The Interim Investment Manager is hopeful that a positive outcome from 
the Fund's perspective will be reached in the near term, for example via an 
agreement to a restructuring of elements of the Company's interests in Strata, 
but if a satisfactory outcome cannot be achieved a temporary deferral of 
interest payments to the Fund may result. 
 
WellPoint Systems Inc. 
WellPoint's core BOLO and Ideas businesses continue to meet revenue targets and 
are significantly profitable.  However, its new DynamicsAX business has yet to 
achieve its revenue targets and due to this and cost associated with certain 
offices it made an overall EBITDA loss during Q1 2010.  WellPoint has indicated 
to the Fund that it will require an injection of working capital funds from the 
Fund and third party investors in an aggregate amount of approximately C$700,000 
and that it will need to defer its Q2 2010 interest payment until Q3 or Q4 2010. 
 
WellPoint's management is working with the Interim Investment Manager to put in 
place cost controls and other measures to ensure a return to profitability and a 
catch-up of deferred interest in the near term.  The Interim Investment Manager 
considers that unless appropriate action is taken there is a potential risk that 
WellPoint might also seek a deferral of its Q3 2010 interest payment to the 
Fund. 
The Interim Investment Manager is confident that the value of the overall 
business supports the amount of its investment and so has not recommended that 
an impairment in the valuation take place. 
 
Quorum MENA Limited 
Quorum MENA Limited ("QMENA") has not raised third party debt or equity 
investment. As a result the roll out of projects and contracts that it has 
developed has been delayed.  QMENA is working with the other investee companies 
to restructure the relationships with them in order to find other methods of 
funding these projects and contracts.  Also, while QMENA has been successful in 
developing projects and contracts for Strata, Ambercore and SR2020, it has not 
thus far been able to develop a pipeline of potential contracts for WellPoint. 
The Interim Investment Manager believes that the pipeline of projects and 
contracts developed, for Strata and Ambercore in particular, are significant, 
and is hopeful that discussions with the relevant companies will be successfully 
concluded in the near term and thereby potentially profitable.  However, the 
Interim Investment Manager does have concerns over the valuation of the business 
and has therefore recommended to the Board that pending the completion of these 
discussions a c.$4.2 million reduction is effected in the value of the 
investment in QMENA. 
 
Ambercore Software Inc. 
Ambercore had intended to enter into a transaction with a major company in this 
sector for the sale of TITAN LiDar equipment. That transaction will now not take 
place due to a change in strategic direction by the buyer.  This has resulted in 
cashflow problems for Ambercore, whose working capital facility has already been 
referred to the special loans department of its working capital lender, the 
Royal Bank of Canada.  The cashflow problems are exacerbated by spending on 
research and development for 4D search and the lack of revenues from the 4diQ 
product. Revenues from Ambercore's LiDar business are significant and consistent 
with forecasts to date. 
As a result, the Interim Investment Manager has recommended a c.$2.9 million 
reduction in the value ascribed to the investment in Ambercore to reflect the 
increased risks to a successful exit.  The Interim Investment Manager is working 
with Ambercore's management to implement an urgent internal restructuring of the 
business to reduce costs and focus on the revenue generating elements of the 
business. 
 
LxData Inc. (held through SQFive Intelligent Oilfield Services Ltd.) 
LxData continues to develop the pressure and multipoint sensors to complement 
its temperature sensor.  It is also actively working on a substantial sales 
pipeline of new and existing customer business for both pressure and temperature 
applications.  The Interim Investment Manager is working with the other 
shareholders in LxData, principally institutional investors from Quebec, to 
develop a strategy for the company going forward. 
 
Seismic Reservoir 2020 Inc (held directly as shown above and additionally 
through SQFive Intelligent Oilfield Services Ltd.) 
SR2020 has developed an impressive client base for its vertical seismic 
acquisition and processing services, including companies such as Exxon.  It is 
also exploring a number of commercial relationships whereby it can bid jointly 
on projects and offer complementary services.  The Interim Investment Manager is 
confident that while at an early stage the technology, business plan and 
management skills present within this company will enable the investment to 
succeed, although shareholders should note that in the short term its cashflow 
position remains sensitive. 
 
Dividend 
Having taken preliminary advice from the Interim Investment Manager, the Board 
has a reasonable degree of confidence that it will be in a position to declare a 
Q2 dividend in respect of the three month period to 30 June 2010 maintained at 
US$0.10 per share. However, as discussed above, there are circumstances in which 
interest payments to the Fund by the two largest investee companies could be 
deferred, which may have a material impact on the income available to fund the 
Q2 dividend, although the potential exists under Guernsey law to supplement such 
payment out of the Company's share capital.  The Board intends to finalise and 
announce the Q2 dividend as soon as possible and in any event no later than 29 
July 2010. 
 
                                    - Ends - 
 
For further information: 
+----------------------------------------+---------------------+ 
|                                        |                     | 
| Interim Investment Manager             |                     | 
| Sefton Partners LLP                    |                     | 
| David Sefton                           |    Tel: +44 (0)7989 | 
| david@seftonpartners.com               |             333 371 | 
|                                        |                     | 
| Corporate Broker                       |                     | 
+----------------------------------------+---------------------+ 
| Numis Securities                       |                     | 
+----------------------------------------+---------------------+ 
| Nathan Brown                           | Tel: +44 (0)20 7260 | 
|                                        |                1426 | 
+----------------------------------------+---------------------+ 
| n.brown@numiscorp.com                  |                     | 
+----------------------------------------+---------------------+ 
 
Media enquiries: 
+----------------------------------------+-------------------------+ 
| Abchurch                               |                         | 
+----------------------------------------+-------------------------+ 
| Henry Harrison-Topham / Quincy Allan   |         Tel: +44 (0) 20 | 
|                                        |               7398 7710 | 
+----------------------------------------+-------------------------+ 
| quincy.allan@abchurch-group.com        | www.abchurch-group.com  | 
+----------------------------------------+-------------------------+ 
 
 
Notes to editors: 
 
Quorum Oil and Gas Technology Fund Limited ("Q-OGT") is a registered 
closed-ended investment company incorporated in Guernsey to provide expansion 
capital to companies which own and/or are developing proven proprietary 
technology which may have a potentially significant effect on the oil and gas 
industry. Q-OGT was admitted to the Official List of the UK Listing Authority 
and to trading on the London Stock Exchange on 7 January 2008. Its stock market 
EPIC is QOGT.L. Further information can be found at www.q-ogtfund.com 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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