Ignis Provides Update to Shareholders
August 29 2008 - 7:00AM
Business Wire
Ignis Petroleum Group, Inc. (OTCBB:IGPG) today provides an update
for its shareholders on the Company. Several changes have been
implemented over the last twelve to eighteen months, most notably
the management structure. After the departure of Mr. Piazza, day to
day management of the Company has been taken over by Mr. Geoff
Evett, who now acts as CEO and Chairman of the Board. The four
areas Mr. Evett has been concentrating his efforts on have been the
restructuring of Ignis�s capital structure, especially in view of
the convertibles outstanding with the Company�s senior creditor,
rationalizing the cost structure of the organization, assessment of
the current project portfolio and, finally, the identification of
new projects. Cost rationalization Management has been downsized
and many other costs the previous Management carried have been cut.
As a result, Ignis is now generating a positive cash flow, enabling
the organization to put in place its restructuring program.
Projects The ACOM A6 well has been productive and has generated a
positive cash flow for the company. The well is currently under a
workover and production is anticipated to restart as soon as this
is completed. Upon recommencement of production, the Company will
assess the feasibility of adding production capacity, both in terms
of investment required and in terms of logistics capacity. The
latter is of importance as the capacity to transport oil out of the
area seems to be near full capacity at present. The project with W.
B. Osborn Oil & Gas Operations ("WBO") to develop the field
located in Montague and Cooke Counties, Texas, continues to
progress and add to production. The project has recently reached
breakeven and Silverpoint Capital, the capital provider for the
project, has only now started to recoup its investment. The way the
deal is structured is that Ignis will start earning its working
interest once Silverpoint has recovered its original investment
plus a certain return. Even though no revenues are accruing to
Ignis from this project as yet, the fact that it has reached
breakeven and has started to generate a positive cash flow has
created definite value to the Company. At present there are no
exploration or exploitation activities at the Sherburne project as
Management has decided that certain technicalities make the
economic viability of the project too risky a prospect to pursue at
present. The rights, however, have been retained. The Barnett Shale
wells (unrelated to the WBO project) to date have proven
unproductive and Management has decided to, for the time being, not
engage in risky investments on this project. Capital Structure As
announced recently, Ignis and the Company�s senior creditor have
executed a new agreement under which the conversion price of the
debentures held has been fixed at $0.03. This is the first step in
the recapitalization process for the company and one management
deems imperative to start building shareholder value. Without the
agreement, the overhang of the convertibles would be of an
uncertain magnitude, effectively rendering further investment in
the Company a very tough prospect. With the agreement executed, the
overhang is now quantifiable and allows for management to pursue
further opportunities. As announced, the dialogue with the creditor
is positive and constructive and Management expects further
announcements to be made regarding the capital restructuring. New
Projects The Board of Directors has deemed the Liberty Hills
project, which the Company was pursuing, as not suitable for the
Ignis portfolio. As a result, the Company is now in a position to
actively pursue new opportunities. Ignis is in discussions on a
number of fronts. With its new management structure and contacts
within industry, the Company has the ability to engage the services
of certain very highly regarded energy professionals to judge the
merits of new projects. With the financial and business acumen of
the Board, the Company is positive on the prospect of securing new
and profitable projects that will create significant shareholder
value. New projects will have to comply with strict criteria. There
will be no wildcatting and projects with a high exploration risk
will not be considered. Management prefers projects where proven
reserves can be extended through targeted exploration or where new
technologies can add significantly to the already established
production flow. Furthermore, Management will assess the projects
it currently holds a working interest in for production expansion.
Geoff Evett, Chairman of the Board and CEO, stated, �We have done a
lot of work these last twelve to eighteen months in restructuring
the organization and have put Ignis on a new footing, enabling us
to actively pursue new opportunities. We now have the capital
structure, management, industry connections and links to financial
partners that will enable us to do so. Furthermore, we are cash
flow positive, which allows us time to analyze properly new
prospects. We are confident we have been and are doing what is
needed to put value into Ignis, and I look forward to informing our
shareholders on a more regular basis.� About Ignis Petroleum Ignis
Petroleum Group, Inc. is a Dallas-based oil and gas production
company focused on exploration, acquisition and development of
crude oil and natural gas reserve in the United States. The
Company's management has closely aligned itself with strategic
industry partnerships and is building a diversified energy
portfolio. It focuses on prospects that result from new lease
opportunities, new technology and new information. For further
information, visit www.ignispetro.com. Safe Harbor for
Forward-Looking Statements This release contains certain
"forward-looking statements" as defined by the Private Securities
Litigation Reform Act of 1995, including, without limitation,
expectations, beliefs, plans and objectives regarding the potential
transactions and ventures discussed in this release. Among the
important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements
are the risks inherent in oil and gas exploration, the need to
obtain additional financing, the availability of needed personnel
and equipment for the future exploration and development,
fluctuations in gas prices, and general economic conditions.
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