Unless North American Oil & Gas Corp. can raise enough capital to cover its operating expenses by Dec. 31, the Ventura company could be forced to close down.
According to filings with the U.S. Securities and Exchange Commission, the company has yet to establish an ongoing source of revenue and has accumulated losses of $2.7 million, along with a working capital deficit of more than $660,000 as of Sept. 30. The filings show the company has survived mainly on borrowings, sales of its common stock and advances from a related party for the last two years.
Additionally, Linda Gassaway, the company’s chief financial officer, submitted her resignation to the Ventura company on Oct. 30, effective immediately.
Following Gassaway’s resignation, the company named Cosimo Damiano as CFO. Damiano is a member of the company’s board and has served as an independent director of the company since November 2012. He also assisted with the merger that formed the company.
While the company has been actively pursuing land leases, it has budgeted to drill only one well by the end of this year, but that project is still contingent on the company’s ability to locate a source of financing. The company has started the permitting process on two other wells.
The company has sufficient funds, due largely to sales of the Company’s common stock for $1 million to continue general and administrative operations through Dec.31, 2014. Capital raising through either investors and farm-out agreements is required to move forward on capital projects, according to company filings.
The company wants to set up two drilling operations, one in the Tejon Ranch main oilfield and another in the Tejon Ranch extension. The estimated cost to do so is about $3.5 million. The Company is looking for outside funding through loans, partner agreements and all other capital sources at their disposal.
While Monterey shale has opened up both a new black gold rush and an environmental debate over unconventional drilling techniques in California, North American President and CEO Bob Rosenthal previously told the Business Times that there’s still plenty of oil to be found by drilling the old way, but deeper.
North American Oil and Gas Corp. came to life in 2012 after Canadian firm East West Petroleum made a $2.5 million investment in a drilling venture with a privately held firm. The company merged with a publicly listed company on the OTC Bulletin Board to become North American.
The Ventura-based firm has accumulated about 5,000 acres worth of leases that it owns the working interest on, much of it south of Bakersfield, where the San Joaquin basin turns into foothills in the Tejon oilfield. Rosenthal told the Business Times in 2013 that he formed the company because he felt that California was simply under-explored. Many of the major oil companies pulled out two decades ago, but are now reconsidering in the wake of Occidental Petroleum’s discovery of as many as 250 million barrels of oil in the Monterey shale in 2009.
“For a long time, California has been considered kind of played out. All the exciting stuff was happening down in the Gulf of Mexico, and people went international. Then people started to return to the U.S. in these unconventional plays in North Dakota, Central Texas and South Texas,” Rosenthal told the Business Times last year. “Now, California is getting a second look.”
Still, North American, might not be able to continue that second look if it can’t find capital.
As of press time Nov. 19 the company’s stock was up 11.2 percent to $0.02.