Today I went to GNZ’s general meeting, and here are some of my findings. This was for me the first time I ever went to such meeting for any company, and I think it was a good experience for me on a personal level as well, besides from learning more from the company.

Including all people from the lawyers office (3 or 4), people related to GNZ (4 or 5) and a few shareholders (6 or 7), in total there where about 12-14 people. I arrived about 5 minutes before the meeting started and everybody was already sitting in a boardroom. Marc Dame came to me, we shook hands, exchanged cards and I took a seat at the table.

At 10 am Marc started the meeting. The official meeting lasted about 15 minutes. This including all the voting and such. Nothing new there, since this was all part of the meeting circular. After this Marc proposed to present a slideshow about the projects GNZ is involved, and also, to ask any questions if people wanted. One question was about the name change, why, when and what now. Marc explained that Goldnev is too much associated with Gold, as it used to be in a former live, but they now like to focus on oil and gas. Hence, the new name will be Blackstone Petroleum Inc. A new symbol is not known yet, this will depend on the exchange. However, Marc already registered the name, so nobody else can scoop it away. They expect that on March 31 we will be trading under the new name and symbol. He explained also, that it should be seen as pushing a restart button for the company. The company has been of the grid a little bit, but the plan is to present it more aggressively to institutions. Next week Marc is going on a trip to New York and Toronto for this matter. The plan is also, once the name is officially changed, to more frequently come out with news releases to keep investors interest.

From here we moved on to the presentation, discussing the properties separately. (He mentioned as well to have an updated presentation on the webpage next week).

Pasquia Hills:

He described the land position and the process a getting the kerogen into an product they can sell. He mentioned the umatac system, and umatac’s involvement in Australia and Jordan in other oil shale projects. About the land position, there is a cost involved with maintaining a land position when not doing anything with it. Therefore they are looking what to do with the northern property there. They like to focus on the southern part, which covers 60 sections, and they have 12 wells drilled there already. This means the southern part would already by substantial for a long life production on its own.

Somebody asked about the timescale of the feasibility study. Initially this was scheduled for March, but there will be some delays there. There has been a fire at Umatac in Nov/Dec, therefore no samples could be processed there. These samples will now ship to Umatac next month. The firm they work with will have to incorporate the results from umatec in the feasibility study. Expected is that the study will finish by the summer. Once they have the feasibility study, they can run numbers on 25+ yr timescale what the economics of the project will be. They expect they will need a (major) partnering with them at some point (like UTS did for example). Costs involved to set up such an operation could total 0.5-1 billion dollars. The expected operating cost are estimated on 22-30 $/bbl. Also, count on another 2.5 yrs or so before they have their first production over there.

One quote from Mr. Dame on this project: “The Company’s goal is to establish the first Canadian commercial oil shale project”.

Turner Valley

Summary is, they used a packer system to seal of a water –bearing fault. They use a submersible pump to produce the well. Over a longer period of time, the water from the fault has been flowing into the reservoir (due to higher pressure in the fault compared to reservoir pressure). Now this water has to be produced first, before oil production increases. The well is producing 25 bbl/day of oil, and they hope this will increase to 50-70 bbl/d. Water production has declined from initially 500, to currently 300 barrels per day. The processing cost are 50 cts/bbl to transport, and 50 cts/bbl to process. Also, due to associated gas and condensate, there is an uplift in price they get for the product of about 30 %. With revenue from this production, they first are clearing the debt they have on the well. The really good thing about this well producing, and especially when production rates are increasing, that the company can book reserves now, for the first time ever in its history.

Some more history on this well, shell drilled it in 1999 (before they made the decision to spin of conventional oil plays). The well initially produced 600 bbl/day, before it started to produce water. Shell spent 6 mln on the lease. This includes a 4.5 km 3-phase pipeline. Therefore, GNZ has all in place to drill a new well there in the future. Also, if other companies drill a well there they will have to use GNZ’s pipeline for transport.

A new well would be a dual leg horizontal well. Estimated costs including drilling, completion and tying in, is 3 million. The nice thing is, that with the current government support, initial royalty is only 5%, and for drilling they receive 10,000 per meter. Also, one of the grow strategies her is to both expand land base as well as ownership.

Noel, BC

They have been negotiating a farm in deal here for the last 2 yrs, and now this is finally achieved. The nice thing here is that they are targeting the shallower Cardium formation, while other companies have been drilling deeper wells here for a longer time. This means that all roads, pipelines and such are in place. It also means that a lot of well logs are available for evaluation, which Chapman has been doing. The deal is that GNZ pays for the drilling of the new wells (estimated 400k$ each), but they also own the well for 100 %. By drilling wells, they earn more land right. Then COP has the right to buy back in for up to 50 %. The estimated operating costs are 2-2.5 $ per mcf of gas, which is below current gas low prices of 3.5-4 $. Farm-in can eventually earn up to 25 sections, with possible 1 well per section.

Pincher Creek

No mention of this in the presentation. They also only own 12% here. They are looking what to do with this. One of their partners here, Mercury, is also partnering with them in Turner Valley.

Just Finished writing, and I see Lana also posted his writings. Hope mine covers it from a different angle.

Martijn