CALGARY, Alberta – George Rick, Chairman of the Bored at Calgary-based Best West Exploration (BW.TO), announced earlier today that the company plans to spend nearly $0 in 2014 and into early 2015. Under the new chairman, the troubled company, which has been bleeding red ink more recently, plans to shut-in all production and to virtually eliminate its General and Administrative costs. At a special press release earlier this week, Mr. Rick had the following to say:
George Rick, Best West Exploration’s Chairman
This is a difficult, but necessary step that should take Best West back to profitability and to help us pay off the company’s ballooning debt. The cost cutting in G&A will be significantly deep, lead by a mandatory 12 to 14 month unpaid vacation for at least 98% of our office and field staff.
The board and I decided to go with the unpaid vacation route because the rounds of layoffs over the last couple of years have not gone over very well with our former staff and their loved ones. Pffft. Go figure.
According to an interview between Mr. Rick and senior 2P News reporter Micky Magoo, the company will find it very difficult to generate cashflow with all of its production shutin, so Mr. Rick and the Board decided to shift revenue generating focus to the company’s Best West Hotels subsidiary headquartered in Stettler, Alberta.
2P News also learned from that interview that the company plans to reassign some of its Calgary staff to its near over-capacity chain of small-town hotels and motels throughout south-central Alberta. Barry Bunns, the company’s former President and CEO, has been demoted to chief doorman at the Sundre Best West Motel, thanks to the way he handled the company before his timely departure earlier in 2013.
(Left) Best West Exploration’s motto before 2013 while it was run by Barry Bunns. The other one: the company’s new motto under George Rick.
Best West Exploration has agreed to keep a skeleton crew of cleaning staff, executives (a laywer, 2 accountants, and 1 geologist) for 2014 and into 2015. Josh Groberman of Grobes IT Consultants has been hired to assist with keeping the IT systems running for the significantly reduced staff. The company also plans to reduce its dividend to -$0.17, meaning that it is asking people who where paid dividends in the past to give them back to the company – to pay it backward.
Although industry analysts agree that Best West Exploration must cut its costs, they do not agree that spending nearly $0 in 2014 is a great idea. Phil Bocknicker, of Fros & Bros investment bank was quoted as saying,
Phil Bocknicker, Investment banker/DJ
I’m not sure how Best West Exporation is going to generate revenue to pay off its debts if it shuts in all of its production. The company’s hospitality subsidiary will not even make close to 1/1000th of a percent of the revenue that marketing the company’s 145,000 BOE/D would have made.
They will need to do something else to more effectively manage the books. I like their novel negative stock divident plan, and that might be the magic bullet for the struggling senior E&P.
BW.TO surged by 25% on the TSX shortly after the company announced its 2014 capital spending plan. Investors appear to be happy to see that the company is at the very least, not spending any more money that it does not have. And how can they not back a company that plans to implement something as insane as a negative dividend.
