Interview with: Philip Collins, President and Director - featuring: their full cycle exploration geographically focusing in the deep basin area of Alberta, west of the fifth meridian (W5M).

Cork Exploration Inc. (CRK-TSX)

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Cork Exploration is a new start up oil and gas company that already controls over 40 thousand net undeveloped acres of high quality real estate west of the fifth meridian in Alberta, with 30 plus wells remaining for 2006 and potentially 40 wells for 2007

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Energy
Oil & Gas Exploration
(CRK-TSX)

Cork Exploration Inc.

380, 435 – 4th Ave. S.W.
Calgary, AB T2P 3A8

Phone: 403-531-1695

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Philip Collins
President, CEO & Director

Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
August 3, 2006

BIO:
Philip Collins
President, CEO & Director
Mr. Collins
has a B.Sc. in Geology from the University of Alberta and over twenty years of diversified experience in the Western Canadian Basin. Mr. Collins has concentrated his efforts in the deep basin from West Central Alberta to North East British Columbia. Mr. Collins served as Vice President Exploration of Big Bear Exploration Ltd. from November 1997 to July 1999. Mr. Collins joined Corsair Exploration Ltd. in August 1999 as Vice President of Exploration and held that position until the company was sold in June 2002. In September, 2002, Mr. Collins joined Meridian Energy Corporation as Vice-President, Exploration. He became President and COO on January 1, 2004 and held that position until the company was sold in March 2005.

Company Profile:
Cork Exploration Inc. is a new start up Oil and Gas Company who’s Management and Board of Directors where principal in the Building of Corsair Exploration Inc. (August 1999 to June 2002) and Meridian Energy Corporation (September 2002 to March 2005). The Management of Cork Exploration Inc. has experience in implementation of internally generated exploration prospects which with success create significant value for the shareholders. The business plan for Cork, like Corsair and Meridian, is for Organic Growth through focused full cycle exploration geographically focusing in the deep basin area of Alberta, west of the fifth meridian (W5M). Cork Exploration Inc. targets multi-section farm-in and crown land sales, targeting drill depths of less than 3000m, on sweet, multi-zone, liquid rich gas and light oil plays. Cork’s focus areas generally have year round access, deep basin tight sand plays and gas resource perm plays. 100% of the Corporations capital is directed to organic drill projects.

Cork has established two operated major core areas W5M (north block and south block), five play areas in the north block and two play areas in the south block and has access to 136 gross sections of land with a potential all earned working interest of 55.6%. Since inception in February 2005, Cork has drilled 27 gross (15.1 net) wells at an estimated net production success rate of 87% of which 13 gross (7.5 net) wells have been completed and tied in. The Corporation has an inventory of over 70 drillable locations.

CEOCFO: Mr. Collins, will you tell us about Cork?
Mr. Collins:Cork is about organic growth through the drill bit, exploration of all the projects west of the fifth meridian (W5M), with the head office stationed in Calgary, Alberta Canada. We are working the western Canadian sedimentary basin. We raised $34 million at a dollar per share a year ago by way of private placement and in June this year (2006), we went public through an IPO and raised another $35 million. Cork started out as a blind capital pool; we raised the capital and invented the geological play concepts, put the land together and started drilling the plays up, building a critical mass or initial threshold of reserves and production. We have taken that to a point over the last fourteen months where we were able to take Cork public at $4.00 on the Toronto Stock Exchange. In one year, Cork has gone from $1.00 to $4.00. We have the people in place, the product in place and the drilling program over the next twelve or eighteen months in place to grow Cork significantly. Cork is an incubator model where we start as an entrepreneurial blind grass-roots blind capital pool and build an exploration and drilling company.”

