Sample Engagements: Industry Operator Clients (Sell Side)

Quick Link (in chronological order):
U.S.A.:
[ Lake Ronel Energy Partners | Red Arrow Energy, LLC | Jones Energy | Sanchez Oil and Gas ]
[ Orbit Energy Inc. | Coronado Resources, LLC | Sleeping Giant LLC | Tenrgys, LLC ]
[ Genesis Gas & Oil LLC | Potoco, LLC | Mid-Con Energy Corp. | Momentum Energy Corp. ]
[ Vision Gas, Ltd. | Cannon Energy, Inc. | Sigmund, Kane & Hatch, Inc.| Aurora Gas, LLC ]
[ Carneros Energy, Inc. | Crutcher-Tufts Resources, L.P. | Arena Energy, LLC ]
[ Lariat Petroleum Inc. ]
Canada :
[ Action Energy Inc. | Ausam Energy Corporation | Sierra Vista Energy Ltd. ]
[ Action Energy Inc. | Stone Castle Exploration Ltd. | Onefour Energy Ltd. | Energy 51 Inc. ]
[ Bunker Energy Inc. | Ausam Energy Corporation | Stratagem Energy Corp. ]
[ Purcell Energy Ltd. | Wild Rose Holdings Ltd. | Action Energy Inc. | TriQuest Energy Ltd. ]
[ Discovery West | BlackRock Ventures Inc. ]
Australia :
[ Southern Pacific Petroleum NL ]

U.S.A.:

Lake Ronel Oil Company (“LROC”) is a closely-held Tyler, TX-based oil and gas exploration and production company founded in the 1930's.  During the late 1990's, LROC began developing a series of proprietary 3D seismic surveys in Orange County, TX to image the Hackberry and later the Yegua Sandstones, including in the prolific Yegua shelf margin and slope plays with under-exploited world class gas reserve potential.  By 2007, LROC’s success as the dominant project developer in this area created capital requirements for drilling that significantly exceeded its internal cash flow.  COSCO assisted LROC to meet this capital need by structuring a spinoff of its growth assets into a newly formed affiliate, Lake Ronel Energy Partners (“LREP”), and by arranging in January, 2008 a private placement of $40.5 million of common equity in the spinoff to fund exploration and development drilling capex. With this equity base and the consequent borrowing capacity, Lake Ronel Energy Partners is well positioned to execute its exploration and development plan to add substantial gas reserves at commercially attractive finding costs.

Red Arrow Energy, LLC (“Red Arrow”) is a Houston, TX-based oil and gas company focused on the acquisition and exploitation of existing properties and new-field resource projects in Texas and the surrounding states, the Williston basin, and elsewhere, per Board approval. Red Arrow’s management, Carter Overton, CEO, Brock Hudson, EVP, and Allen McGee, CFO, had worked together for years. They had compiled an extraordinary commercial track record, investing over $200 million in 60 separate transactions in five different states through good cycles and bad, doing what they proposed to do in the new business plan. This sterling track record was attractive to many private equity buyers, and after only 30 days, in May, 2007, Red Arrow accepted a term sheet from EnCap Investments LP for a line of equity of $80 million. Combined with the $20MM committed by lead investors that had supported management in its previous ventures, plus others, including COSCO, which joined the financing, this amounted to $114MM of equity available to support the new business. COSCO remains active in support of Red Arrow through both attendance at Board Meetings, as well as a consequence of a contractual incentive to bring to Red Arrow investment opportunities that meet its criteria.

Jones Energy Ltd. (“Jones”) is an Austin, TX-based closely held oil and gas company focused on developing gas reserves primarily in the Texas panhandle region. Recognized for its superior management of oilfield operations, Jones secured the rights to prospective natural gas acreage held by production where it could employ its proven drilling and completion methods to produce and recover above average quantities of gas reserves. COSCO structured a mezzanine debt issue to fund the development of these assets off balance sheet by an affiliated entity, thereby avoiding any credit impact on the company, itself, while accelerating the development of low risk gas reserves and positioning the company for substantial further development of other similar acreage. In May, 2007, Guggenheim Partners agreed to purchase this issue at the offering price and agreed to structure it as a $100 million credit facility with the capacity to fund further development beyond the initial assets.   

