report on the agm

I attended the AGM on Friday along with some 30 others. This is as much interest I’ve seen at this company’s meetings since the Salinas days.
For those who were hoping for updates OR new information…….I’ve got nothing to pass on. While it is enlightening talking with the company reps I’ve long since come to the realisation that they’ve got to be VERY careful in what they say. As a result we talk in generalisations and all the while you get impressions about those running this company. I may be naïve but I shake my head wondering why people with such strong backgrounds are using Neon as their next major vehicle. (but it restores my faith in keeping these long held shares of hope) Each time I attend meetings with these people I come away impressed with their strong belief in the direction the company is heading. At every gathering I hear the same mantra “we believe in ticking boxes…….not making vague promises”.

If that last statement by the company sounds like a reference to our Californian partner you’d be right. Somewhere above I mentioned how guarded they have to be while in general conversations – however, a comment I made about how often Solimar give press releases almost had the chairman about to let fly some expletives. Even while talking with K.C. I quickly gained the impression that Neon is very unhappy with their joint venture partner’s rush to the press.
(Ken said he gets many calls from investors wanting info on releases by Solimar. He gets VERY frustrated when he can’t provide results for them “when there aren’t any”. “Be assured we’ll tell you when we get the testing results”)
I’d commented about the number of investors who long for regular updates. Each of the Neon reps I was able to speak to were adamant that their stated policy, and the one that they’re determined to follow, is to make sure they do not give investors false hopes. They have a policy of conservative guidelines on each project and proudly ticking the boxes as each is achieved.

(I’m sorry if I ramble on but I’m trying to reassure those contributors to this forum who get impatient – have faith. I’ve just spent some time looking at both Dr Alan Stein’s and Ken Charsinsky’s past (and present) achievements. I honestly don’t believe either would be with this company if they couldn’t see it being a game changer.)
One other point they both said publicly and privately, Neon is a unique small company. They believe it’s a rare beast in that it has no debt and is self funding.

Here’s as much update as I can give you. Paloma reached TD on Friday. As you all know there were ‘shows’ at every zone. “However much we might speculate we’ll not know how successful this well might be until we get the results in the order of a few weeks.” Having said that they hold great hopes for this resource.
(An aside – I asked that if the well is successful, what percentage do they think is recoverable? “You know we take a conservative approach and we’re working on a figure of 10%)
The executive team had a full week’s meetings with the Californian employees. Both A.S. and K.C. came away not only ‘excited’ by the near term prospects of Neon’s holdings in that state but were also highly impressed with the ideas presented by the Neon management team there. (K.C. used the word ‘astounded’ to me). As always they wouldn’t go into detail but did say that the locals had brought in Canadians with new techniques for extracting heavy oil. The locals have been given approval to go ahead with trials.
“We’ve since heard that Shell is now also interested in this development work by the Canadians”.

At the moment the focus is on Paloma so I’ve little to report on the other projects in that state. I was interested though in talking with another of Neon’s technical team about NSA. He likened it to the Sunset oil field (you might remember the picture in last years report of hundreds of wells scarring the landscape). He said he’d worked in fields like this and knowing that each well had a short life span but are cheap to drill, they simply moved the rig a short distance and dug another well. In NSA they’re using steam but he believes that the six wells/six successes means they can do something similar there.

Vietnam. They’ve got until Jan 2013 to spud a well in block 120 and Jan 2014 for block 105. I couldn’t get any word of interested farm-in prospects particularly for the block 120. Who ever is successful they will be paying a large premium. Both Kris Energy and Neon are determined to go it alone unless they get an outstanding offer. (and here’s what I sometimes forget) “People must remember that years of work went into choosing, first Vietnam and secondly, these particular blocks. This was not a case of a random choice of fields.”
“We expect interest from prospective farm-in partners within the next few weeks.”
I asked why so little info is coming out of the Exxon discovery. Surely with a huge organisation like this it must leak like a sieve – and not to mention the Vietnamese Govt?
As far as the Govt goes both leaders stressed that they’ve rarely encountered such professional officials to work with. They have absolute faith in that regard.
As to Exxon – I’ll try to quote A.S. – “You’ve go to remember that with an organisation as large as Exxon this the process of developing a new project takes at least 20-24 months by the time it goes through the various committee stages. Having found something of interest they want to keep the knowledge as tight as possible to delay other big players from charging into this region. In my opinion, if they say they’ve found hydro carbons or gas what they really mean is they’ve found oil. Let’s hope they’ve found plenty and block 120 has the same prospective ground. If Exxon feel it’s worth testing it is exciting for us.”

And that’s all I can decipher from my scrawled notes. Hope this long winded note helps but I’m sorry that I given few (if any) new detail.
James