Categories: Precious Metals
Topics: Gold Stocks

Monumental Energy (TSX-V: MNRG)(OTCQB: MNMRF) CEO Max Sali on Latest Production Success and Expanding Well Workovers in New Zealand’s Taranaki Basin

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Monumental Energy (TSX-V: MNRG)(OTCQB: MNMRF) — Mr. Max Sali. Max, it's been a bit, but it's a heck of a time to reconnect. How have you been?

Max Sali: I've been very busy. Thank you very much for taking the time to do this interview. It's definitely been an interesting time in the oil market. Gold and silver had their big run, and we're kind of waiting for oil to make a big comeback.

And obviously now with our most recent news, the stock has had a tremendous performance and kind of a wake-up. Finally, after a long period of sitting there dead, we're back and we're doing a lot of operations. So I'm in a great mood.

Gerardo Del Real: I believe it. Let's talk about it. We just had one of the most volatile couple of weeks in the energy space, which again just happens to coincide with you coming back on as CEO. 

For people that haven't been following Monumental for the past several quarters, can you give us an overview of where the company is and why it's positioned to take advantage of rising energy prices?

Max Sali: Yes, Monumental had the opportunity to invest in New Zealand oil and gas. The nice thing about New Zealand is the gas prices are, if not the highest, among the highest in the world.

We're getting near Brent crude pricing for oil. I mean, the spike in oil last week — I think we put out news on Thursday and Brent went from $85 to $114 Sunday night, and then back down to $85 per barrel. So it's super volatile.

But what Monumental's been able to do is farm in and do agreements with another private company and our operating partner, listed New Zealand Energy Corp., and pretty much take some wells that were online that produced significant amounts of oil but needed workovers, and we're doing those workovers. We did a couple in the summer that were kind of our stepping stone. They did okay. One is producing decently and one will be back online soon.

But the new workovers we're doing are very simple perforation gun programs. The news we had last week was obviously a very good news release to the market. I think in the last four days we traded organically 25 million shares just based on the news and the timing. 

It was about a 1,400-barrel-per-day rate. I think the six-hour rate was about 586 barrels. We had to shut it in to wait for another tanker truck. Once we turned it back on, we continued that flow rate. And the wells — they come on strong, then they settle. We've already received our payback. These are not expensive wells.

And currently, right now while we're on this phone call, we're doing perforations on our Waihapa well, which is about 100 meters from a producing station. We're doing seven 6-meter perforations starting yesterday. 

So everything is working out well. We're very happy with what's going on. Hopefully this turns out to be another big success for us and moves the stock up again. It's been nice to see shareholders be patient.

And the fact is that all our input costs are in New Zealand dollars and our output revenues are in USD for Brent crude. So the margins are tremendous.

Gerardo Del Real: Where's your market cap right now?

Max Sali: I haven't looked today. I'm assuming it's around seven and a half million Canadian.

Gerardo Del Real: Yes, that's what I pegged it at. And again, that's tiny given the upside. What comes next for people that are looking at the story and want some exposure to the energy volatility that's going on? 

And for those that believe that higher prices are going to be sustained, what do you recommend people look at when they're doing their due diligence here for the next several quarters?

Max Sali: That's a great question. There's two parts to this. One is the oil market. That's going to be volatile no matter what. That's out of my control — out of anyone's control. So in terms of drilling or perforating these oil wells or going into new wells, that's going to determine the price you're going to get.

On the separate side is gas. New Zealand, I believe around January 15, opened up a fund where the government will participate with companies in new applications to drill gas targets. All the infrastructure is available. Everything is there.

So kind of like in British Columbia where you have your gas producer and you pay your monthly gas bill — same thing in New Zealand. They're producing at about 25% capacity because there's really been no new gas discoveries or new gas coming online for the last 10 years.

So we know where the fields are, but the former government was not friendly toward that. They wanted to do hydropower and solar dams. The new government is begging people to find more gas because the economy needs it. And so the gas price is, I think, between $12 and $15 US per MCF, where here in Canada it's like C$3.50 per MCF. So a massive increase.

That's the gas part. The oil play is that there are lots of fields locally onshore in the Taranaki Basin where we are. We've applied to extend permits and increase acreage so we can drill some of these fresh new oil wells.

That oil just gets trucked down about 40 km to New Plymouth and then gets refined when the tanker goes to Singapore and comes back. You get a big premium because there are no refining stations in New Zealand.

Both oil and gas have massive premiums. It's a great place to work. It's a great place to live. It's a great, safe jurisdiction. I think if you're looking at investing in a conventional oil and gas play in a niche market, Monumental has that valuation where I think you can see a lot of upside.

And the last financing we did, my family came in. We are the largest shareholder along with a few other big shareholders. You've got to put your money where your mouth is and see things succeed.

Gerardo Del Real: Skin in the game… I like that! As always, Max, a pleasure to chat with you. Looking forward to getting you back on here and keeping an eye on all the developments going on here at home and abroad, obviously. Thank you so much.

Max Sali: Great, thank you, Gerardo. I just want to say we are perforating now, and once this well is done being perforated, we move on to another well on Monday. So we're going to have a lot of news flow over the next few months.

Gerardo Del Real: Well done. Thanks again, Max.

Max Sali: Thank you, Gerardo.

Click here to see more from Monumental Energy