Sanchez Oil and Gas Corporation (“Sanchez”) is a Houston, TX-based oil and gas company focused on drilling proved and probable oil and gas reserve locations identified by the company through its extensive onshore Texas Gulf Coast 3D seismic acquisition programs. Sanchez had gained access to numerous large tracts of underexploited land on which it had parlayed a substantial carried interest in ten proprietary 3D seismic surveys being funded and explored with proceeds from a $260 million exploration joint venture. During the summer of 2006, the company sought $50 million in Senior Secured Notes as an intermediate slice in the overall capital structure to accelerate its extensive growth plans. COSCO developed Sanchez’s drilling plans into a financing plan supported by third party engineering that could be funded by debt with manageable credit risk and then organized a competitive financing process to secure the best possible financial partner.  The interest in financing the company was strong and immediate. From several proposals submitted, TCW Asset Management was selected by the end of December, 2007, as the most compatible partner.

Orbit Energy, Inc. (“Orbit”) is a Lafayette, LA-based oil and gas production and petroleum land company focused on executing large 3D seismic projects in South Louisiana and participating in a portion of the working interest in these projects. Recognizing Orbit’s competitive advantage as a dominant petroleum land business in the region, COSCO, in June, 2006, arranged a $25 million common equity financing for a newly formed affiliate to own and develop Orbit’s growing number of non-operated working interest participations being generated by its land and seismic project business. The issue was funded by a private oil and gas investor experienced in funding exploration and production operations as a corporate equity investor.

Coronado Resources, LLC (“Coronado”) is a Tulsa-based private company, founded in 2004 by Mark Wilson and John Coates for the purpose of assembling large acreage holdings on and establishing significant gas reserves in unconventional reservoirs (primarily shales and coals) in the Mid-Continent and Appalachian basins of the US. Coronado engaged COSCO’s broker-dealer affiliate in early 2005 to arrange a $75MM line of equity, which was accomplished in October 2005, with Lime Rock and Greenhill committing to share equally the required amount. COSCO and its investing arm committed an additional $5.5MM, bringing the total raised in the financing to $80.5MM  At initial closing, Coronado had identified uses of capital of only $5MM, so investors obviously are relying on management’s track record to provide the confidence that the vast proportion of committed capital will be appropriately allocated.

Sleeping Giant LLC (“Sleeping Giant”) was a Traverse City, MI-based oil and gas production company formed in 1996 by a petroleum landman and an exploration geologist who recognized that the middle member of the Bakken Shale Formation in Richland County, Montana, was dolomitized and may have trapped producible oil volumes from the surrounding black shale source rock. After the company leased 84,000 acres over this prospect, COSCO assisted it to form a venture with an operating company to jointly develop the play. Initial drilling of vertical wells in the late 90's met with limited success; however, the venture later perfected methods for drilling and completing long horizontal wells across 640-acre sections, which resulted in recoverable oil reserves averaging up to 300,000 barrels per well. As the pace of drilling increased in 2002, COSCO arranged a commercial bank line of credit with Wells Fargo to finance those capital costs that couldn't be funded from the company's growing stream of cash flow. By 2005, Sleeping Giant's Bakken Shale prospect had become one of the most commercial plays in North America, producing over 10,000 gross barrels of oil per day, and delivering to the company's shareholders an annual dividend yield equal to over half their original cost of corporate equity. In late 2005, COSCO arranged the sale of the company for $93 million to EnerPlus Resources Fund, a Calgary-based income trust, which resulted in a 20:1 ROI to Sleeping Giant's shareholders.

Tenrgys, LLC (“Tenrgys”) is a Jackson, Mississippi-based oil and gas production company formed in the late 1980's to acquire and exploit oil and gas properties in the Mississippi Salt Basin and North Louisiana. Tenrgys and its larger affiliate company had accumulated and enhanced over $250MM in proved oil and gas production concentrated primarily in a dozen old oil and gas fields, some of which had produced as much as 1 Tcf over the last half century. Tenrgys and its affiliate had been very successful using increased density drilling, deeper drilling, workover operations, and gathering system improvements to grow or maintain production in mature fields, and had used an aggressive distribution policy to return the resulting earnings and cash flow to their shareholders. In order to grow further, however, and possibly in order to prepare for the potential of a public market exit, the two companies sought to normalize their ownership by monetizing a portion of the Tenrgys equity. COSCO analyzed the companies' needs and recommended using a Volumetric Production Payment (VPP) as a market-based means to price and monetize a portion of Tenrgys equity during a period of low interest rates and high commodity prices. COSCO ultimately placed a $72MM VPP with AIG Financial Products in June, 2005.

