Timing in the oil and gas game is pretty much the real key. A company just needs to be in the right place with the capacity to get the oil and gas out of the ground as prices move up. Too soon and a company is left carrying debt. Too late and it fails to maximize profit. Get the timing just right and profit floods in. Itâ€™s certainly isnâ€™t a scenario for the faint of heart but one that can be lucrative if the timing is just right.
Bluegrass Energy Inc., a development stage oil and gas company, works to acquire, develop and exploit oil and natural gas deposits primarily in the Appalachian basin of Kentucky. The company has recently signed a letter of intent for a $1.5 million private placement.
The general purposes of the companyâ€™s private placement are directed toward acquisition and development of eastern Kentucky gas properties. In acquiring these properties, the company has instituted a criterion where access to existing pipelines and known reserves are present. Generally speaking, past companies have done the research so Bluegrass can take advantage. This is indicated simply because at the time of gas and oil discovery within the basin, there was no access to pipelines for transport to market, causing companies to look elsewhere. In todayâ€™s environment, however, the basin has become more developed and is well served by gas pipelines and other transport options. This is where the company finds its advantage. It knows the basin is only 20% developed and also where the most reliable fields are located.
Although the company is still a development stage company and still putting its plan into action, it has acquired several properties where a realistic production target of 1 BCFE over three years has been estimated. Given current pricing, oil and gas are sitting at a cross roads. The nature of commodity pricing, however, does seem to indicate that there is potential if the company can put its infrastructure together in short order. From all indications, the companyâ€™s timing may actually be fairly right on target, as also evidenced by its price. The private placement was carried out for 3 million shares at $0.50 with yesterdayâ€™s close at $0.80. There is still work to be done but Bluegrass Energy Corp. does look to be on its way.