Interview with: Donald F. Mardak, Chairman, President and CEO - featuring: their development and exploration of oil and natural gas in the Ukrainian.

Sunrise Energy Resources, Inc. (SEYR-OTC: BB)

wpe3.jpg (15694 bytes)

CURRENT ISSUE    |   COVER ARCHIVES    |       INDEX      |    CONTACT    |    FINANCIALS    |     MARKETING SERVICES   |    HOME PAGE


CEOCFO
-Members Login

Become A Member!

This is a printer friendly page!

Not just a pie in the sky, Sunrise Energy Resources has current profitable production from their 2 wells in the Ukraine with significant upside from the currently producing property + 7 more properties

wpe11.jpg (6020 bytes)

Basic Materials
Oil & Gas Equipment & Services
(SEYR-OTC: BB)


Sunrise Energy Resources, Inc.

551 Fifth Avenue, Suite 2020
New York, NY 10017

Phone: 212-973-0063


wpe20.jpg (7335 bytes)

Roman Livson
Chief Financial Officer

Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – March 29, 2007

BIO:
Mr. Roman Livson
,
CFO. Mr. Livson has served as the managing director of Thor Capital Group, Inc. heading its investment banking department since its foundation in 2002. Prior to that he headed the investment banking department of Thor United Corp. He brings to the company a valuable expertise in the Eastern European energy sector. Mr. Livson worked for Coopers and Lybrand from 1994-1998 and received a Master's degree in Mathematics of Finance from Columbia University in 2002.

Company Profile:

Sunrise Energy Resources, Inc. is public US company engaged in development and exploration of oil and natural gas.

Having acquired 100% of the Ukrainian oil&gas exploration and production companies Esko-Pivnich and Pari, which collectively hold 8 licenses for exploration and development of various oil and gas deposits in Ukraine, we now conduct all of our operations through these subsidiaries.

At the end of 2004 our estimated total proven and probable reserves were around 12.4 million barrels of oil and around 67 billion cubic feet of gas. All of these reserves are located in the Karaikozovsk’s field in Ukraine.
We plan to expand production of the Karaikozovsk’s property following the completion of workovers on the existing wells. In addition, we expect to drill two other wells on the property to increase production and proven recoverable reserves. In the nearest future we intend to conduct a series of geological tests on the new licenses awarded to Esko-Pivnich in order to establish the most efficient development scenario.

In addition, Sunrise Energy Resources, Inc. recently decided to acquire 100% stake in Pari, Ltd. a ukrainian gas and oil company, which holds several licenses for oil and gas fields in Western Ukraine.

CEOCFO
: Mr. Livson, would you tell us your background with Sunrise?
Mr. Livson: “Sunrise Energy Resources is a US public company operating exclusively in the Ukraine. We currently have eight properties in our portfolio, of which three are in Eastern Ukraine and five are in Western Ukraine. One of the properties is producing at the rate of 150 barrels a day from two wells, one of the wells is producing about 105 barrels a day, and another one is 35-40 barrels a day. We have significant upside in the form of more wells to be drilled on the producing property and of course the exploration of the remaining seven properties. We have revenues of about $450 to $500 thousand a quarter and we are EBITDA positive.”

CEOCFO: Why is the Ukraine a good place to be for drilling?
Mr. Livson: “First, the Ukraine’s current production meets about 40-45% of its current demand. The rest has to be imported from Russia, Kazakhstan and Turkmenistan. At the same time, it is actually in the middle of Europe so all transit pipelines from Russia go through Ukrainian territory. Therefore, once we start producing from our properties in Western Ukraine, we can actually sell our gas and oil into the European Union. The government understands the importance of domestic production because now that Ukraine is a separate country, they want to be independent from Russia, Kazakhstan and Turkmenistan for its energy needs. They are doing their best to foster domestic production, and now we do not have any export duties and the netbacks at this time are higher than the netbacks in Russia and Kazakhstan. Lastly, we are going to pursue and aggressive acquisition strategy and so far we have a two or three-year window whereby the assets will remain undervalued but the market is going to correct itself and the reserves valuations will be on par with Russia and Kazakhstan.”

CEOCFO: What is the common thread in your properties?
Mr. Livson: “We look at properties with some production that can be significantly increased by drilling new wells and we look for properties with some reserves that also can be significantly expanded. The overriding criteria is the valuation. We are looking at properties right now that we can buy it at the valuation of .60 cents to $1.00 for a barrel of proved and probable reserves. That would provide our shareholders with a tremendous upside potential because we are a public company and public companies are typically traded in the range of anywhere from 4 to $10.00 a barrel.”

CEOCFO: Why is it going to take two or three years for everyone else to catch up?
Mr. Livson: “It is a transition period. There are no international majors present in the Ukraine in terms of exploration and development. They are there in terms of trading but so far, they have not bought any significant assets. I guess it is like any country going through a transitional period; it just takes time to correct.”

CEOCFO: Could you tell us about your CEO’s background. Is he native to the area and could you share some of your background?
Mr. Livson: “Our CEO was born in the Ukraine. He enjoys great influence in the oil and gas circles. He was the one who was responsible for introducing to us our current portfolio of properties, both of the two acquisitions that were made. He also referred to us several properties that we are currently evaluating. I was born in Russia; I worked for Coopers and Lybrand (now PriceWaterhouseCoopers) for 4 years and I was involved in a number of energy projects in the area.”