CEOCFO: Will you tell us about the properties in the areas that you have chosen to drill in and how you decided on the properties?
Mr. Collins: “I have twenty years of experience and I have drilled personally over 300 wells in the western Canadian sedimentary basin. Over that time, I built a repeatable model on geological concepts that I believe gives the investors and shareholders a really decent rate of return. Our focus within Cork is geographically in an area that is along the foothills, which we call the Deep Basin where there are reasonable gas-charged reservoirs that are resource plays or deep basin type gas plays and that are based on current trends. Therefore, what we are doing is that we are hunting a liquid rich gas product in the western part of the basin that has very strong reserves and production per net acre-foot. We like that liquid rich product and the reason for that is 70% of our revenue out of Cork is gas and 30% is NGL (Natural Gas Liquid), which is tied to the  WTI price. Our methane has an ethane content and our gigajule count is high, so we get a 20% premium to AECO, so if AECO is $5.00, Cork gets $6.00 on the gas price plus a liquid NGL premium. We have the best net back product for gas that you can in Alberta, relative to a dry Mcf. It is very competitive with a barrel of oil. With the recent pullback on gas prices, we can withstand a lower gas price than most other gas companies because of our liquid rich gas nature.”

CEOCFO: You have a 90% exploratory success rate, will you tell us about that?
Mr. Collins: “That is a 90% production success rate. What we are doing in Cork is that a lot of our wells are new pool wildcats or outposts and they are deemed exploratory or quasi-exploratory/development. What we are doing is we are going into areas where geologically we know we have our resource play intact where we can drill a statistical play type. The reason this success rate is high has a lot to do with our commodity prices. As a geologist I have been drilling for 20 years and I had a high economic success rate, but in the 1980’s it was a lot lower than it is today because we were dealing with $1.30 or 90 cents /mcf, not $5.00 or $6.00/mcf. Therefore, the commodity price increase allows you in certain geographic areas in Alberta to have a higher production success rate than we would previously. It is strictly demographics and based on this gas price. Yes, we are astute technically, yes we have a good business plan and yes we are being successful in our exploration, but there is also the momentum shift in commodities prices that has helped us post what appears to be higher than normal production success rate percentages.”

CEOCFO: Are you concerned about a pullback in prices?
Mr. Collins: “Obviously we are. I think for us personally, when the gas price gets below $3.00 Canadian at AECO, I am starting to get worried. How we manage that is we are looking at the possibility of hedging and collars in the market to protect our downside risk. We are working with the board of directors on that. I do not think that we will see that kind of price erosion long-term; we may see it spotty throughout the summer and fall; it depends on what happens with storage. I think a gigajule of energy is a gigajule of energy whether it comes from oil or natural gas or coal or other energy sources. Normally gas tracks at about six-to-one ratio to oil, and right now we are at about a fourteen-to-one ratio. That is because of this perceived storage build and perceived gas bubble. I do not believe long-term, and I mean twelve to eighteen months, that that is sustainable. Our market and our industries are too nimble - they will adjust to change and will be switching their fuel type and other things that will occur to help draw that storage level down and bring things more normalized. I think you are going to see an erosion of that fourteen-to-one deficit on the pricing, coming closer to the six-to-one over time, and with that it will raise up your gas market again. What I am saying is that Cork is a really good opportunity to buy today because I was taught you are supposed to buy low and sell high and when you are in a shoulder or a downward pressure commodity price, there are good values to find out there in the stock market.”

CEOCFO: Do you own 100% or do you have partners, what is the philosophy?
Mr. Collins: “The philosophy is mixed. We have partners, but we generally have the lion’s share of the working interest to where we are about 60 to 66%. We will spend 100% dollars to farm in on our partner’s lands to earn a working interest and take the exploration risk from our partner, so that when we prove out the concept and when we are in the development phase, the land vendor, our partner, is our 40 or 35% working interest partner. They will pay the subsequent development wells and infrastructure pipeline costs and we will risk mitigate our capital by spreading it out over the full cycle exploration 2 year drilling cycle on the property. Therefore, we do like higher working interests and we like taking things 100%, and we like to use partners on occasion to help us manage our capital.”

