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CAMAC Energy (NYSEMKT:CAK)

Q4 2012 Earnings Call

April 12, 2013 11:00 am ET

Executives

Jason Lee

Kase Lukman Lawal - Founder, Chairman, Chief Executive Officer, Member of Nominating & Corporate Governance Committee and Director of Camac Energy Holdings Ltd.

Earl W. McNiel - Chief Financial Officer and Senior Vice President

Analysts

Peter Cardillo - Rockwell Global Capital LLC

Operator

Good day, everyone, and welcome to CAMAC Energy's Fourth Quarter and Year-end 2012 Earnings and Operations Conference Call. Just as a reminder, today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Jason Lee, Corporate Finance Manager for CAMAC Energy. Please go ahead, sir.

Jason Lee

Thank you very much. Before we get started, I want to highlight that this conference call includes forward-looking statements and estimates of future performance. There are numerous risks associated with forward-looking statements and forward estimates, and there can be no assurance that the statements and estimates will be realized. A listing of the many risk factors you should consider as part of the material discussed in this conference call has been outlined in our earnings release and in CAMAC Energy’s SEC filings, and we incorporate these materials by reference for all discussion in this call.

All statements in this conference call relating to oil and gas resources, prospects and potential are not references to proved reserves as defined in the applicable SEC regulations and are not permitted in CAMAC Energy’s filings with the SEC.

At this time, for opening remarks and introductions, I would like to turn the call over to our Chairman and Chief Executive Officer, Dr. Kase Lawal. Please go ahead, Dr. Lawal.

Kase Lukman Lawal

Thank you, Jason. Good morning, everyone. Thank you for joining us today for CAMAC Energy's Fourth Quarter and Year-end 2012 Earnings Conference Call. I'm joined today by CAMAC Energy's Chief Financial Officer, Earl McNiel.

On the call today, I will provide a review of the company's progress during the 2012 fiscal year and provide an outlook for the next 12 months. Next, Earl will provide a financial and operational review of the quarter and fiscal year as well as an overview of the company's market strategy moving forward. After these remarks, we will open the line for questions.

In 2012, CAMAC Energy executed several strategic initiatives that put the company on an accelerated growth trajectory over the next 12 months and beyond. In order to truly appreciate the year's accomplishments, it is important to remember where we started at the beginning of this year.

At the end of 2011, we announced that our affiliated company, Allied Energy Plc, had entered into a definitive agreement to acquire Eni's 40% working interest in our Nigeria OMLs 120/121, subject to closing. In the fourth quarter of 2012, we announced the company had been awarded 5 new exploration blocks, 2 offshore Gambia and 3 onshore Kenya, subject to the negotiation and signing of production sharing contracts with their respective governments. At roughly the same time, we also disclosed that we were engaged in preliminary negotiations to divest our Chinese coalbed methane gas exploration assets with Leyshon. Each one of these transactions represented an essential step to unlocking immense value for shareholders over the coming months and years. And therefore, our entire organization entered 2012 fully committed to bringing each one to a successful conclusion. I'm pleased to say that we were able to do just that.

First, in May, we announced that we had signed production sharing contracts in both the Gambia and the Republic of Kenya. In the Gambia, we acquired 100% operating interest in 2 offshore deepwater blocks, A2 and A5, covering a combined 2,666 square kilometers. If you'll recall, our Gambia blocks are immediately adjacent to Blocks A1 and A4 operated by African Petroleum. You may also remember that Chevron drilled the Jammah-1 well in our own block, A2, in 1979 with gas shows. And both A2 and A5 are covered in 2D seismic. Once we signed the production sharing contracts, our technical team went to work, reviewed the existing data and designing the work program for each block. In September 2012, our proposed work programs permitting us to conducting surveys, acquiring 3D seismic data and drilling one exploration well on each block by the end of 2016 were approved by the Ministry of Petroleum in Gambia.

In Kenya, we actually signed 4 production sharing contracts instead of 3 that we had previously announced. We acquired 100% operating interest in 2 onshore Lamu Basin blocks, L1B and L16, and 2 offshore deepwater blocks, L27 and L28, for a combined net acreage position of 36,919 square kilometers, representing one of the largest of any pure play Africa-focused independent in Kenya. Just like in the Gambia, once we signed the production sharing contracts in Kenya, our technical team went to work, analyzing existing data, reviewing regional geological trends and designing a work program for the first initial exploration period in each block.

