Questions concerning the business operations of 1st NRG Corp. (PINKSHEETS: FNRC) have been raised in the past and unfortunately the independent energy company engaged in the exploration, development, and production of natural gas properties in the United States has done little in the way of providing answers, making it difficult for investors to actually buy in to any update that the company issues.
FNRC has seen some pretty heavy trading volume over the past week and they have already surpassed the 11.7 million mark by early afternoon on Wednesday yet that activity hasn’t been triggered by any press release or announcement about company developments.
In fact, the last press release issued by FNRC was back on April 15, 2013 in which they gave an update to the transaction they closed with nine investors who purchased a private placement of units consisting of Preferred Shares and Warrants to purchase Common Shares. That transaction was closed in January 2011 with the total unit purchase set at $14,452,014 yet the company said in the most recent release that “to date releases of approximately $25,000 relating to this agreement have been disbursed.”
It was acknowledged in that press release that while the company had seen sufficient trading volume as per the agreement the decline in the share price had “restricted the orderly release of funds.” To say that FNRC has seen a decline in their share price may be a bit of an understatement as they have collapsed from a 52-week high of 0.5800 back in September 2012 down to a current level around 0.0032.
Because of their trouble with their share price and the effects that it has had on the transaction agreement with those investors FNRC has said they were “negotiating amendments to the terms of the financing with the Investors to facilitate further fund releases.” Needless to say FNRC is certainly not in a strong position so any kind of amendment to the agreement would likely devalue the position of common shareholders.
The problem FNRC has with money appears to be what’s holding the company up from actually doing anything in the field. They continue to highlight their property in Northern Wyoming, saying “the recent rise in natural gas prices may enable the Company to initiate a plan of development which will include completing coals currently behind pipe, working over existing wells and drilling our permitted locations.” What investors can take from this statement is that the company is not actively doing any work at the property.
As for the Utica Shale property in Eastern Ohio, FNRC continues to say “The Company has an agreement to develop approximately 7,150 acres in Eastern Ohio, one of the most active areas for oil, natural gas and natural gas liquids exploration in the United States. We are currently seeking a partner to develop the prospect.” Given the financial problems that FNRC has it would be hard to believe that they have potential partners lining up.
There are just so many issues that FNRC has to settle before they can be taken seriously as a natural gas company and until they get that financing straightened out it looks as if investors won’t be overly aggressive in building much of a position.