Genesis Gas & Oil LLC (“Genesis”), based in Kansas City, was formed in early 2005 by Nez and Jeff Mohajir to develop coalbed methane, tight sand and fractured shale gas properties, principally in the Rocky Mountains. For over eight years, COSCO had tracked the success of the Mohajirs and other Genesis management members in developing coalbed methane reserves for larger companies. When the team decided to go out on its own, COSCO secured the opportunity to assist it organize a $50MM private equity financing. Management’s track record was widely recognized by potential equity investors during the private placement process. As a result, the target was raised ultimately to $75MM, with Greenhill Capital and Citigroup committing an initial $5MM at closing in May, 2005.  Genesis anticipates developing a number of gas productive projects and then selling itself or its projects within the next five years.

Three of the four founders of Potoco, LLC (“Potoco”) had played key roles in the development of publicly traded Mallon Resources’ successful development of unconventional reserves in the San Juan Basin of New Mexico. During 2004, Potoco’s management banded together to secure an initial acreage position in the Arkansas side of the Arkoma Basin coalbed methane play, where little activity had yet occurred. In February, 2005, COSCO then secured from a wealthy Family Office in Dallas an initial commitment of $5 million required to complete acquisition of the acreage and to conduct a “pilot” to test the project. Furthermore, if the pilot were successful, the capital source was prepared to provide an additional $15 million to develop the project to a point where either commercial debt or outright sale would be viable options.

Mid-Con Energy Corporation (“Mid-Con”) is a Tulsa, OK-based oil and gas production company founded by two principals, one a proven expert in sound oil and gas operations management, the other an unusually successful waterflood engineer with an outstanding track record of finding, engineering and developing waterflood projects resulting in very low oil finding costs. Two of COSCO's managing directors had prior investment experience with Mid-Con's founders. Recognizing that few enhanced oil recovery operations had been initiated since the early 1990's and recognizing that this management team had intimate knowledge and experience identifying and engineering a number of such properties that remained undeveloped while the industry focused primarily on natural gas projects, COSCO committed to invest in Mid-Con and assisted it to raise $30 million in common equity commitments from Yorktown Partners in July, 2004. Proceeds from this issue are being used to acquire, unitize and develop oil properties for enhanced oil recovery, which once developed, will provide an attractive base of oil production for sale to any one of many potential industry buyers.

Momentum Energy Corporation (“Momentum”) is a Midland, TX–based oil and gas production company. COSCO began advising Momentum through its start-up and first-round equity raise in late-1999, and by mid-2003, management had established $4.5 million in equity value and a nearly four-fold increase in the value of its shareholder equity, primarily by allocating limited amounts of capital to a diverse array of internally and externally generated drilling projects. In October, 2003, Natural Gas Partners committed $20 million in preferred equity to back Momentum’s management, funding $5.0 million at closing and arranging a new commercial bank line of credit. COSCO acquired $50,000 in equity at closing, and is committed to fund an additional $110,000. Momentum has since grown further by developing and operating low risk drilling projects, which it plans to continue in order to achieve a sufficient size and growth profile to effect an exit through a merger or acquisition within five to six years.

Vision Gas, Ltd. (“Vision”) is a Houston-based exploration company with substantial land and seismic holdings in the deep Woodbine play in east Texas and in the Norphlet play in southeast Mississippi. Vision’s lead geoscientist headed Amoco Corporation’s development of the multi-Tcf Norphlet fields offshore Alabama and the multi-Tcf Tuscaloosa field redevelopments in south-central Louisiana. Vision’s two gas plays are geologic extensions of these same proven plays into under-exploited areas. As advisor to Vision for nearly two years, COSCO, in October 2003 arranged the private placement of $10 million of limited partnership units to George Kaiser, a Tulsa-based investor and owner of Kaiser Francis Oil Company. At the closing of this transaction, COSCO invested $160,000 to acquire an interest in Bellmeade Minerals, LP, which is the general partner and 33.3% owner of Vision. COSCO has committed to meet additional capital calls as Vision requires further capital from Kaiser and its other founding shareholders before achieving a self-sustaining level of cash flow. Proceeds from this issue are being used to test several of Vision’s exploration prospects, any one of which could discover and lead to the production of up to 100 Bcf of natural gas and potentially as much as 500 Bcf or greater. Early drilling success has already validated some of Vision’s subsurface concepts and established 10,000 Mcfgd production capacity, along with considerable field extension drilling plans for 2005. In recognition of the quality and huge potential of Vision’s exploration plans, both British Petroleum and ExxonMobil have contributed substantial fee land and seismic data to Vision through a joint venture, and Range Resources committed to a 25% interest participation.