In September, we received the ministry approval for our Kenya work program, permitting us to conducting surveys, acquiring seismic by the end of 2014 on our onshore blocks and the end of 2015 on our offshore blocks.

After closing our exploration acquisitions, at the end of June we announced that Allied had closed its transaction to acquire Eni's interest in OMLs 120 and 121. On day 1, Allied announced its intention to fully fund the drilling of the Oyo #7 well as soon as a rig is available to both increase the oil production from the producing Pliocene reservoir and pair [ph] the exploration potential of the deeper Miocene, the source for all -- of all major production in the Gulf of Guinea. Through a technical services agreement with Allied, CAMAC Energy personnel took over day-to-day operation of the OMLs and began working to stabilize the production decline in Oyo. They were successful in doing so, and we have had remarkable stabilization period. At the same time, working alongside Allied, our team also began contracting critical services, ordering necessary long lead items for both drilling and completion of Oyo well #7.

In the fourth quarter of 2012, we engaged Axxis Petroleum Consultants (sic) [Axxis Petroconsultants] as project manager, Halliburton as our well design consultant, Deep Trend as our subsea completion engineer and consultant, and Wellstream as our flowline and riser engineer manufacturers. Each one of these contractors brings world-class expertise and specific regional experience to this critical operation.

Concurrent to these activities on Oyo, in August, our business development team completed the sale of our Zijinshan Gas Block to Leyshon Resources of Australia for a combination of cash and shares. Closing this transaction meant reduced overhead and CapEx and a cash infusion to Allied state [ph] exploration activities in the Gambia and Kenya.

As a result of these strategic initiatives through the course of the year, CAMAC Energy exited 2012 as a much different and better company than when we had entered the year. CAMAC Energy transformed from a nonoperating indigenous Nigerian company to a pan-African operator with expected production growth and high-impact exploration assets. We believe that this new platform is poised to deliver significant value growth for shareholders in the coming months.

Now I want to give you an update on the company's activities thus far in 2013 and discuss the critical operational and business development activities planned over the next 12 months.

In the Gambia, in addition to the ongoing geological and geophysical study, we continue to evaluate the existing 2D seismic lines in order to delineate and optimize 3D seismic program. We will study the results of African Petroleum exploration well targeting the 500 million barrel Alhamdulilah prospect in block A1. This is expected to be drilled in the second half of this year.

As we have stated before, given our high net working interest, we are open and pursuing partnering with other operators in ways that manage risk and deliver the best returns to shareholders. Although we have not initiated a [indiscernible] out agreement and process, we have received several inbound inquiries from both large independents and junior independent players that have experience in deep water. Generally, farming activity remains robust in this region. As with the riskier blocks, with the acquisition of more data, we expect to pursue similar value-creating transactions as those recently completed by other regional operators.

In Kenya, we recently announced an agreement with Sander Geophysics Limited to shoot airborne gravity and magnetic geophysical surveys on our Kenya onshore blocks L1B and L16. Just this morning, we announced that the program has commenced and the results of this acquisition expected in the third quarter of this year will be used to optimize the placement of 2D seismic line. This work will coincide with the evaluation of the existing seismic and well data on Block L1B to identify leads for closer studies.

On our deepwater offshore blocks L27 and L28, our technical team is undertaking regional geological study in advance of our participation in a 2D multi-client seismic acquisition sponsored by the Kenyan Government later this year. This government-led acquisition covering both blocks will allow CAMAC Energy to acquire 2D data much sooner and at much lower cost than would otherwise be possible. We expect the acquisition to commence before the end of this year.

As in the Gambia, we will also be observing the results of the near-term drilling activity occurring adjacent to our blocks both onshore and offshore Kenya. In the transitional zone and offshore, Ophir and Apache both are potential high-impact wells planned for the second half of the year adjacent to our Block L16.

The most near-term and the most interesting and exciting exploration wells are currently being drilled by Anadarko in its offshore Block L7 and L11A. Anadarko has spudded 2 wells targeting very large oil prospects in each block. And results for each are expected in the second quarter of this year. Block L11A is immediately inboard of our own deepwater blocks L27 and L28. And we believe a successful discovery there will significantly enhance and have implications that are positive on the prospectivity of our own acreage.

