EDITOR’S NOTE: Having just completed
a corporate recapitalization, including
the addition of new management, the acquisition of several promising new assets,
and an infusion of cash, Scot Cohen, the
founder and executive chairman of Petro
River Oil Corp. (OTCBB: PTRC), recently
sat down with OGFJ to talk about the
BRIAN BROOKS, ENERCOM INC., DENVER
PETRO RIVER’S AIM IS SUSTAINABILITY AND PROFITABILITY EVEN IN A LOW-PRICE ENVIRONMENT
Built to withstand volatility
OIL & GAS FINANCIAL JOURNAL: Thank
you for joining us, Scot. As I understand
it, Petro River is fairly unusual when com-
pared to other E&P players in the space.
With the recapitalization, you’ve adopted
the tagline “Conventional Wisdom in an
Era of Unconventional Oil & Gas.” Tell us
a little about your strategy, the tagline,
and what makes you different.
SCOT COHEN: The tagline captures the
essence of our strategy. Petro River is purely
focused on low-cost, conventional E&P
development, meaning the assets we own
and take interests in are drilled vertically
and require no horizontal drilling or massive multi-stage fracture stimulation jobs.
At $30 to $40 per barrel, I don’t know of
a single shale player that can generate positive returns at the corporate level. Sure,
single shale well economics can be positive
at those prices but only wells drilled on
tier-one acreage in select basins. Nearly $3
trillion has been spent on the so-called
“shale revolution” in North America. People,
services, and technology all followed the
money, but there aren’t many companies
still pursuing vertical drilling techniques.
Petro is different, and less sensitive to
oil price swings. We’ve built a company that
can withstand the volatility in commodity
prices and turn a profit, regardless of wheth-
er oil is selling at $26 or $100 per barrel.
Petro’s assets are different. We’re targeting
conventional resources with finding and
development costs of $10 per barrel and
under. To do that, we’ve assembled a domestic portfolio of low-risk conventional assets
in proven, producing oil and gas basins such as California’s San Joaquin Basin and Osage
County in northern Oklahoma. In both of these regions, we’re using advanced 3D seismic
to better understand and interpret the subsurface.
As a complement to our low-risk domestic portfolio, Petro River owns small interests
in various conventional international projects that provide investors exposure to greater
upside from these exploration programs. Between our onshore project in Northern Ireland,
on- and offshore assets in southern England, and our offshore project in Denmark, Petro
River has exposure to more than 747,000 gross acres internationally. These projects all
conform to our core strategy of low-cost, conventional production.
How has Petro River, a company with a market capitalization of approximately
$50 million, been able to accumulate such a large inventory of projects domestically
and internationally? Have you secured the required capital for your drill program?
COHEN: Through our relationship with Horizon Energy Partners LLC. Horizon is a private
partnership comprised of veteran industry executives. Great minds must think alike because Horizon had quietly assembled a portfolio of conventional, low-cost projects that