CEOCFO: Will you tell us about the management?
Mr. Collins: “Our management and board of directors have successfully built and sold junior start-up owned gas companies, several times. Cork is the third generation company with which I have personally been involved, with this board of directors and with a portion of the senior management. What we have done historically with Corsair and Meridian Energy Corporation, two previous companies, is that we started as blind capital. We built and sold Corsair in 2002; we started it in 1999. We started Meridian in 2002, and sold it in 2005. We started Cork Exploration in February of 2005, and we capitalized it in May of 2005 and started to build it. Our board of directors and management are entrepreneurial people. We have worked this area before geologically and engineering-wise. We have built companies in this core area that we are working, we have that track record of success and we pass those great returns onto our shareholders. Therefore, that is an important message to get out; it is the same people and the same geographic area. It is a new name and new capital but, basically the same business model and people that are executing that model.”

CEOCFO: What should people be watching for in the next few years ahead?
Mr. Collins: “We believe that Cork at our current stock price does not reflect what Cork will look like 18 months from now. Cork is a young dynamic, aggressive company and our drilling program has the potential to enhance shareholder value over the next 18 months. Underscoring this is a proven track record of delivering results to shareholders. This is evidenced by both our over 90% production success rate over the 24 gross wells that we have drilled to the end of our second quarter in 2006 and the prior successes of Corsair, and Meridian - two companies which, prior to Cork, key members of our management and board of directors founded, managed and delivered all-in annual IRR’s of over 122% and 60%, respectively. The key message that I would like to send to the investment community is that Cork has a very experienced management team and board of directors with a track record of delivering shareholder returns. Cork’s management and board has repeated several times an organic growth drill bit story from a standing start, which I call a blind capital pool and our team has achieved top quartile finding and development costs, both present and historical, on average relative to our peer group. Cork has a path identified, developing production growth over the next 18 months. Cork controls over 40 thousand net undeveloped acres of high quality real estate west of the fifth meridian in Alberta, and Cork has a significant drilling inventory of 30 plus wells remaining for 2006 and potentially 40 wells for 2007. Therefore, Cork is anticipating for 2006, our production to exit at approximately 2600 barrels of oil equivalent a day. Cork exited 2005, at 300 barrels of oil equivalent a day. That is the kind of magnitude of growth we that can do in these start-up companies. We have the capital, the equipment and the people in-place to carry out the next 18 months of exploration and development drilling in our core areas. We believe this operational activity will add significantly to our share price.”

CEOCFO: Is there anything that people miss about Cork that they should realize?
Mr. Collins: “We are new. We were just on the TSX - it hasn’t been a month yet. It is a young dynamic story, so we are trying our best through a number of known reputable brokerage like Tristone Capital, and First Energy Capital Corp. and GMP. We are trying to get our story out there on the retail side and that is one of the reasons that we are talking to you, with CEOCFO. We are trying to get the story out. I do not know so much if it is something that people do not know about us or it is more of an exposure issue.”

CEOCFO: Any final thoughts for our readers and listeners?
Mr. Collins: “I just think that the oil and gas market are very tenuous at best. There are ups and downs and it is a good time to go into a good solid gas story like Cork that has zero debt. We also have capital in the bank that we just raised off our IPO, and a very clear track record of where we are going to go with this capital on our product. Buy it counter cyclically, put it in your bottom drawer and watch the market come back and reap the benefits in the next six to twelve months.”


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“Cork is a young dynamic, aggressive company and our drilling program has the potential to enhance shareholder value over the next 18 months. Underscoring this is a proven track record of delivering results to shareholders. This is evidenced by both our over 90% production success rate over the 24 gross wells that we have drilled to the end of our second quarter in 2006 and the prior successes of Corsair, and Meridian - two companies which, prior to Cork, key members of our management and board of directors founded, managed and delivered all-in annual IRR’s of over 122% and 60%, respectively. The key message that I would like to send to the investment community is that Cork has a very experienced management team and board of directors with a track record of delivering shareholder returns.” - Philip Collins

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