December 8, 2009 - The Wall Street Transcript
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Oil & Gas Production and Distribution Report
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Special Report
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Brian G. Thurston, President, CEO and Director of Lion Energy Corp. has advanced the company through a change of business into the mineral exploration sector during his two years at the helm, raising over $32 million and acquiring quality assets for the company. Mr. Thurston brings over 17 years of exploration management and operational experience in Canadian and Latin American projects. He was part of the initial geological exploration team that evaluated the current land holdings of Aurelian Resources, Inc., in Ecuador in 2002, and he held the position of Country Manager for Aurelian in 2004 and 2005. Aurelian was taken over by Kinross Gold Corp. in a transaction valued at $1.2 billion.
TWST: Let's begin with a brief historical sketch of Lion Energy and a picture of things as they are now.
Mr. Thurston: The company has actually been around for many years but underwent a change of business to the resource exploration sector in November of 2007 under the name of Raytec Metals Corp. Initially, the company was focused on exploration for commodities that were believed to be of interest by the emerging BRIC countries, Brazil, Russia, India and China, such as key offerings, iron ore for infrastructure, uranium for power, and potash and sulfur fertilizers for food production. We were quite successful with this business model and raised over $30 million in less than a year. However, when the financial crisis hit beginning in late 2008, the markets for all these commodities were severely weakened.
After months of searching for new opportunities to increase value for our shareholders and our investors, management and directors of the company decided to concentrate on the oil and gas sector. So in May of 2009, Raytec farmed in on several properties with Africa Oil Corp., a Canadian oil and gas exploration company with assets in Kenya, Ethiopia and Somalia, which is also a member of the Lundin Group of Companies, who are very successful. With this new focus on oil in Africa, we underwent a name change and we became Lion Energy Corp. (TSX.V-LEO), which is now an international oil and gas exploration company that is publicly traded on the TSX Venture Exchange with the symbol LEO. We currently have investment assets in Canada and, as I've mentioned, the farm-in operations in Africa. The company is focused on acquiring, exploring and developing oil and gas reserves.
TWST: In light of your business model, how do you assess the risk in Somalia and Kenya?
Mr. Thurston: That's a very good question. It's a well-founded concern that there is strong risk politically in Somalia. However, in Somalia itself, the main problems tend to be in the south to central regions of the country. The northern areas of Somaliland and Puntland are semi-autonomous regions in their own right and have proven to be much more stable areas, which we believe are amenable to foreign investment. Lion Energy believes that the geology in this region is underexplored and holds the potential for a very large discovery.
We believe the geological upside in these areas mitigates the potential political risk. Secondly, we believe the risk is further mitigated by the successful track record and business strategy of our partners, Africa Oil Corp. Their willingness to go into less-desirable countries with underexplored, highly prospective geology has lead to their success. With Africa Oil as operators and with their successful track record, we believe we've partnered up with a good team, and that's why we've accepted that risk.
TWST: What do you see as the pricing supply/demand dynamics and the political situation that may have an impact on Lion's strategies during the next 12 months?
Mr. Thurston: I just attended a research conference in Denver, where energy was of the main topics. And several speakers who are quite knowledgeable about the subject believe that there will be a shortage of oil in the future and that oil will be highly sought after. As we are using up the known resources, the easy resources, it's going to take new discoveries in these underexplored, highly prospective areas, such as Uganda, Kenya and Somalia, to feed what will be the demand for oil in the future.
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