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In the Sacramento Valley, Aspen has drilled 29 successful
gas wells out of 30 attempts during the last 3 years (97% success rate) and drilled 37
successful gas wells out of 42 attempts during the last 5 years, a success rate of 88%.
Aspen currently operates 55 gas wells and has non-operated interests in 20 additional
wells in the Sacramento Valley of northern California and has non-operated interests in
approximately 40 oil wells on its 23,000 acre Montana leasehold.
Oil and Gas Exploration
Aspen Exploration Corporation
PO Box 22530
Bakersfield, CA 93390-2530
1601 New Stine Road-Suite205
Bakersfield, CA. 93309
Chief Executive Officer
Lynn Fosse, Senior Editor
Published - March 16, 2007
President and Chief Executive Officer
Mr. Cohan obtained a Bachelor of Science degree in Geology from the State University College
at Oneonta, NY in 1979. He has approximately 28 years experience in oil and gas
exploration, development, and evaluation including employment with Western Geophysical, H.
K. van Poollen & Assoc., Inc., Universal Oil & Gas, and Tri-Valley Oil & Gas
Co. Mr. Cohan has been employed by Aspen Exploration Corporation for a total of 16 years
and effective May 1, 2003, was appointed President and CEO of Aspen. He is a member of the
Society of Petroleum Engineers (SPE) and the American Association of Petroleum Geologists
ASPEN EXPLORATION CORPORATION (OTCASPN.OB), operating primarily in northern California
and Montana is engaged in the business of acquiring and developing interests in domestic
oil and gas properties. The Company has a talented staff that allows Aspen to keep
overhead costs low and yet participate in numerous exploration and development drilling
deals as well as production purchases.
In the Sacramento Valley, Aspen has drilled 29 successful gas wells out of 30 attempts
during the last 3 years (97% success rate) and drilled 37 successful gas wells out of 42
attempts during the last 5 years, a success rate of 88%. Aspen currently operates 55 gas
wells and has non-operated interests in 20 additional wells in the Sacramento Valley of
northern California and has non-operated interests in approximately 40 oil wells on its
23,000 acre Montana leasehold.
3-D seismic data and qualified interpreters are essential for this exploration. All of the
selected drill sites for 2007 have been identified through the use of 3-D seismic
techniques, which have demonstrated great improvement in the percentages of successful oil
and gas discoveries. New and additional drilling locations for gas wells are constantly
being sought, based on solid geology in conjunction with 3-D seismic information. The
Sacramento Valley of California, where current activities are focused, include extensive,
nationally important oil and gas production and refining facilities, thereby allowing
quick hook-up and production of gas when a discovery is made. The Aspen staff and
consultants have also found representatives of the State of California to be very
cooperative and it is not difficult to obtain permits for new exploratory wells or to
expand existing production.
CEOCFO: Mr. Cohan, will you give us a little
background on Aspen, please?
Mr. Cohan: "Aspen was founded in
February of 1980, about 27 years ago. In April of 1995, which was twelve years ago, I
opened the California office. We are currently engaged in natural gas exploration in the
Sacramento Valley of northern California and oil production in Montana; operating 55 gas
wells and have other non-operated interests in 20 additional gas wells in northern
California and approximately 40 oil wells in Montana. We are traded under the symbol
ASPN.OB and have offices in Bakersfield, California and Denver, Colorado."
CEOCFO: What was your vision several years
ago and how has that played out?
Mr. Cohan: "The vision was to
continually increase Aspens gas production, revenues, and share price, in addition
to drilling quality gas prospects. We have done that quite nicely. If you look at an Aspen
stock price-chart going back to April of 2004, we traded at 62 cents per share and today
we are currently trading at $2.40 per share, a 287% increase in 3 years.
CEOCFO: How have you done this and how do
you continue to grow?
Mr. Cohan: "A careful selection of
drilling prospects. For every well that we drill, we probably evaluate twenty to
twenty-five prospects. We use the best geological and geophysical consultants, 3-D seismic
data in addition to well data in identifying our prospects. We drilled nine gas wells last
year out of 10 attempts for a 90% success ratio and I think that demonstrates our careful
drill site selection. In the Sacramento Valley during the last 5 years, we drilled 37 gas
wells out of 42 attempts, which is an 88% success rate. Natural gas prices have helped us
considerably; gas prices have been in the range of $6.00 per MMBTU to $7.00 per MMBTU for
the past few months.
CEOCFO: 88% is an extremely high success
Mr. Cohan: "It is incredibly high! I
would say the industry average is probably 25% - 30%."
CEOCFO: What is the secret to your success?
Mr. Cohan: "I do not know if there are
any secrets. We do not drill many super wildcats, so that helps minimize the risk. I think
it just goes back to good basic business. There is no magic formula other than the things
I have previously said such as using quality scientific consultants and looking at many
prospects. The other thing about Aspen is that we will not drill a well just because we
have the money to do so and we can make some money on a prospect fee. Many companies out
there will do that; we will not."
CEOCFO: What is it about that particular
geographic area which makes it a good place to be?
