American Noble Gas, Inc. (ticker AMNI) recently recorded an impairment charge of $192,762 to reduce the capitalized tangible and intangible costs related to its Hugoton Gas Field properties. As of December 31, 2022, the total capitalized costs were reduced to $88,687, and further reduced to $85,276 as of March 31, 2023. This article will delve deeper into the company’s financials, focusing on its investment venture through GMDOC, LLC, refinancing strategies, operational objectives, and recent changes in oil and gas lease operations.
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In May 2022, American Noble Gas entered into an operating agreement to acquire 17 (or 60.7143%) of 28 limited liability membership interests in a Kansas-based company called GMDOC, LLC, for an aggregate purchase price of $4,037,500.
GMDOC previously acquired 70% of the working interests in GMDOC leases from Castelli Energy, L.L.C., an Oklahoma-based company. These leases cover around 10,000 acres located in Southern Kansas near the Oklahoma border and currently produce approximately 100 barrels of oil per day and 1.5 million cubic feet of natural gas per day on a gross basis.
For 2023, the company’s operational objectives are focused on financing exploration and development of the Hugoton Gas Field, repayment of obligations, exploring and developing properties, competing for new oil and gas properties, and funding daily operations.
In order to do so, American Noble Gas has been engaging in various financing activities such as issuing Series B Convertible Preferred Stock and refinancing and extending Convertible Notes Payable.
In May 2023, the company entered into a securities purchase agreement with three accredited investors for an aggregate investment of $750,000.
The funds raised from this issuance are intended to be used for the development of Hugoton Gas Field and Central Kansas Uplift properties, as well as for general working capital purposes.
Additionally, the company has been involved in several refinancing and extension deals for convertible notes payable as part of its financing strategy.
For instance, the company reached agreements to extend the maturity dates of its 8% Convertible Notes Payable to September 30, 2023, and entered into a new convertible promissory note for approximately $450,000 aggregate principal face amount.
American Noble Gas faced a decrease in revenues during the three months ended March 31, 2023 as compared to the same period last year.
The decrease was mainly due to a reduction in oil and gas sales from the company’s Central Kansas Uplift properties. In late 2022, the company decided to shut down its horizontal production wells in these properties and focus on deepening the conventional wells to explore for helium and other noble gases that may be present in deeper producing zones. This change in strategy has also led to a decrease in oil and gas lease operating expenses and depreciation, depletion, and impairment expenses during the three months ended March 31, 2023.
The company’s investment in GMDOC has resulted in reported equity earnings of $39,813 for the three months ended March 31, 2023, which points to a better performance compared to the same period in the previous year.
With its focus on financing strategies and changes in oil and gas lease operations, American Noble Gas is strategically positioning itself to maximize its exploration capabilities, pursue new opportunities in the industry, and achieve its operational objectives for 2023.
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