FOREXCO, INC.
Forexco, Inc. is a
private oil and gas exploration company formed in 1991 by its owner and
founder, Daniel R. Forsberg. Forexco has seven full-time employees and
employs various consulting geologists and engineers in its exploration
activities. Forexco has several different areas in its day-to
day-operations, ranging from drilling and exploration to a utility and
gas storage field. The company owns mineral leases and drills wells in
southeastern Kentucky and northwestern California. Forexco currently
owns 36 producing wells in both conventional and unconventional sands
and drill about six wells a year.
CITIENERGY, LLC
Citienergy, LLC was
formed in the summer of 2005 as a holding company for Citipower,
LLC. Citipower redistributed its assets under Citienergy, LLC to
allow for maximum growth of its assets. As a result of
redistribution of assets, all Citipower memberships have been
transferred to Citienergy with no change in value. Because Citienergy is a
holding company of several subsidiaries, it is not involved in any
daily activity.
CITIPOWER, LLC
Forexco formed Citipower, L.L.C. ("Cityipower"),
a regulated utility, in 1996 in the acquisition of McCreary Natural Gas,
a junior natural gas utility. Citipower operates in McCreary County,
which is located in south central Kentucky on the border of Tennessee.
Citipower is a natural gas utility
regulated by the Kentucky Public Service Commission. Initially,
Citipower was a small rural utility with just 50 customers. The utility
now has approximately 500 customers. A $120 MM Federal Prision facility
has just been completed in the utilities' franchise area, and we expect
increased gas sales from 35 MMcfg/year to an estimated 140 MMcfg this
year.
Since its founding, Citipower has
focused on building infrastructure to permit it to serve the principal
communities of Whitley City, Stears and Pine Knot, Kentucky. Citipower
began operations with 21 miles of pipeline. Since 1996, Citipower has
invested approximately $7.6 million in the construction of approximately
100 miles of additional pipeline.
Citipower has completed the
infrastructure phase of its growth and has successfully added new
institutional, commercial and residential customers. Citipower has the
foresight to anticipate the construction of the new federal prison and
has positioned the company to capitalize on this very significant new
customer base. In 1998, Citipower completed the construction of an 11.5 mile steel
pipeline from Citipower's existing facilities to a high pressure
interstate line owned by Citizens Gas. This new pipeline enables
Citipower to sell its excess gas to Citizens Gas.
KENTUCKY
Forexco formed Appalachian
Gas Associates (AGA) in 1996 to supply natural gas to Citipower. From
1996 through 2002, Forexco raised almost $7.0MM, formed eleven AGA
drilling programs and drilled 40 wells. Each drilling program contained
multiple wells to diversify risk.
Forexco is now drilling wells in Bell
County Kentucky and plans to drill additional wells in Bell and Harlan
Counties. Given the Company’s existing asset base in SE Kentucky,
Forexco plans to continue expanding and developing new well
opportunities in what we believe are underexploited assets in SE
Kentucky.
CALIFORNIA
In 2003, Forexco
completed a multi-million dollar fund raising project for a natural gas
drilling project in California. Forexco’s Fortuna natural gas is
located in northern California near Eureka. The project resulted in a
new field discovery and consists of 6 new natural gas wells with enough
development capabilities to drill an additional 15-20 more wells. Forexco
laid a 3,000’ pipeline under the Eel River and connected the new gas
wells to Pacific Gas & Electric’s pipeline in Arcata, California.
LBU, LLC
In 1998, Citipower acquired an indirect
49% interest in the Lick Branch Unit (LBU) gas storage facility and
enhanced oil recovery project. LBU is a Federal Energy Regulatory
Commission-regulation facility and the only natural gas storage field in
Tennessee. LBU includes 14 wells used for injection and withdrawal, 3
wells for observation and 10 wells for oil production. The purpose of
this acquisition was two-fold: (1) a long-term supply of gas to
Citipower's customers; and (2) the opportunity to earn transportation
fees from the transportation of natural gas to and from the field.
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