Mr. Cohan: "What we like about the Sacramento
Valley is that it is a large basin which encompasses about ten counties in northern California.
There are multiple producing horizons. Our shallowest well is 2,000 feet and our deepest
well is about 11,500 feet. If the well depth is 7,000 feet and shallower, the gas really
images nicely on 3-D seismic so you can see the AVO anomalies or bright spots; things of
that nature. We know all of the service companies and other operators that work in this
region, and Aspen has established a very good reputation. We pretty much have found a home
up there in the last twelve years. There are many places to drill with multiple
CEOCFO: Are there a set number of properties
you would like to acquire?
Mr. Cohan: "It all depends on the
amount of prospects that are available to us at any given time. We have quite a few in
inventory right now. Until the last three years, we averaged about five wells a year. For
the past three years we drilled ten wells per year and plan to drill about 11 wells in
2007. We only have two full-time employees; everything else is accomplished with
consultants and service companies.
CEOCFO: Will you explain the benefits of
working with the outside consultants as opposed to your own people?
Mr. Cohan: "Working with outside
consultants keeps our overhead costs much lower than if we had a staff of ten or fifteen
people. Many companies with Aspens level of activity have maybe ten or twelve
full-time employees and we have two. The cost of the consultant or service company is
typically part of the well cost, which is shared by Aspen and all the partners in the
CEOCFO: It seems that the experience and the
steadiness of Aspen is a very important feature for people looking at the company!
Mr. Cohan: "That is so true! Most
companies Aspens size just have a dream or an idea and no cash flow. Maybe they are
not incredibly honest. Aspen is known to be very solid and very honest. You get a high
level of confidence when you deal with us either in buying our stock or investing in our
wells. Another reason we get to see a lot of drilling prospects is that the geologists and
geophysicists that bring us those prospects know that if Aspen takes those prospects, they
will get paid a prospect fee, the well will be drilled in a timely manner and if it is
successful, they will get their overriding royalty each month. Aspen is a closer. If you
look at our balance sheet, there is essentially no debt, good cash flow, and good
management. It is a very good company to invest in and I think people tend to sense
CEOCFO: What should people look for going
Mr. Cohan: "I think continued growth
and success, strong natural gas prices, which coupled with solid gas production, will show
CEOCFO: You mentioned earlier taking
advantage of the latest technologies in terms of deciding what wells you might want; what
about on the production end?
Mr. Cohan: "On the production end, one
advantage Aspen has, even though we operate quite a few wells for a small company, is that
I know what every well is doing every morning. I get an email from the field pumpers, so I
can see a production problem as soon as it arises and rectify that problem. For example,
if I see increased water production in a well, I will look at it that morning and we can
choke back or cut back production on the well, therefore possibly minimizing water
production and prolonging the life of the well. We use the best available technology out
there to operate the wells. It is more about caring about the gas wells and paying
attention to the details.
On the exploration end Aspen has started to successfully utilize underbalanced drilling
CEOCFO: What are the challenges that you see
and how are you prepared for potential challenges?
Mr. Cohan: "Our main challenge is to
keep a steady stream of drilling prospects in our inventory. We have been able to do that
thus far and we have more prospects now than at any time in the past. That is the biggest
challenge, to continue to get quality prospects to drill."
CEOCFO: In closing, what would you like
readers to remember about Aspen?
Mr. Cohan: "In closing, I think Aspen
is a wonderful investment opportunity with an honest, solid reputation, good existing gas
properties and cash flow, excellent future drilling prospects, little debt and a very
favorable gas price environment. Looking forward I see continued growth."
This article contains information that is
forward-looking in that it describes events and conditions which Aspen
Exploration Corporation (Aspen) reasonably expects to occur in the
future. Expectations for the future performance of the business of Aspen are
dependent upon a number of factors, and there can be no assurance that Aspen will achieve
the results as contemplated herein and there can be no assurance that Aspen will be able
to conduct its operations or production from its properties will continue as contemplated
herein. Certain statements contained in this report using the terms may,
expects to, and other terms denoting future possibilities, are forward-looking
statements. The accuracy of these statements cannot be guaranteed as they are
subject to a variety of risks which are beyond the Companys ability to predict or
control and which may cause actual results to differ materially from the projections or
estimates contained herein. These risks include, but are not limited to: the
possibility that the described operations (including any proposed exploration or
development drilling) will not be completed on economic terms, if at all, or the estimates
of reserves may not be accurate. The exploration for, and development and production
of, oil and gas are an enterprises attendant with high risk, including the risk of
fluctuating prices for oil and natural gas, imports of petroleum products from other
countries, the risks of not encountering adequate resources despite expending large sums
of money, and the risk that test results and reserve estimates may not be accurate,
notwithstanding appropriate precautions. Many of these risks are described herein
and in Aspens annual report on Form 10-KSB, and it is important that each person
reviewing this report understand the significant risks attendant to the operations of Aspen.
Aspen disclaims any obligation to update any forward-looking statement made herein.
Any reproduction or further distribution of this
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