In Kenya, we are also receiving inbound interest from international operators looking for farming opportunities in East Africa. We are holding informal discussions and expect quantity and quality of the interest to increase as we de-risk our acreage with more data and the results of the current drilling activities going on adjacent to our blocks.

In Nigeria, after the flurry of activity in the fourth quarter of 2012, we have continued to make excellent progress towards the drilling of Oyo well #7. As we previously announced, our partner, Allied, signed a deed of assignment with Nigerian Petroleum Development Corporation and Transocean for the Sedneth 701 semisubmersible rig. This is very fortuitous considering the tightness of the rig market in West Africa currently. As we previously announced, NPDC will give us approximately 30 days' notice prior to delivery of the rig, which Transocean personnel will continue to operate once Allied has taken possession. Based on all that we know and the correspondence from NPDC and Transocean, we will take delivery of the rig in May this year. And by the end of next month, the rig should be on location.

On the rigs on location at Oyo, we will drill for about 60 days, penetrating the deeper Miocene and setting the casing for the sidetrack into the currently producing Pliocene B1A reservoir. At the end of the 60 days, we will return the rig to NPDC as we wait for the delivery of the long lead completion items. We expect to bring the rig back to the well site in the fourth quarter of 2010 (sic) to complete and tie back the well #7 to the FPSO and increase significantly our production. If all goes according to plan, we will keep the rig and immediately drill and complete the next production well, Oyo well #8, after completing #7. That means a year from now, we will have not 1 but 2 additional producing wells on Oyo Field, generating significant cash flow for our organization.

As important as the increased production is, I am probably even more excited about the opportunity to tell the deeper Miocene potential. And as I've mentioned before, the Miocene is a sweet spot for oil production in the Gulf of Guinea with fields like Bosi, Ereng and Bonga all producing in excess of 100,000 barrels of oil a day from gas fraction. In the well #7, we know there is actually potential to find significant volumes in the Miocene prospect we call Oyo Deep [ph]. We have designed a well so that we'll have the optionality to produce from Oyo well Deep [ph] if we discover commercial volumes.

However, what is really promising is the Miocene potential outside of the Oyo Field. In December of last year, I asked our geological and geophysics team to take another look at the 3D seismic covering both OML 120 and 121 and examined the Miocene, although Netherland, Sewell have certified a high estimate of 2.2 billion barrels of resource potential in 2011. Given the regional geology, I knew we were likely to find even larger prospects on the OMLs. Although the analysis is not yet completed, we believe, based on the work so far, that our team's recent work has uncovered significant resource potential far exceeding what was previously certified by Netherland, Sewell with several leads double or even triple the size of the largest prospects currently identified. Our geological team must find this internal analysis -- finish its internal analysis and then work with an independent reserve auditor to certify the results. But with additional certified resources and a successful test of Miocene in Oyo well #7, not only we will begin to see market value assigned to our exploration prospects, but we expect that farm-in interest in OMLs will increase. With a partner and based on the current interest on the 2 blocks from large independents and majors, we could accelerate our Nigeria exploration program.

In addition to these operation activities on our current assets, we continue to be focused on business development. Our reputation, relationships and experience in building indigenous capacity in Africa are some of our greatest assets, and we will be negligent if we didn't continue to leverage them to grow the company and diversify our asset base.

As we discussed previously, the company is pursuing several additional asset acquisitions in East and West African countries. Each are different levels and stages of maturity. We previously disclosed a memorandum of understanding with the state oil company in Mozambique to jointly pursue oil and gas projects in that country, and we will continue to update you as these opportunities progress.

In closing, I want to reiterate that 2012 was a year of execution and transformation for CAMAC Energy. And based on what I've outlined today, I expect 2013 to be the same. We are -- our execution in 2012 set the stage for value creation. The activities of 2013 will deliver that value to shareholders and all of our stakeholders. After traveling to meet with investors in the United States, Europe and Africa, I am convinced the market has a strong appetite for what we are building. I have met investors that are looking for African exploration and production companies with diversified asset portfolios, both geographically and through the value chain, that can fund exploration with production and partnerships. Investors are looking for companies with a good [indiscernible] indigenous content and transparent corporate governance that can take advantage of high-impact business development opportunities as they arise.

