News- January 27, 2003

Ok, no doubt things have been tough in the oil patch for Blaine the past year.  Much of my spare capacity and resources has been used meeting the requirements of the OCC regarding our disposal wells.  But after a long effort we are finally coming to the end of the list of wells to M.I.T. 

The Farmland Industries bankruptcy just about put us down last June.  We still have yet to see any money from the May 2002 production which was about $16,000.  As the year has passed you don't know how many times I wished I could have that money, but we have no guarantee of ever getting any of it.

Cindy, my beloved wife, was diagnosed with Leukemia on Dec 17, 2002, a very dark day for me and my family.  Although it hurt deeply to have her leave my side as my best worker, we had decided in Oct 2001 that she should seek employment from an outside source, which would eventually lead to her having health insurance.  With all her pre-existing conditions we had never been able to purchase insurance for her.  We had no idea the Leukemia was coming, obviously, but are very glad she has the insurance. However in the long run this may eventually lead to the closing down of Gateway, as we seek for a better quality of life for her and our family.  We have some very major decisions to make in the next 6-12 months.

We seem to be getting closer to pursuing a farm-out of the Khan/Akin leases for coal gas development, while the negotiations are coming along, we have at least two suitors looking to take on the project.  However, I won't hold my breath for any of it.  What will be will be.

In order to reduce my expenses and open the door to restructure our employee base later on down the road I decided to let Dale Hanks go from regular part time employment.  He had been working from 10-4 pm M-F welding and as a pulling unit helper.  The need to stop my workday at 3:30 pm each day, and start work at 10:00am often lead to inefficiencies and inconvenience.  I will be using John Gallie again on a very part time basis.  Later down the road I will look for an appropriate employee that has the potential to work on my schedule without supervision.

The name of the game today is to reduce debt and clear up credit lines and liberate cash flow.  We have several key notes going to be retired in the next three months.

I am still fighting several major mechanical break downs on the Brown lease.  It seems like most leases this year had something major go wrong on them where we lost production over an extended time.  I still have several that are giving me troubles.  We are still building oil/water separators and have started building two more.   Our fifth and sixth gun barrels will be for the Khan Lease the other for the Anderson A lease.

My little black 89 Ford Ranger is starting to show its age as the 250,000 miles has just about done it in.  I just learned yesterday that the rings are starting to go pretty badly in the engine.  We kind of have it customized with heavier springs and it has been a real work horse for us.  I may just put a new engine in it.