CEOCFO: So you know and understand the area; tell us about the geologists.
Mr. Livson: “With regard to our geologists, they are key to finding and evaluating new projects. Our chief geologist Mr. Posokhov, prior to joining Sunrise, worked for the Ukrainian Geology Committee for around 40 years and he knows the Ukrainian geology in terms of oil and gas like the palm of his hand. Historically, the Ukraine does have significant oil and gas reserves even though people do not generally know about it. They always think Russia and Kazakhstan in terms of oil and gas, which is a very popular misconception. When Ukraine was part of the Soviet Union and the big mega fields were discovered in Siberia, most of the resources went into exploration and development but these fields and the Ukrainian fields, which at that time had less potential, were largely neglected. Now of course it is different because Ukraine is a separate country and the oil price is way up, so it makes a great deal of sense to explore these properties and develop these properties. At that time when Mr. Postnikov was the chief geologist at the Ukrainian Geology Committee, he saw a lot of promising properties that went unnoticed and that was a big factor in his decision-making. He made a note of all of these properties and right now these properties are the ones that we are focusing on. We are lucky to have him onboard.”

CEOCFO: What is the financial picture of the company today?
Mr. Livson: “We have revenues of about $450 to half a million dollars per quarter. We are EBITDA positive and what is good about it is that it is coming from just two wells. The prospects look very promising. We just completed a third well on Karaikozovsk block in Eastern Ukraine. The preliminary test results are excellent. We put out a press release in January of this year (2007) that we expect to double the production from as a result of launching the new well and consequently double the revenues. What has transpired since then was that we discovered two gas horizons underneath the oil producing horizons. We now think that it makes more sense to actually produce gas rather than oil from the new well and we think that will more than double our production in revenues.”

CEOCFO: Does it make a difference whether it is oil or gas, or is it just what is more plentiful?
Mr. Livson: “It does make a difference in terms of infrastructure; we do need to construct additional infrastructure to produce gas. We will need to construct an extra mile of pipeline and we will need to put together a gas and condensate separation facility. What this means for us in terms of timing is that we won’t be able to launch this well until late July this year (2007). However, the economics justifies it and it also justifies the additional investment of $2.4 million of which we raised $550 thousand last week and we are looking to raise the rest in early April.”

CEOCFO: How does the investment community feel about being in the Ukraine and are there any obstacles you need to overcome when you speak to people?
Mr. Livson: “There is a popular misconception that the Ukraine doesn’t have significant oil and gas reserves and that has been one of the biggest challenges. Right now, there are several public oil and gas companies operating in the Ukraine, so that misconception is starting to erode. The other factor that has been a big issue is the regulatory system that was inherited from the Soviet Union. Right now it is making big strides at coming into line more with the US and European standards, so it has become much less of an issue.”

CEOCFO: Would you comment on the cyclicality of the oil and gas industry?
Mr. Livson: “There is a global cyclicality and it has affected us. However, what gives us big confidence in terms of the overall picture is that China and India are developing rapidly, so they actually drive the demand. What it means for us is that Ukraine is always short of energy for the foreseeable future so we will have no problem in selling our oil and gas. Right now, we have more demand than we can produce. That gives us confidence that we can sell every barrel and every cubic foot that we can produce. We think that the current pricing environment will continue for the foreseeable future and that there will not be any big drops in oil price in the next five or ten years.”

CEOCFO: Is getting equipment a problem?
Mr. Livson: “It is a problem and it is a bit of a trade-off. We can hire Ukrainian geologists, which is what we do and they are inexpensive, but not necessarily the most efficient in terms of quality, timing and their equipment. The other extreme is our American crews, which can be expensive, so it is a function of how much funds we can raise. So far, we have been using Ukrainian geologists and if we are successful at raising more funds, then of course, we will switch to American or Polish crews that can do the job faster and more efficiently.”

CEOCFO: In closing, why should potential investors be looking at Sunrise Energy Resources?
Mr. Livson: “There are several factors as to why investors should be looking at Sunrise Energy Resources. First, we are not a pie in the sky; we have current production and we are EBITDA positive. We have significant upside in the form of seven more properties in addition to the properties that we are currently producing from, which holds tremendous upside potential.

Secondly, Ukraine has a long way to go in terms of building its own domestic production. We are going to be part of this picture increasing our production in line with other companies in the Ukraine. Thirdly, we are a public company and we have access to capital, so in the next two or three years we can grow our company both internally and by way of future acquisitions, which we intend to pursue. Finally, we have a great team of people who really want this company to succeed.”


disclaimers

Any reproduction or further distribution of this article without the express written consent of CEOCFOinterviews.com is prohibited.


“There are several factors as to why investors should be looking at Sunrise Energy Resources. First, we are not a pie in the sky; we have current production and we are EBITDA positive. We have significant upside in the form of seven more properties in addition to the properties that we are currently producing from, which holds tremendous upside potential. Secondly, Ukraine has a long way to go in terms of building its own domestic production. We are going to be part of this picture increasing our production in line with other companies in the Ukraine. Thirdly, we are a public company and we have access to capital, so in the next two or three years we can grow our company both internally and by way of future acquisitions, which we intend to pursue. Finally, we have a great team of people who really want this company to succeed.” - Roman Livson

wpe21.jpg (12348 bytes)

ceocfointerviews.com does not purchase or make
recommendation on stocks based on the interviews published.

.