In the next 12 months, we expect CAMAC Energy to be producing from 2 new wells in Oyo, to have certified and de-risked material prospects in OML 120 and 121, to have de-risked our acreage in both Kenya and the Gambia through data acquisition and to either have partnered or be close to partnering in all 3 of our operating countries. In essence, we will have the cash flow to fund operations, to diversify assets, to develop -- to deliver value, the reputation and relationship to continue to grow and a track record of delivering successful projects.

Going forward, ladies and gentlemen, my colleagues and I at CAMAC Energy are focused on executing the plan I've outlined to you on this call. As we execute, we will continue to conduct our business with integrity, a commitment to the communities in which we operate and a focus on creating value for all of our shareholders.

Thank you very much for listening. And now to Earl for a financial and operational overview.

Earl W. McNiel

Thank you, Kase. For the quarter, we reported a net loss of $2.9 million or $0.02 per diluted share. Average daily gross oil production from the Oyo Field was 2,661 barrels of oil per day during the quarter. In December, there was a lifting of approximately 251,000 gross barrels of crude oil with a realization of $110.22 per barrel. This resulted in revenues net to us, net of royalties, of $3 million, which consists of profit oil of $1.6 million and cost oil recovery of $1.4 million.

For the full year, we reported a net loss of $6.1 million or $0.04 per diluted share. Average daily gross production in the Oyo Field was 2,759 barrels per day or 401 barrels per day net to us for the full year.

And the average sales price for the year was $112.60 per barrel. This resulted in 2012 operating revenues of $16.6 million. This compares to total revenues of $37.9 million in 2011. The decrease year-over-year was primarily due to reduction of cost oil recovery in 2012 related to workover costs incurred on well #5 in 2010 and 2011.

On the balance sheet, the company had cash and cash equivalents of $3.8 million as of the end of 2012. The decrease in cash year-over-year was principally due to lower operating revenues from the Oyo Field. Net cash used in operations was $5.9 million for 2012.

And finally, our G&A costs decreased by $2.3 million in 2012 to $11 million, mainly due to a decrease in salaries and stock-based compensation.

And now I'll briefly discuss the company's SEC reserve report as of December 31, 2012, prepared by Gaffney, Cline & Associates. As you may recall from the discussion of our 2011 SEC reserve report, CAMAC Energy's net reserves only reflect its reserves in the Oyo Field and do not reflect any potential resources outside the field in the surrounding acreage in OMLs 120 and 121. These reserves also do not take into account the significant contingent gas reserves in Oyo and the surrounding acreage due to the fact that the gas is not currently being monetized. As of December 31, 2012, estimated net proved reserves were approximately 3.1 million barrels.

As Kase discussed, at CAMAC Energy, we believe we are building a platform that has the potential to create significant value for our shareholders in the next 12 months and that the value will manifest itself through share price appreciation. On all of our valuation metrics, whether it be production, cash flow or risk net asset value, we expect CAMAC Energy to deliver strong growth over the next 12 months, and we expect our market valuation to respond accordingly as we deliver.

While we are fortunate that we will be able to execute our current 2013 plan without needing to tap the equity markets, primarily due to the availability of our $25 million revolving credit facility with Allied and the fact that Allied is carrying us 100% on Oyo well #7, we know that eventually we will need to be in a position to use our shares as currency to fast-track transformational exploration opportunities in Nigeria, Gambia and Kenya. While we will certainly be prudent in managing exploration risk and cost through partnership, which, by the way, may be an additional source of capital, it will be necessary at various stages to pay our share to maintain an acceptable working interest in our assets.

The good news is that our 2013 program will give us more flexibility with regards to our capital strategy. Increased production at Oyo Field should provide the opportunity to add debt to the balance sheet to fund further development and some exploration activities. However, we know that even development financing requires some equity participation.

