Whoo is that in the jungle? (Alange Energy Part 1)

Alange Energy drilled for oil. Alange Energy found oil. Alange Energy said it was pumping lots of oil — 3,500 bbl/day — and would triple output in the second quarter of 2011. It said it hit a gusher. Alange Energy stock rose.

Today, Alange Energy says it wasn’t pumping very much oil after all. It just had the theoretical capacity to pump oil, if only it weren’t for all this rain.

The meat of the restatement is in a little table:

Daily average production (boe/d) Actual Previously
Disclosed
Sept. 2010 average 2,622 3,330
3 months ended Sept. 30, 2010 2,561 3,179
9 months ended Sept. 30, 2010 2,378 2,579
November 29, 2010 2,609 4,300
Dec. 2010 average 2,374 N/A
3 months ended Dec. 31, 2010 2,515 N/A
Year ended Dec. 31, 2010 2,413 N/A

If that all isn’t bad enough, today’s news release doesn’t even mention that they said oil production had reached 3,500 barrels a day on Aug 30 (a statement that is still on the company website). Seems unlikely, given that they averaged only 2,622 bbl/day in September.

I’m sure none of this has anything to do with a CEO best known for being head of the Olde PDVSA and then being connected to Stanford Bank. (He has declined to comment publicly on his role at Stanford, but the body doesn’t seem to have had much if any power in the organization.) Or that his son was VP of Investor Relations at Alange as recently as November. (I’m not sure whether this is the same son who worked at Stanford Bank.) Or that the biggest company backer is Frank Giustra’s Endeavour Financial, which has been wrapped up in quite a few little scandalitos.

Actually that’s not true. This news release today just makes no sense. These guys, especially Giusti, know damn well the difference between potential production and real production. And he’s a hands-on manager who can tell you about the properties of individual wells. It is very odd to see them trying to pass this off as something that will be fixed with the appointment of a new COO. The Giustis weren’t immediately available to comment.

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3 thoughts on “Whoo is that in the jungle? (Alange Energy Part 1)

  1. jordaN FRAZIER

    Man, I’m with you here, but actually you’ve highlighted some points i was not familiar with (funding, ect.) …the news yesterday was rather shocking and truly feel like ive been driven off a cliff and we’re not talking about the chart! You’re right on with Guisti competence, he’s knows better. It will take quite a bit of effort and time to get this stock above $1…..i can take a hiccup in the oil production due to rain and whether a correction of internal controls will help in the effort 1 year out is yet to be determined, i just hope the public isn’t looking at a mirage and whether the guy leading the ship is looking for a quick fix after being thrown out of VEnezuela! any thoughts would be greatly appreciated…….this was rather shocking to say the least

    1. sapitosetty Post author

      I think that if you are seriously asking me for investment advice, you really shouldn’t be managing your own money. Get a good advisor or a nice index fund.

  2. El rojo

    “I think that if you are seriously asking me for investment advice, you really shouldn’t be managing your own money. Get a good advisor or a nice index fund.”

    Hilarious but oh so true! All I can say is thank God for small favours like a basket of Colombian stocks and (considerable) additional portfolio diversification.

    Now if the setty can get to these stories before they break the headlines…. I can see the private subscriber blog: Setty’s Biz Buzz Austral.

    Adore your blog posts. It takes the edge off being a few palos poorer. If a class action proceeds, please let us know.

    -El rojo

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