Navajo Oil & Gas has huge growth By Kathy Helms WINDOW ROCK If Navajo Nation Oil & Gas were put on the market today, the company would be valued at about $400 million, according to Manuel Morgan, chairman of the board. Morgan told the Budget and Finance Committee this week that if Navajo Oil & Gas were publicly traded, as of 2006 it would have been in the top 100 companies based on the Oil and Gas Journal 200 annual ranking published in September. A companys ranking is based on several components,
such as total assets, total revenue, net income, stockholder equity,
capital and exploratory spending, and other factors. Based on NNOGs crude oil assets, the company
would have ranked 55th. If we were a public company, we would
have ranked 44th in the nation in crude oil reserves, Morgan
said. Based on our reserves, we are worth $400 million. It also is looking at refining and helium projects, but those would be more long-term, according to Morgan. The companys revenue comes from three business units: Upstream, or exploration; Midstream, or pipeline; and Downstream, or convenience stores. Groen and Geraldine Kee-Yazzie, NNOG controller, said
that from March 31, 2006, to March 31, 2007, revenues increased
51 percent, from $48.8 million to $73.7 million. Last year the company acquired 25 percent of the ExxonMobil Aneth Field producing properties in San Juan County, Utah. The acquisition was completed in cooperation with Resolute Resources, which owns 75 percent, Morgan said. With that acquisition and other smaller ones, NNOGs average daily crude oil production increased 45 percent, to an average 2,122 barrels of oil per day, and proven oil reserves increased 150 percent to 28.8 million barrels of oil. NNOGs Running Horse Pipeline transports nearly all of the Four Corners crude oil to Giant Industries Bisti terminal. Last March, Running Horse had the highest through-put volume month since NNOG purchased the pipeline. Revenues for the pipeline system were up 10 percent from $2.9 million in 2006 to $3.2 million in 2007. Giant has been bought by Western Refining, and Morgan said, We have some issues with them. They want a significant reduction in what they pay for oil. We may have some right-of-way issues with them later. NNOG has applied for an exploration well permit and two development well permits for Echo House Mesa and Tohonadla Field and hopes to begin drilling the first quarter of this year. The company also is working with Minerals Department to finalize the acquisition of Ismay Field northeast of Aneth. The acquisition is projected to add 1.4 million barrels of proven reserves to NNOGs reserve base. Groen said the company has spent $26 million in the last few years, taking its profits and reinvesting them in the field. He said there is some thought that NNOG should become a fully taxable entity, but said he and others believe the company should stay a non-taxable entity and continue to reacquire oil and gas property as soon as possible. Groen said Aneth Field, which was discovered in 1957, was at peak production in the mid-1970s and since then has been in rapid decline. If we had continued with operations as they were, we would have been down to less than 1 million barrels by 2020, he said. But because the company plowed its profits into the field to enhance production of existing wells, we now have reversed that and have had an increase since last year, he said. As part of NNOGs cooperative agreement with Resolute, Groen said, the company is looking at $231 million in total capital in the next five years, and spending $20 million a year in the field while buying back 10 percent of properties. |
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