In order to ensure CAMAC Energy's future production and asset growth is reflected in our market value as we deliver them, we will be aggressively communicating our plans in progress to the global investor community. As Kase correctly noted, in traveling to meet investors in both Europe and the United States, I know there is strong appetite for the type of full-cycle, Africa-focused independent that we are building. Many of the small and micro-cap junior EMPs have run into trouble with large exploration cost overhangs and no internally generated source of cash flow. Investors are looking for companies that have access to higher return exploration opportunities, but that are also supported by stable production and cash flow to weather exploration risk without value-destroying dilution. Some of the investors with the greatest appetite for stories such as ours are in Europe, where many large investors are very experienced and successful in investing in the African E&P space. If we determine that listing in one of these international equity markets is necessary to realize the true asset value and the market value of the company, we will not hesitate to do so.

Obviously, for the company and its shareholders, it is most important that we execute on the program that Kase has outlined. But alongside the operational program, we will be working very hard to make sure that these successful activities manifest in better returns for our shareholders through market appreciation over the coming months. Once again, I look forward to working with Kase and the rest of the management team to execute our operational and market strategies to maximize shareholder value.

Thank you for your time. And we will now take questions. Operator, please open the line.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question is from Peter Cardillo of Rockwell Global Capital.

Peter Cardillo - Rockwell Global Capital LLC

I just need to make you individuals realize that while you are obviously trying to cut down expenses, it's quite imperative that you have an Investors Relations that gets back to shareholders. Now I want to be very clear about this. I did call Jason Lee when he was first appointed, and he got back to me rather quickly. However, I've called him several times before and I'm still waiting. And these calls, I would say, are over a month old. So it's important, especially now that things are looking up, that you hold the hands of shareholders and a quick return or perhaps maybe an independent Investors Relations relater is now quite important.

Kase Lukman Lawal

Earl, do you want to take that?

Earl W. McNiel

Yes, thanks for the comment. We'll look into where the breakdown in communication may have occurred. And I assure you we take every effort to make sure that we communicate with every investor that reaches out to us.

Operator

And the next question is from Mark Seger [ph] of Raymond James.

Unknown Analyst

But I just want to be clear on a couple of things here after listening to all this. Are we saying that by the end of May, we're literally going to be drilling a new well to get production and oil out of the ground? And how long does that take once you start drilling? That's question number one.

Kase Lukman Lawal

Yes. You want to go on with the second question?

Unknown Analyst

Well, okay. That's question number one. Question 2 was just regarding your 10-Q and when will that be filed. That's the 2 questions I have. Number one is, like -- if you -- let me do it this way on question one. If you start drilling by the end of May, when do you expect production to take place after the drilling has started, like how many days does that take before you start getting revenue out of a new well?

Kase Lukman Lawal

Good question, Mark. The drilling will commence late next month. It will take approximately 60 days to complete drilling. The rig has to be released at that time because it takes anywhere from 18 -- from 12 to 18 months to get and obtain the drilling -- long lead drilling items like the flow lines, the Christmas trees, all the subsea equipment that we needed to do the completion and the tie-in into the FPSO. So the rig is going to come back in the fourth quarter, and we expect to tie in at that time. And before the end of the year, we should be able to have significantly increased our production from where we are today and be able to enjoy the production increase at that time. So our expectation is before the end of the year, we will have cut in the long lead items, do the completion, tie off, do the installation and start the increase in our production.

Unknown Analyst

So we start drilling at the end of...

Kase Lukman Lawal

On the 10-Q.

Earl W. McNiel

Yes, our deadline for filing the 10-Q is May 15, and we would expect to file and have our first quarter conference call around that date.

Unknown Analyst

Okay. So by May 15, you file the 10-Q. And that's for the fourth quarter of last year, correct?

Earl W. McNiel

No, no. This is -- I'm sorry, you said 10-Q. Did you mean our 10-K?

Unknown Analyst

Well, 10-K, yes, that's fine. 10-K, 10-Q. I know they are 2 different ones. When are they going to be filed?

Earl W. McNiel

Yes. The 10-K should be filed in the next day or 2.

Unknown Analyst

Okay. The 10-K in the next day or 2 for the fourth quarter, right?

Earl W. McNiel

That's correct, for the full year of 2012. And then our first quarter 10-Q for 2013 will be filed on May 15.

Unknown Analyst

Okay. But then -- and then just to clarify then, so even though we got the rig coming at the end of May, we really don't get production and oil revenue out of that until the end of the year, correct?

Kase Lukman Lawal

Until the fourth quarter.

Unknown Analyst

Yes, so the fourth quarter of 2013, correct?

