BPI Energy Holdings, Inc. (NYSE:BPG)
Industry: Basic Materials
BPI Energy Holdings Inc. (BPI), formerly BPI Industries Inc., incorporated in 1980, is engaged in the acquisition, exploration, development and production of coalbed methane (CBM) reserves located in the Illinois Basin, which covers approximately 60,000 square miles in the mid to southern part of Illinois, southwest Indiana and northwest Kentucky. During the fiscal year ended July 31, 2005, the Company owned or controlled CBM rights, through mineral leases, options to acquire mineral leases, and farm-out agreements, covering 418,435 total acres. Based on its acreage position and anticipating 80-acre spacing, it has the potential for more than 5,000 drilling locations. On March 31, 2005, BPI entered into a Technical Services Agreement with BHP Petroleum (Exploration) Inc., a wholly owned subsidiary of BHP Billiton, an international resources company. As part of this agreement, BHP has agreed to provide the Company, on an exclusive basis in the Illinois Basin, technical services related to BHP's techniques and know how in the areas of drilling and completion of CBM wells. BHP will provide its medium radius drilling (MRD) techniques to assist BPI in drilling three initial pilot wells and will provide an assessment of the application of its tight radius drilling (TRD) technology at its projects. The Company conducts its operations in one segment, which is oil and gas exploration and production. BPI has identified seven commercially productive seams within the Illinois Basin with average coal thickness from 3 to 9 feet, all of which are located at the Company's Delta Project. In addition to the Delta Project, it controls, through leases, option and farm-out agreements, a total of 239,487 acres in the Montgomery Project, which is located in the north central part of the Illinois Basin, and 135,948 acres in the Clinton/ Washington Project, which is located in the northwestern part of the Illinois Basin. Delta Project The Delta Project, which is located in Saline and Williamson counties in southern Illinois, is one of only two in-seam CBM projects that are in commercial production in the Illinois Basin. The Delta Project has 43,000 contiguous leased acres of CBM rights, and the Company owns the leasehold on this acreage. It holds the CBM rights on this acreage pursuant to a lease agreement that extends until April 3, 2006. BPI's right to drill for and produce CBM under this lease is subject to the mining of coal on the acreage covered by the lease. As of November 1, 2005, the Company has drilled 82 CBM wells at the Delta Project. These wells include 64 productive wells and 18 wells that have been drilled but are not yet in production, including three test wells. It is selling gas from these productive wells into one of the two interstate pipelines that cross the project. BPI has completed 22 permeability tests throughout the project. Based on the results of its drilling, testing and mapping, the Company initiated its development program. Montgomery Project The Company's CBM rights in the Montgomery Project covers 239,487 acres in Montgomery, Christian, Shelby and Macoupin Counties in Illinois, which are located in the north central part of the Illinois Basin. It holds the CBM rights on this acreage pursuant to a mineral lease, options to acquire mineral leases and a farm-out agreement. BPI holds an option from Montgomery County to lease 120,951 acres of CBM rights in Montgomery County, Illinois. The option extends until January 5, 2006. The lease agreement underlying the option will extend for a period of five years from the date it exercises the option. The Company also holds an option from Christian County to lease 14,033 acres of CBM rights in Christian County, Illinois. The option extends until January 20, 2007. The lease agreement underlying the option will extend for a period of five years from the date it exercises the option. The Company has entered into a lease agreement with Shelby County covering 63,250 acres of CBM rights in Shelby County, Illinois. This lease agreement extends until November
As Of: 10/07 00:00 ET
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