In March 2003, COSCO concluded successfully a financing of just under $19MM for a two-man team that had a year previously sold its private CBM company for $36MM. The capital is earmarked for development of leases assembled through farm-in in prospective, but untested, CBM acreage in the southern Rockies.

At the close of 2002, COSCO provided key assistance to Sigmund, Kane & Hatch, Inc., a Houston operator seeking to underwrite its leasing and mineral acquisition strategies, through securing a lead, technologically outstanding investor to commit to a meaningful percentage of a multi-year lease fund. In February 2003, the Fund was closed with over $40MM of subscriptions, including COSCO’s own contribution.

In late 2001 through the spring of 2002, COSCO worked with a team of three outstanding entrepreneurs to assist them to raise $25MM to expand development of gas reserves on properties already assembled, as well as to consummate the purchase of, exploit, and explore new properties they had arranged to purchase, all or most on the west shore of the Cook Inlet of Alaska. After meeting with most of the usual private capital sources, the majority of which could not get comfortable with the supply/demand dynamics in the Anchorage area, COSCO, relying on personal relationships developed over a decade previously, introduced the management team to Kaiser-Francis in Tulsa. After a month of due diligence, the deal was closed in May 2002, with COSCO participating as an equity owner.

In late 2000, COSCO contracted with a three-man management team to arrange for financing in support of their exploration plans focused in the San Joaquin basin of California (“Carneros”). Carneros at the time had no assets, no operating history, and no office, but the management team had a long record of success and recent history suggesting unusual qualifications for execution of the business plan. In April 2001, after showing the opportunity to just three potential investors, COSCO assisted Carneros to arrange a $75MM line of equity, with the first installment of $10MM drawn down at inception. COSCO participated in the financing as a founding stockholder, and, in recognition of its unusual service in assisting the management team to formulate its business plan and execute its financing, it also shares in management equity incentives.

In 1999 and 2000, COSCO was retained by the manager of a private, family owned partnership (“Crutcher-Tufts”) which had borrowed significant capital from a consortium of banks for the purpose of expanding and infilling oil reserves in the giant Belridge Field in Kern County, CA.  Crutcher-Tufts had developed a substantial deficit net worth because its flush production coincided with the collapse of oil prices in 1998. COSCO first developed a workout plan that eliminated the need for a bankruptcy filing, restructured Crutcher-Tufts’s debts, and modified a key operating contract. COSCO then arranged with a prominent mezzanine lender, a $78MM note issue to refinance $32MM in senior debt, issue $40MM in junior debt, and provide $46MM in senior debt fundings to expand Crutcher-Tufts’s development drilling in the Belridge Field. This time, while simultaneously eliminating significant risk from operations management, flush production benefited from rising oil prices and the rapid growth in cash flow allowed full repayment of all senior and junior notes from the restructuring, leaving the equity holders of the firm with $50MM of exit proceeds only three years after having a $27MM deficit net worth on the verge of bankruptcy.

In early 1998, COSCO was engaged by an independent oil and gas company headquartered in Houston (“Arena”), for the purpose of assisting in the private placement of up to $5MM in debt with an equity kicker to fund the development of proved undeveloped gas reserves in Texas state waters. Arena sought to significantly increase cash flow from these assets prior to the sale of additional corporate equity. With COSCO’s assistance, Arena received financing proposals from two separate Tier 1 aggregators, and COSCO was able to stimulate spirited competition between these investors during the ensuing negotiations. As a result, Arena received a $10MM commitment to fund a Secured Note issue with a Term Net Profits Interest and Warrants at a significantly lower cost of capital than initially proposed by either investor, and, combining the most favorable terms from each proposal.

