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Desert Mountain Energy (DME.V) wanted some money, the markets went all ‘No, take more! Take it all!’

09/14/2020

Not so long ago, one of our sales guys called Desert Mountain Energy (DME.V) and said, ‘yo desert bros, we like helium, you got helium, let’s work together.’

DME politely face-palmed. ‘We don’t really have a lot of money,’ they said. ‘We’re transitioning.’

Then their stock ran from $0.70 to $1.70.

Now they’ve got dollars.

So many, in fact, that despite announcing a $9 million raise literally three days ago, the company announced another raise, this one for $4 million, today, because too many folks were throwing hundys their way.

Same price. Just a lot more of it.

Desert Mountain Energy Corp. is proceeding with a non-brokered private placement offering to raise up to $4-million. Under the terms of the private placement, the company will offer for sale up to 2.5 million units at $1.60 per unit. This offering is in addition to the previously announced non-brokered private placement that was announced on Sept. 11, 2020, for up to 5,625,000 units. This placement is as a result of strong interest from potential investors in the previously announced private placement.

This is bonkers town. It’s bubble-licious. But it’s also valid.

Hear me out.

Two weeks ago, you could have bought all the DME you wanted for $1.10. A week before that, $0.70.

So why are people suddenly prepared to go $1.60 – with a four month hold?

Is it the recent helium analysis results?

The company has completed its independent gas analyses on both of its exploratory wells in Arizona, the State 10-1 and State 16-1. In the 10-1 well, the company perforated five feet of a limey sand in the lower Pennsylvanian-aged formation out of which the company feels, based on open-hole logs, is a possible productive 28-foot zone with resistivities from 38 to 73 ohms. Well logs delineate a drop in the porosity in the mid-portion of this zone, consequently it feels that the additional interval under the current perforations would require separate sets of perforations to produce. Initial shut-in pressure was 900 psi (pound per square inch) and through the multichoke flow test, flowing pressure increased to 940 psi on a one-inch choke with a co-efficient of 25.76, equivalent to a non-corrected flow rate of 24,214 MCFGPD (million cubic feet of gas per day). The average gas analysis showed helium 7.1321 per cent, nitrogen 77.0837 per cent, carbon dioxide 4.0183 per cent, methane 2.6512 per cent and other assorted minor gases.

Of course not. You don’t know what good helium analysis results are from looking at them – I know this because about eight people in North America do.

That said – those are good results. Most helium production hits about 1% helium in the mix.

No, the real impetus behind this run has been something that began back in July:

The hulking up of the Desert Mountain Energy team.

Robert Rohlfing has now assumed the new role as chief executive officer, president and chairman of Desert Mountain Energy Corp. effective at this time, replacing Irwin Olian, who is retiring from these positions. Mr. Olian, who founded the company and ably served in these roles for the past 12 years, elected to retire from his continuing day-to-day administrative responsibilities to devote more time to family, friends and other personal interests. However, as founder and shareholder, he remains keenly committed to the company’s success and will be providing value-added strategic advice and services to the company’s team going forward as a senior financial consultant under a consulting agreement.

Translated: Olian had long toiled on this thing and the market had finally caught up to its potential. So rather than keep toiling, he brought in some killers to take the reins.

The shift from Mr. Olian to Mr. Rohlfing at the helm of the company is part of a management restructuring effort now under way to place seasoned oil and gas industry professionals in key leadership roles within the company.

Others have been added since.

Technical heft:

Desert Mountain Energy Corp. has added Dr. James Cronoble to both the board of directors and as vice-president of exploration. He earned his BS in geology from the University of Oklahoma followed with both his MS and PhD in geology from the Colorado School of Mines. His more than 40 years of exploration and operations experience in the Rocky Mountains and mid-continent of the United States coupled with his continuing dedication to education provides the company with an integral part of the required expertise as we transition forward.

Markets heft:

Don Mosher has accepted a position as vice-president of capital markets and as a director of Desert Mountain Energy Corp. [..] Mr. Mosher has 35 years of experience in corporate finance, business development, management and marketing. He has served on boards and management teams of many publicly traded companies, advising companies on marketing, financing and corporate strategies.

Desert Mountain isn’t a client. But they’re the fast runner in a sector that is a fast runner, and now they’re raising $13 million which will mean there’ll be nothing stopping them going on an absolute tear.

That’s a lot of money raised at the top of a price spike. Head on a swivel, folks.

— Chris Parry

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