RedChip Visibility, a division of RedChip Companies Inc., began research coverage on Gulf Western Petroleum Corporation, an emerging oil and gas company with low-risk drilling prospects in Central Texas and Kansas. The CEO, Milton Cox, formed Gulf Western Petroleum Corp. from merging assets of Wharton Resources Corp. and Code America Inc. both of which he controlled. They have targeted the Frio Sands in Central Texas with 15 wells that will come on line within the next one to two months and so will be showing revenue near-term. They are participating in higher potential plays in Texas targeting the Wilcox Zone near the proven Southwest Bonus fields and leases in the Cherokee Basin in southeast Kansas, the Mound Branch Prospect.
The Board of Directors includes three officers and two senior industry executives. W. Milton Cox, Chairman and CEO, brings over 25 Years of oil and gas experience to Gulf Western Petroleum. With a 14 year background in oil field project development, Mr. Bassam Nasat, President, has handled all aspects of crude oil sales and contract negotiations. Don Sytsma, CFO, brings with him a history in domestic and international industries of 25 years. Directors, Tim Altum and Arden McCraken, collectively have more than 4 decades of experience in the technical and engineering fields with companies such as BP, Devon Energy, Pennzoil and PennzEnergy.
The Texas Frio Prospect is a series of non-operating working interests that were identified through 3D seismic data. Gulf Western has successfully drilled nine of the 15 wells and revenue is expected to start within the next 30–60 days as the wells are brought on stream. They have also announced the addition of two wells in the Shamrock Project and ten drilling targets have been identified for The Brushy Creek Prospect, both of which are expected to well. In Mound Branch, Kansas, Gulf Western Petroleum Corp. holds oil and gas leases on 8,800 acres. They have 8 of the planned 150 wells with production “behind pipe,” meaning they have reserves but are not producing until they are tied into a pipeline.
Clay Mahaffey, CFA, RedChip Research Analyst, reported: “The major assets are the leases in central Texas targeting the Wilcox sands Oakcrest Prospect, a very prolific producing field for many years. A reserve study was done in 2006 for Wharton Resources by Sproule, an independent professional petroleum engineering firm. They determined that two of the drilling targets had proved reserves of 3.7 BCFeq and the other 15 targets had probable and possible reserves of an additional 27 BCFeq. On an unrisked basis and recent market valuation multiples of $15 per barrel, or $2.50/MCF, this gives a valuation of $1.35 per share, well over the recent trading price of $0.49. This excludes the other Texas, Kansas and Kentucky assets, justifying further interest.”
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