In early 1997, COSCO was engaged by an independent oil and gas operator (“Lariat”) to assist it to raise $5MM of capital for the purpose of effecting an exploration program in the Anadarko Basin. At the time, Lariat had no employees or assets, its owner having just completed the sale of his previous company, which, however, had added to his reputation as an executive capable of creating meaningful value for his shareholders. COSCO advised Lariat that it was unlikely to be able to raise the $5MM, but recommended a target of $10MM. In fact, COSCO was unable to raise the $10MM, but assisted Lariat successfully to complete a $20MM private placement with Warburg Pincus, a Tier 1 aggregator based in New York. Furthermore, COSCO was able to retain significant upside potential for Lariat’s founder in the form of performance options, based on defined performance hurdles. In January 2001, less than four years later, Lariat was sold for approximately $350MM, with the financial investor receiving well over $120MM of profit on less than $40MM of equity investment, and the principals of Lariat clearing an additional $20MM or more pursuant to their performance options.

Canada :

Action Energy Inc. (“Action”) is an oil-weighted junior E&P company that went public in November 2006 through a reverse takeover of High Plains Energy Inc. It has a large, diversified asset base focused on three core areas in Western Canada, with a balanced mix of exploration and development opportunities. While a private company, Action undertook two large financings, the first with Natural Gas Partners, the second, with Quantum Energy. COSCO, through PESI, was sole manager of both. In the current round, COSCO, through Strategic Energy, participated in as the sole US broker in a syndicate led by Dundee Securities and raised over 93% of the C$17.5MM Offering. The net proceeds of the Offering will initially be used by the Company to reduce indebtedness under its credit facilities, which will then be drawn down, as needed, to fund the Company’s ongoing exploration and development activities and for general working capital purposes.

Starting in 2001, COSCO was retained by Ausam Energy Corporation (“Ausam”) to assist it to achieve financing to support its business plan of bringing underbalanced drilling and completion techniques, utilized broadly in North America, to Australia. COSCO assisted Ausam, then a public, but unlisted Australian company to become listed on the Toronto Venture Exchange through reverse merger into an existing public shell and, then, to raise over $30MM through a series of private placements, primarily to US institutional investors, most notably Wellington Investments.

In 2006, Ausam decided to redirect its focus to the US and organized the purchase of a suite of 19 drilling prospects along the Gulf Coast, stretching from Texas to Alabama. In support of this transaction, COSCO assisted the Company to effect a private placement of $25MM in convertible notes with warrants to The Huff Energy Fund, L.P.

COSCO continues under contract to assist Ausam with its current investment strategies, to source new investments, and with its further financing plans.

Sierra Vista Energy Ltd. (“Sierra Vista”) is a Calgary-based junior oil and gas company traded on the TSX Venture Exchange under the symbols SVR.A and SVR.B. The company was founded in June 2005 by certain former members of the management team of Val Vista Energy Ltd., following its sale to Avenir Diversified Income Trust in early 2005. Sierra Vista focuses on medium depth, moderate risk oil and natural gas targets with multiple zone potential in the Peace River Arch area of northwestern Alberta.  As of May 1, 2006, Sierra Vista had earned or acquired interests and farm-in options covering 52 gross sections (640 acres to a section) or 32 net sections of land primarily in the Peace River Arch and, to a lesser extent, southeast Alberta. In the summer of 2006, to develop and expand the company’s growing portfolio of development and exploration projects, COSCO assisted Sierra Vista in raising C$4 million in common equity.

COSCO has had a long standing relationship with Action Energy Inc. (“Action”) that started in 2001 when COSCO assisted Action in raising C$7.2 million in common equity. In February 2005, COSCO assisted Action in a C$4 million convertible subordinated debenture placement. Action was founded in early 2001 by Roger Tang, Warren Doenz and Douglas Cole as a private Calgary-based exploration and production company following the sale of their previous company for C$58 million (paid in capital of $8.5 million). COSCO assisted Action in raising over C$35 million in February 2006 and in November 2006, Action completed a reverse takeover of High Plains Energy Inc., and became publicly listed on the TSX Venture Exchange under the symbol AEC. Since its inception, Action has assembled a balanced low-risk development drilling and high-impact exploration drilling portfolio in Albert and Saskatchewan.

