Black Dragon is finalizing its financial statements for fiscal year 2008 and expects to report a pre-tax profit for the year.
Management has recently cut costs, streamlined its operations, and expects to increase oil and gas production, along with its revenues during the current fiscal year. One of the recent steps taken by Black Dragon was to transfer to Caddo International, Inc., 60 wells, which the Company was unable to develop due to the lack of capital funding required to avoid losing these lease rights. Under the terms of the leases, if the wells were not put into production, Black Dragon would have lost all of its rights. By transferring these rights to Caddo, Black Dragon was able to reduce its obligation by $50,000.00 a month plus surrendering all of Caddo shares of Preferred Stock of Black Dragon.
This transaction will greatly improve Black Dragon's financial condition by eliminating the most significant liability on its balance sheet and thus assist the Company in its future search for capital. The Company continues to experience liquidity problems, however, because of its continuing program of drilling the new wells with the goal of drilling up to 15 new wells this year, including two new wells on the Land Co. lease this month. This program should add an additional 270 barrels of oil a day and 1 million mcf of gas, which would result in 2009's production exceeding all previous years. Mr. Zorne added that with the recent increase in the price of oil and gas, revenues will most certainly increase.
The Company also recently elected, after comparing the pricing of all other drilling companies in the area, to work with Petrolind Drilling, a subsidiary of Caddo International, Inc., which could save the Company up to $30,000.00 per well drilled.
Management of the Company stated that Black Dragon had faced very difficult and unusual challenges in the past year, but has come out of it a leaner and more focused producer, ready to take full advantage of all new opportunities in the fossil fuel industry.
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