Alange Energy has finished its internal review and says it found problems. Here’s a bit of the key stuff, but if you’re really into this story, you would do well to block out a half hour in a quiet room and read the whole, epic, thing:
the Internal Review found that:
1. the Company did not maintain effective operational control to determine its production;
2. the Company did not maintain adequate controls over lines of communication between operational staff and management to assist in managing cash flow and to obtain a full understanding of the Company’s current working capital position;
3. the Company did not maintain adequate controls for the reliable sharing of information between the operational staff and finance staff;
4. the Company did not maintain effective controls to ensure that material sales of assets of the Company are subject to a formal approval process;
5. the Company did not maintain effective procedures with respect to competitive awarding of contracts to ensure the proper approval and documentation of significant contracts; and
6. the Company did not maintain adequate controls over the timely communication between departments of information relating to issues that may impact the Company’s financial reporting.
I find it interesting to see that the board is saying there may have been problems with asset sales and contracting practices. I had wondered about some of the asset sales and purchases, but never got around to doing the analysis any justice. They don’t say much new about the oil trucking contract they entered into last year, except that it was “more costly” and that it caused them to have a loss from operations. That contract, since terminated, would seem to be worth learning more about — who owns the company that got the contract, how did that contract happen, you know what I mean. Could all be innocent, or not.
But I don’t expect anything of the sort. As I’ve mentioned before, Alange was the most active oil and gas stock on the Toronto Venture exchange last year, and was second only to Suncor as the most active Canadian oil and gas stock, period. But the press, both in Colombia and the international financial wires, just say, nah, not our problem. They are happy to write up a little CEO interview, but they lack either time or ability to read and understand financial filings.
All of which is a long way of saying, don’t count on anyone to do your due diligence. Companies get things wrong all the time. Don’t expect anyone to catch the error.