Stone Castle Exploration Ltd. (“Stone Castle”) was a private, Calgary-based exploration and production company incorporated in 2004 by Robert J. Lawrence and Morley Brown. In February 2006, COSCO assisted Stone Castle in securing senior secured debentures with warrants in the amount of C$4 million in order for the company to develop their 35% working interest in the relatively unexplored Tableland area of southeast Saskatchewan. In February 2007 Stone Castle was acquired by WaveForm Energy Ltd.

Onefour Energy Ltd. (“Onefour”) is a private, Calgary-based exploration and production company founded in January of 2004 by Lou Sanche, Brent Cooper and Brian Johnston. Messrs. Sanche and Cooper are both geologists who have spent the majority of their careers developing reserves in southern Alberta for both public and private companies. At the time of financing, Onefour already held high working interests in two core areas: Senex, Alberta, where they targeted light oil formations from the Keg River and Slave Point and shallow gas from the Bluesky, and the Sweetgrass Arch area of southern Alberta, where they focused on gas and light oil from seven different horizons. From June to November 2005, COSCO assisted it in five separate financings, raising in total C$52+MM in common equity and debentures to develop these core assets.

Energy 51 Inc. (“Energy 51”) is a Calgary-based oil and gas exploration and production company formed in early 2004 by three experienced explorationists, all born in 1951. Prior to the financing, management had captured two shallow, scalable drilling projects in Alberta with relatively low reserve risk and two higher risk oil and gas prospects with the potential to grow the company’s production base by as much as 4,000 BOEPD. COSCO was retained by Energy 51 in December, 2004, to assist in raising the necessary equity to fund these projects and its overall business plan. In May, 2005, Greenhill Capital of New York committed to C$17.5MM in common equity to meet these needs, with COSCO, itself, investing C$0.25MM. Given the scope and character of its drilling projects, Energy 51 expects to achieve sufficient size and scale to sell itself to a larger, publicly traded company or income trust within three to five years.

Bunker Energy Inc. (“Bunker”) is a Calgary-based oil and gas exploration and production company formed in late 2001 by an experienced management team. Over the following three years, Bunker had grown at a moderate 8% per year rate from its initial $3 million equity base, but in early 2005 had arranged to purchase another company with substantial exploitation potential. Because COSCO had been working closely with Bunker for the prior year, it was quickly able to arrange a C$25MM convertible preferred stock commitment by Natural Gas Partners, with C$13MM funded at closing to finance the corporate acquisition and subsequent development. Bunker has already achieved considerable drilling success in the recently acquired acreage. Bunker’s ambition is to build and sell within 3-5 years, with which its management has had repeated successful experience.

Ausam Energy Corporation (“Ausam”), originally AusAm Resources, N.L., is a Calgary-based Toronto Venture Exchange (“AUZ”) listed exploration and production company focused on using underbalanced drilling to exploit its 800,000 net acres in the Surat/Bowen basin of eastern Australia to produce natural gas. Through a joint venture with Origin Energy Ltd., Australia’s second largest independent oil company, Ausam has access to all necessary infrastructure and markets. COSCO arranged in 2004 a C$12 million private placement of stock and warrants with Wellington Management, the Mitchell and Lundin Families, and others in the US, Canada, and Europe. Ausam now plans to fund a significant drilling program in 2005. COSCO has advised Ausam since 1991, and this professional assistance included shifting Ausam’s focus of operations from Western Australia to Queensland, upgrading its technical personnel, effecting a public listing on the TSX-V through a reverse merger with an existing shell company, and, finally, in completing the recent private placement. COSCO purchased 117,000 shares of Ausam common stock for $88,000 and earned warrants for 290,000 additional shares, exercisable at the C$0.75/share issue price.

In February, 2004, COSCO was engaged by Stratagem Energy Corp. (“Stratagem”) an early stage private exploration and production company based in Calgary, AB, which was seeking to raise C$15MM through the private placement of common shares. Use of capital was acceleration of drilling on two large farm-ins it had arranged from Royalty Trusts, both of which agreements were time sensitive. After only a month of preparation and a week after commencement of marketing, COSCO secured two term sheets for its client, which elected to accept financing from Quantum Energy of Houston TX. Closing followed within a month. COSCO then assisted Stratagem to raise an additional C$0.74MM from local Canadian investors, as well as to arrange a secondary placement of C$0.24MM worth of common stock held by first round investors who needed liquidity.