Kase Lukman Lawal

That is correct. And that's not unusual, by the way, Mark. Deepwater drilling sometimes have gone anywhere from 60 days to about 180 days, depending if you are doing the completion testing at the same time, do the installation at the same time. So it is prudent on our part, since it's being fully funded internally, to return the rig instead of incurring in excess of $750,000 a day in terms of the rig [indiscernible] and the related services.

Unknown Analyst

Okay. Okay, well, I just wanted to make sure I understood on the -- thank you for that. I just -- because sometimes your clients, when they hear they're going to drill in May and send the rig back in 60 days, they think that means by August we're pumping oil. And so I just want to be clear on that.

Kase Lukman Lawal

You are correct, Mark. Thank you very much for your continued interest in our organization.

Operator

[Operator Instructions] And the next question is from Anthony Gullo [ph].

Unknown Analyst

My question has to do with the corporate structure. There were references in prior conferences that we attended, where we would -- there was talk about a combination of the parent company Allied with CAMAC and structuring it as one company. Is that still on the table?

Kase Lukman Lawal

Well, as we said in the fourth quarter, we always continue to look at the best way to optimize shareholders value. That is one of the options. We are considering several options at this juncture, and it is the responsibility of management to do just that. So we have different options on the table that we are looking at right now. And the one that we optimize the value for the shareholders will possibly be the one that we'll put up to the shareholders to consider and to the board to make a decision on.

Operator

And the next question is from Gareth Murchie [ph].

Unknown Analyst

My question is, I would like to know how much of Oyo #7, should it become a successful producing well, how much will CAMAC be getting of that? I realize that it's a carried interest. And since you're not putting any money in the cost of developing the well, how much return do you expect to get?

Kase Lukman Lawal

Essentially, based on the preliminary predrilling prognosis, we expect that -- without an increase, we expect to increase the production of

[audio gap]

to CAMAC Energy in excess of doubling or almost tripling what we are getting right now. So essentially, we will still get substantial benefit relative to what we are getting today with the relative production increase that we expect going forward, notwithstanding that we are not participating in the cost of the well itself. So it's a very, very good situation for CAMAC Energy, and we are very happy to be in this position.

Unknown Analyst

So my understanding is that we have an operational interest of 60% and economic interest of 30%. Does that mean that we would get 30% of the revenues produced from Oyo #7 for CAMAC?

Kase Lukman Lawal

We will not. We have contributed 30%. Yes, we will have gotten 30%. If you look at what we are getting today and what we have been getting over the last 2 years, you can pretty much expect -- based on the expected production increase, you can pretty much expect that to about more than double, about triple.

Unknown Analyst

Okay. I guess when I read the financials and I see that we produced 2,661 barrels, yet 289 barrels was allocated to CAMAC, that certainly doesn't equate to 30% economic interest, and I was wondering why.

Earl W. McNiel

Yes. The answer to that is because we're not participating in the drilling of the well. We're not having to incur any cost for drilling the well. So the operator who's funding the cost of the well is entitled to recover those drilling costs out of revenue. So that has the effect of reducing our net revenue interest to between 5% and 7%. And I would also just add that based on expected increase in production from Oyo #7, as Dr. Lawal indicated, we're looking to increase our net revenues by double or triple. And that will be enough to make CAMAC Energy positive from an operating cash flow standpoint.

Unknown Analyst

Right. Are we monetizing any of the gas at this point in time? And if not, when would you anticipate monetizing the gas? And does the gas -- is the gas flared off just -- or is it used for other purposes?

Kase Lukman Lawal

That is a very good question. We do have gas that we are producing right now in excess of 40 million cubic feet a day. And we are not monetizing it right now. We are reinjecting it through the compressor that we have on board. In any -- in most companies or in any company, that is a company maker, where you are making between 40 million and 60 million cubic feet a day. In our case, because of the capital cost of building pipelines and infrastructure to bring it onshore, we haven't been able to do that yet. However, as you know, the FPSO that we are currently using will expire as of January 2014. Allied is in advanced stages of acquiring a new FPSO that will replace that one. And hopefully, there will be gas units on it that will help us to be in a position to start looking at monetizing the gas production that we have today and that we will have in the future.

Operator

[Operator Instructions] Our next question will be from Steve Schnipper [ph].

