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
|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.