Trans Energy 'Surprised' By Bankruptcy Rumors
West Virginia-based Trans Energy Inc., which recently announced plans to focus on drilling for deep gas in the Appalachian Basin, is working to dispel rumors that it faces bankruptcy after a creditor filed a proceeding against it recently.
In a written statement, Trans Energy said that it had settled the matter and that it was "surprised" by the filing, which it called "essentially a breakdown in communications." Trans Energy said it would file a motion to dismiss the lawsuit, and is requesting an expedited hearing in the case.
"The bankruptcy proceeding filed in Houston against Trans Energy by a single creditor translates essentially to a breakdown in communications," said CEO Loren E. Bagley in a written statement. "The company has been in settlement negotiations in this matter, and the filing comes as a surprise, based upon a settlement having been reached. We would like to assure stakeholders that we have taken a positive, proactive stance on this issue."
Trans Energy transports, markets and produces natural gas and oil and also conducts exploration and development activities. It owns and operates three oil and gas wells in West Virginia, one oil well in Wyoming and owns an interest in seven wells in Wyoming that it does not operate. It also owns and operates an aggregate of more than 100 miles of three-inch, four-inch and six-inch gas transmission lines within West Virginia. Along with its West Virginia business, the company has approximately 22,000 acres under lease in the Powder River Basin.
In the third quarter, which ended in September, Trans Energy's revenues increased 10% to $890,000. Net loss decreased 70% to $1.5 million, and revenues came from increased energy prices. Just months ago, Trans Energy announced a successful debenture conversion from debt to equity, which it said "greatly enhanced its financial position." In October, it formed Trans Energy Acquisition Inc. to specialize in acquiring major oil and natural gas assets. "New and future energy acquisitions and mergers" are expected to "substantially add to the reserves of the company and to the bottom line," said the company.
In August, it acquired 51% of the operations of Oil and Gas Inc., which operated in the Appalachian Basin. Because Trans Energy already had property in the basin, it announced then that it would focus its production activities there.
Earlier this month, Bagley said the company's Appalachian Basin program, which includes a seven well re-entry program in Tyler County, WV, was going well and was "interpreted to be a commercial success." Even though the company has a substantial stake in the booming Powder River Basin, it has decided to focus only on Appalachian projects in the short term.
Bagley said that "while we are currently shifting our sole focus to the Appalachian Basin, we continue to evaluate prospects in the Powder River Basin, and are currently exploring several joint venture opportunities with relevant industry partners. At this time, our maximum return on dollars expended is in the natural gas markets in the Appalachian Basin."
Trans Energy's statements yesterday appeared to do nothing to help its performance in the markets. At close yesterday, its stock had lost 13.3%, and stood at $0.065. In the past 52 weeks, Trans Energy's stock has been as high as $0.35, and as low as $0.021.
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