Unknown Analyst

I have a question regarding the 10b5-1 plan that Dr. Lawal had entered into several months ago. He had purchased a bunch of stock, then it appeared that he canceled it. I spoke with one of the company representatives that indicated that the attorneys were having some issues because of developments going on in the company and they didn't feel that it made sense to have this plan in place. I didn't really get a clear answer on what difference does that make. That's the whole point of a 10b5-1 plan. If things are going on, you can still buy. Do you have any color on -- a better explanation as to why we announced it, the stock moved up and then you just dropped it and didn't bother clarifying that the plan was canceled?

Kase Lukman Lawal

Well, thank you, Steve. If you look at the history of our participation in this company, we've continued to support this organization and continued to instill the confidence in terms of the opportunity and the growth strategy that we have. So whenever there's an opening that allows us to purchase shares since 2010, we'll continue to do that. Recently, because of the various options that we are looking to grow this organization, the legal team determined that it won't be prudent for us to continue with that program. Thus, they advised us to suspend it until there is clarity in terms of the exhaustion of those opportunities that we may have been considering at that particular time. I would encourage you to possibly talk to the company's legal professionals and maybe they can give you more information on that, but that's best that I know right now.

Unknown Analyst

Okay. I mean, but beyond whatever legal advice you're getting, there's still the PR issue that you guys go out and announce the 10b5. I understand there's no obligation -- the whole problem with these plans, there's no obligations to update and clarify what you're doing with the plan. But don't you believe that if all of a sudden, your counsel advise you, "Oh, you should probably suspend this," and you had put out a press release announcing it and the stock was moving off it, that you should have put out a press release clarifying why you suspended the plan?

Kase Lukman Lawal

I don't know. I leave that to the legal folks. And we'll be more than glad to provide you with that information, Steve.

Earl W. McNiel

Look, it would be perfectly fine to continue with the 10b5 program. It's only out of conservatism that Dr. Lawal decided to cease purchases. He did purchase a number of shares.

Unknown Analyst

I'm not disputing that, and I agree with the -- if the legal team makes an interpretation. But I think part of it is a concern for how you deal with the investors. It took -- there was quite a long period where all of a sudden, there were just no purchases. No one said anything. It took a while until your IR department responded to my inquiries. If the decision was made and the stock was being priced based on an expectation, I think the shareholders should have been notified that, hey, we've made a new determination, we have to suspend this plan. That's more what I'm zeroing in on, not necessarily the legal reasoning. I'm not going to argue with a lawyer, that's their job, that's fine. You guys control the press releases, not them.

Operator

And our next question is from Mark Stoakley [ph].

Unknown Analyst

We were told for several years the great value of the Chinese asset. And then when we disposed of it, we didn't realize very much. Can you tell me what happened there?

Kase Lukman Lawal

Earl?

Earl W. McNiel

Yes. I mean, we drilled several wells in China. We did find gas, but it was not commercial based on the quantities recovered and the cost required to recover that gas. There was also an ongoing capital spending commitment under the terms of the license. And we made the decision that it was in the shareholders' best interest to recover capital out of that investment rather than continue to meet the capital spending obligations under the license.

Unknown Analyst

Yes, well, we were never advised that the value had diminished significantly until it was disposed of.

Kase Lukman Lawal

I do not know what was told to you before we got involved in the Pacific Asia. But I can tell you this much. The awarded discovery, we accelerated the pace of drilling. And we find out, as Earl just said, just to reiterate, that the cost of developing those discoveries far outweighed the benefit that we'll get out of it. And it's prudent on behalf of the shareholders that we make the best decision.

Unknown Analyst

Again, I don't think we were advised timely of what was going on.

Kase Lukman Lawal

Mark, I wish I can -- I wish we can do much better or have the large discovery that be commercial. That will have been something great for the organization. But we'll be very consistent in saying that we want to focus on Africa. And I believe that's exactly what we are doing.

Operator

And next we have a follow-up question from Mark Seger [ph] of Raymond James.

