On April 15, 2008, Holloman Energy Corporation (HENC) filed its first consolidated annual financial statements including the assets acquired during November 2007 in a share exchange with Holloman Oil and Gas Limited. In connection with this acquisition, Holloman Oil and Gas, a wholly owned subsidiary of Holloman Corporation, became the largest shareholder of HENC.
As of December 31, 2007, HENC reported total assets of $23.796 million and shareholders equity of $14.992 million. During 2007, HENC focused it efforts on asset acquisition. As a result, it generated substantially no revenues and incurred an operating loss of $1.508 million. Subsequent to December 2007, HENC divested of Endeavor Canada Corporation, a wholly-owned subsidiary which held all of its Canadian-based oil & gas properties. Of HENC's $2.566 million in current liabilities at December 31, 2007, $1.504 million related to the operations of Endeavor Canada. Of the remaining $1.062 million in current liabilities, $760,026 are advances from related parties. HENC anticipates that it will recognize a gain on its divestiture of Endeavor Canada. HENC's results are available in detail in its Form 10-KSB filed with the U.S. Securities and Exchange Commission on April 15, 2008.
HENC now has working interests, varying between 37.5% and 100%, in seven oil and gas permits awarded by the Australian government. These permits, which have remaining terms expiring between June 2008 and February 2013, cover 6,873 square kilometers (1,698,355 acres) of land in the Cooper basin and 2,589 square kilometers (639,755 acres) offshore in the Gippsland basin and Barrow sub-basin. HENC's management believes Australia is a politically stable environment that is pro hydrocarbon development. The oil and gas areas in which HENC holds its interests have had several major discoveries in various stages of development since the late 1960's, and have yielded substantial production to the global markets. Several of the world's largest oil and gas companies are producing, developing and exploring adjacent to HENC's oil and gas concessions. HENC believes that Australian oil and gas reserves are widely known to be under-explored and under-developed. Industry estimates set proven reserves of Australian oil at 4 billion bbls though only a small fraction of known potential has been exploited. HENC believes the Australian environment provides the enviable combination of low-risk and strong potential return.
On March 5th, the Company announced the commencement of drilling on its first well on its 820,000 acre concession in the South Australian, Cooper/Eromanga Basin. This wildcat test was Holloman's Pecos-1. The well was drilled to its 6,000 foot total depth but was deemed non-commercial. The information obtained from this well however, is assisting HENC in marking the location for two additional wells in what it believes to be a very prolific basin. Holloman Oil & Gas, who operated the Pecos-1 well, has farmed in to drill a minimum of two additional wells. The cost of these exploratory wells is expecting to reach approximately $6 million over the next year. Details covering the next well will be forthcoming in a future press release.
"We are proud of the start we've made," stated Grant Petersen, HENC's CEO. "There's plenty yet to be accomplished, but I believe our new direction sets the stage for future expansion and profitability."
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