Mr. Ingriselli: We started the company a little over three years ago as a private enterprise with a plan to develop small, low-risk, high-return oil and gas type projects in China. Since then, we have achieved several milestones. The first was raising about $5 million in private capital. Then a little over two years ago, we went public and raised an additional $17 million. Why did we start this company? I spent 23 years at Texaco in many senior positions, including the role of President of Texaco International, but what had the biggest impact on my career and was the foundation for the startup of Pacific Asia were the four years I spent starting in 1979 in China negotiating the first successful foreign oil contract there. That venture today, 26 years later, is still producing enormous cash for its owners. This proved that energy ventures in China work and that the Chinese live up to their commercial commitments. I retired in 2001 as a result of the merger between Chevron and Texaco. After doing some consulting, I decided to go back into this business and do what I did best for Texaco, which was identifying, negotiating and operating high-return projects for the company that contributed significant cash earnings to the bottom line for the company. So we started Pacific Asia and embarked on a portfolio approach that includes short-term onshore oil field development to bring in early cash flow with low capital exposure and balance that with longer-term sustainable natural gas projects in the field of coal bed methane.
TWST: How has the economic downturn impacted Pacific Asia over the past year?
Mr. Ingriselli: When we started the company, oil was trading at approximately
$50 a barrel. Over the last three yearsÊwe have seen oil soar well above $100
and then come back down to about $50 several months ago. Currently, it has been
trading between $60 to $70. At the same time, we saw the financial markets
collapse. We have a balance sheet that's all cash and includes our oil and gas
assets. We have no borrowings, no debt and all of our assets are unencumbered.
This strong balance sheet has sustained our company. So you really get a win-win
situation with our company as we don't have to go out to Wall Street at this
difficult time to borrow the money, and if we need any capital we will consider
bringing in partners to disproportionately cover any of our capital needs. This
period has also created very attractive deals. With our strong balance sheet and
leveraging that position, we were able to recently start our enhanced oil
recovery production and production business. As recently announced, we will
start working on hundreds of wells. So the current economic environment has
provided great opportunities for Pacific Asia and we have a great management
team to execute on these new initiatives.
Tickers included in this excerpt: PFAP.OB
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.