In late 2002, COSCO and one of its Colleagues in Canada assisted Purcell Energy Ltd. (“Purcell”), a public E&P company with current production of 5,000 bopd, to access C$11.2MM, $7.5MM in the form of subordinated notes and the remainder in flow-through shares. This capital proved essential in maintaining the Purcell’s aggressive drilling schedule through the winter of 2002/3.

In late 2000, COSCO agreed to assist a pair of entrepreneur inventors based in Calgary, AB, to access capital to construct a prototype, conduct pilot tests, and to commercialize an internationally patented technology for storage and transport of compressed natural gas (“Wild Rose”). COSCO assisted the principals to understand their financial options, rearrange certain contracts which materially improved the marketability of their patents, and by late summer 2001, had arranged for the staged sale of Wild Rose to a Williams Energy, which, subject to certain conditions, will provide all the necessary funding.

In early 2000, COSCO was engaged by a private, fledgling shallow gas operator (“Action”) in Calgary to assist it to raise capital with which to drill dozens of infill wells on two major farm-ins it had arranged from two Majors during a period of retrenchment. Within four months, COSCO had assisted Action to secure C$6MM from Natural Gas Partners. Just under a year later, Action was sold to a large US Independent for over four times its pre-financing valuation. At the same time, a new private company was formed, into which the non-producing assets of Action were assigned, and the stock was then distributed to the original shareholders prior to a new round of financing conducted by way of a rights offering. COSCO participated as a shareholder in Action and is a shareholder in its current successor.

In early 1999, COSCO was engaged by a team of four explorationists (“TriQuest”) with an excellent track record of founding, managing, and monetizing exploration companies focused consistently in west-central Alberta. TriQuest sought for the first time to finance this, its third start-up, outside of Canada, where private capital was deemed more receptive to the longer lead times required to nurture and develop exploration success. Over a six-month period, COSCO was able to forge a coalition of professional energy investors and private family offices to support this business plan, finally closing the private placement in October 1999 with C$12MM of common equity.

In early 1996, COSCO was engaged by an oil and gas operator headquartered in Toronto, ON (“Discovery West”), for the purpose of raising C$70MM for a new subsidiary to which it had committed C$30MM of its own, the use of capital being acquisition, exploitation, and exploration in the British sector of the North Sea. COSCO secured a commitment from the Beacon Group, a large Tier 1 financial investor, for such C$70MM, which, for reasons at the time difficult to understand, Discovery West turned down, relying on its local financial advisors that they would be able to raise the money at lower cost in the Canadian markets. Unfortunately, Discovery West missed its third-quarter operating and financial targets, its stock price collapsed, and within six months it was merged out of existence.

Prior to the merger of Discovery West featured above, a new public subsidiary was formed (“BlackRock”), and Mr. Smith was asked to serve on its board of directors. Within the year, the chairman of the board resigned, and Mr. Smith was asked to assume the role of Chairman. Within six months, BlackRock was then involved in an unfriendly proxy battle, which resulted in Mr. Smith assuming the role of Chairman of the Independent Committee, whose vote ultimately determined the successful implementation of a plan of arrangement. In the process, Mr. Smith came to know many of the more prominent investors in natural resources in the Toronto community, as well as many of its legal and financial advisors. Mr. Smith then arranged for the engagement of a new management team, formerly from Koch, assisted in assembling C$30MM of investment capital, and oversaw implementation of the first year’s business plan. Satisfied that BlackRock was fairly launched, Mr. Smith then resigned as Chairman and director in May 2000, the Company’s stock having more than doubled over the previous 12 months. The new management team has since developed significant new production and has made several major new field discoveries, and BlackRock’s stock has doubled once again in value.

Starting in the second half of 2001, COSCO began work with the foremost practitioner of shale-to-oil technology in the world, a public company based in Australia. In late 2001, COSCO secured for its client not one, but two term sheets from two of the most sophisticated providers of mezzanine debt, only to have both scared off by demonstrations by Green Peace against the client’s operations. In late 2002, the engagement was renewed, this time in search of equity. Recognizing the challenge, COSCO approached Sandefer Capital Partners, one of the least intimidated sources of private capital available, who then spent over five months pursuing due diligence on all aspects of the client’s operations, technical, operational, financial, and environmental. The result was a commitment in April 2003 of $30MM in two tranches, sufficient to advance the initial project to commercial decision.