Unknown Analyst

I guess my question is more related to we're always talking -- I mean, I'm a long-suffering shareholder. And I mean, a long -- I go back prior to Dr. Lawal getting involved in this, and I don't want to rehash any history here. But it's obvious we need revenues. And I don't -- and it just sounds like they're always being put off for another 2 or 3 quarters, and I just don't understand this. We've got all these different assets. And I guess my question is, if there's some sort of a -- one of the things brought up at one point in time was maybe CAMAC would be merged with Allied or taken over or whatever. Is there -- is that even a possibility? Or is there some value to CAMAC that Allied would even be interested in CAMAC? I mean, because it's -- this is year after year, there's no increase in revenues, and that's since we focused on Africa. This is going on years now. We're not talking months. We're talking years. And so that's my question. When -- now it's the fourth quarter when we get revenues from the new well. And I don't know what we're going to say in the fourth quarter. I mean, it's just -- this is getting -- it's like the same old story, and it's pretty frustrating if you're sitting in my chair.

Kase Lukman Lawal

Mark, number one, I want to thank you for investing in this organization, whenever you did. But more importantly, I couldn't share your frustration more than we do ourselves. We are significant shareholders in this organization. And we have, through the Allied organization, supported this company. You will recall that the last time this organization went to the capital market to raise money was in 2010. That was 3 years ago. Now for a small organization, we know the importance of exploration, having seen companies that have grown into billions of dollars without a single drop of production. Values are not created by the production that you make. We have seen that over the last few years with companies like African Oil, which is almost $2 billion right now in East Africa, companies like, Ophir, which is over $3 billion right now. None of these have a single production either in oil or gas. These are facts. And we've done our research. We've looked around. We've talked to institutions and analysts, and we came to the conclusion that we must pursue what the market wants. And I believe the market wants exploration. But more importantly, they want a balanced portfolio. So we are pursuing this double approach in terms of enhancing the value of the shareholders. While our shares have not been reflected in terms of the work we've done and the values we brought to the table, I assure you, Mark, that the exploration assets we've been able, lucky and worked hard to assemble today will yield value, either through farming out or drilling them. Either way, we have seen this work and we believe it will work. So our production is not necessarily what will yield us value because exploration companies are exactly what they are, exploration. And we will continue to focus on the optimum way that we can enhance value. It is in our best interest as significant shareholders of this company. I feel what you are saying, and I actually share it. And I can tell you, no one is more frustrated in terms of the languishing share values than ourselves. And I'm saying this first hand to you that, that is the determination and the motivation that every single day, 24/7, makes us to go to work, makes us to be on the road, almost 80% of the time looking for these opportunities to bring value to you and to ourselves. And we will not stop doing that until we're able to get the job done. Now obviously, we have no control in the marketplace. And we may do all this work, and we may still not get value for it, but I tell you it won't be lack of trying.

Unknown Analyst

Okay. Well, I just hope we -- you can -- and I know you're the major shareholder and everything and you've got more money at stake than all of us put together. But I mean, I've got a lot of clients where we've been buying the stock and buying more. And it's just -- so all I can say is -- and I can feel it because I see these other companies and their share prices. And I just don't understand why we can't get to some -- I'm not talking about getting to $20 a share. I'd like to just see us get up to $2, just so people know there's some hope for the company when the longer this thing toils below $1, it's even hard for people to even have a serious discussion about it, and that's a fact.

Kase Lukman Lawal

Where are you, Mark? And I don't know if you -- are you in New Orleans? Where are you?

Unknown Analyst

I'm in Cincinnati, Ohio.

Kase Lukman Lawal

Cincinnati. I'd tell you it would be good for us to get together sometimes. I'd really like to get to meet you as a long-term shareholder of the company. And perhaps, we can share some experiences together.

Operator

And this does conclude our question-and-answer session. I would like to turn the conference back over to Dr. Lawal for any closing remarks.

Kase Lukman Lawal

Well, thank you very much, operator. I want to thank every single one that is on the call today. And all I want to say to you is that reflective of what Mark Seger [ph] just said and the frustration that he is feeling, I believe a lot of us that are on this line are feeling the same frustration because the marketplace has not given us the value we expect and we believe this stock ought to be at. But we continue to be resilient, we'll continue to be focused and we'll continue to add value to this organization. And with your continued interest, we believe very strongly that we'll continue to be motivated to do the kind of things and the opportunity that we've laid out to you today. We hope, sooner rather than later, we can come to you and share with you some of the opportunities and options that we are looking at and hopefully, go forward from there. Thank you very much for joining us. I wish you all a good day.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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