(Updated 3 Nov 2008 6:00 AM)
Gateway Resources U.S.A., Inc. Gateway Resources Ltd. Blaine Exploration Ltd.
Gateway Oil & Gas, Inc. Blaine Development, Inc. Hanks Oilfield Services, Inc.
Bartlesville, Oklahoma
In a little over six weeks I watched oil prices fall another $38.50 to $59.25 (our Oklahoma prices). The stunning 58% drop from $141.75 on July 14 to 59.25 on October 28th took my breath away. In our corporate history there has never been anything like this free fall. The price collapse of 1998 was long and drawn out but took almost 2 years to bottom out in December of 1998. 09-11-01 also brought a price collapse but was short lived and shallow in comparison to 1998. Of course what we really don't know is the question of how far down will it go and how long will it last. I know comments have been made about the concept that $60 oil is still a good price in comparison to the $8 in 1998. First I was going broke in 1998 and long term prices of less than $10 would have been fatal. Secondly the cost of our supplies and services have tripled or quadrupled. Suppliers of goods and services to the oil industry were more than willing to quickly stick it to oil and gas producers during the "boom" and are very reluctant to reduce prices now that oil is down 58%. Electricity costs are up and labor costs are up as well. We all became used to having more money and unfortunately are not always able to reverse the expenses.
The fact that OPEC seems to also be feeling some pain at $60 oil also tells me that they will be more likely to defend a floor price. If I have been spending tens of thousands improving my company, they have been spending billions improving theirs. And like me, I am sure they have the debt to match the expenses. What a curious memory of hearing the soothsayers of the oil industry talking of $200-500/BBL oil just three months ago, and after all we were running out of it! What a joke! I knew the pull back in prices was coming. I just didn't know how much, how fast or that the crash in the stock market would be the root cause of the oil price collapse. Ironically we have just began gas flow from two wells that were plugged in 1933, the heart of the last great depression. The owner of the wells had ended his life by shooting himself in the stomach due to his financial demise.
But now I am faced with a greater challenge, and that is to restore profitability after a 58% price drop in the value of our product. I really don't think this is a short term situation and has to be dealt with accordingly. And there is no guarantee this is the bottom either. If a production overhang is created due to faltering world economies, prices could collapse even further. Painfully, I do not want to accept the end of the story for the company: Yes and how did you finally fail? Well after 19 years of fighting it out through insurmountable challenges, the stock market crash of 2008 dealt the final blow, and there was nothing I could do to stop it. Yes, the company has been body slammed by the oncoming truck. Hopefully we have not been cast in the path of the oncoming train. Okay well enough of the doom and gloom. Either I make it through this or I don't. But I plan on doing all I can to make it through the problems created by the current situation.
Monthly Net Oil Sales ==> Charts
Financial Statements
Consolidated CND$ US & CAN Gateway Resources Ltd ==> Charts :) Report
Gateway Resources Ltd ==> Charts :) Report
Gateway Resources USA ==> Charts :) Report
Blaine Exploration (Canada) :) Report
Blaine Exploration (USA) :) Report
Hanks Oil Field Services, Inc. :) Report
Gateway Oil & Gas, Inc. :) Report
Blaine Development, Inc. :) Report
Laying new injection line Akin Putting new bottom on tank Akin Inside Akin tank patching weak spots
Our tank lifter adapter put to the test Lifting the Akin Tank Painting the Akin Tank
Laying new lines to Sanders Tank Battery Rearranging the plumbing Sanders The new Sanders Tank Battery
Laying poly and electric Khan James painting transitions Khan Setting up perfs on Khan F-1
Dale cutting down casing on Khan F-12 James holding packer Anderson B Dale laying new suction line Holland
My birthday present - Scovel tank battery burning to the ground Dale rearranging input lines Scovel
Cutting up tanks Drummer Hauling off stuff Anderson A
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