Categories: Energy
Topics: General Energy

Monumental Energy (TSX-V: MNGR)(OTC: MNMRF) CEO Max Sali on a Derisked Energy Play in a Top Jurisdiction

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of the recently cashed up Monumental Energy (TSX-V: MNGR)(OTC: MNMRF), Mr. Max Sali. Max, great to have you back on. It's the summer, but you've been busy. How are you today?

Max Sali: I'm fantastic. Thank you. It's a beautiful day here in Vancouver and yes, we did a confidential private placement. We closed just over three million. We had about five million in orders that didn't need the dilution down here. And so now that that's done, the money's in the bank. We've made our cash calls to New Zealand Energy Corp where we get our 75% payback and go into our royalty. We added a new very, very successful director, which is good for beefing up the board and just a lot of things are happening in the background.

A few things that have happened over the last, well, I guess six months is kind of restructuring the people in the company and the tech team. And that's been very important. And so what the game plan is for us now is I was introduced to the new operational manager, our operations partner, New Zealand Energy Corp, yesterday who came from a much bigger company.

They're working on a game plan for the next 12 months, which wells we want to work over, et cetera. And then we're also dealing with a couple of other things. So it's very exciting. I look forward to putting out some news. Things take a little longer than what you expect, but the capital raised was fantastic. It was all firms and funds out of London and then PowerOne Capital out of Toronto, which has supported us previously. They're probably the biggest EMD in Toronto. So I appreciate the continued support. I look forward to now being able to build the business over the summer when everyone's on their holidays.

Gerardo Del Real: Well, let's talk about what the business is for those that may be newish to the company, right? You obviously have some new eyeballs on the stock given the fact that you raise some cash and people talk, right? Nobody writes a check without letting somebody know why they're writing a check. So can you explain for the good folks out there what it is that Monumental Energy's business model is given the volatility that we've seen in the energy space, which has been at times detrimental and then at other times, obviously very, very beneficial. You're kind of in the sweet spot as far as cost and that goes. Can you explain that?

Max Sali: Yeah. So Monumental as of now is technically just a royalty company. We made a funding agreement with New Zealand Energy Corp to put a bunch of workover wells back into production, which were very successful. The last three workovers, each flush produced 3,000 barrels and came on strong. The only issue was trucking capacity and in general just holding capacity, which isn't a bad problem to have. And so what's happening now is we have applied for a number of applications for permits for gas blocks, mostly onshore, which is great because it's all conventional. There's all the infrastructure to be able to tie it right into the pipeline and get sent right to market.

The gas price in New Zealand is between $10 and $15 US per MCF. I think in the states it's $250 US. So it's one of the highest gas prices in the world and we were first movers to make those applications. I think we made about five of them and one of the guys at PowerOne was a oil engineer, used to be working with Exxon. He said, whenever blocks came up, we were the first to apply. So it's now publicly known in New Zealand that we've applied for them, which gives us a good shot of getting these blocks and it's just a matter of government permitting.

For the workover wells, the permitting phase is only about 30 days. These blocks take about three to six months and there's a government fund that's actually willing to pay for a majority of these wells because they need the gas so bad. So that's the good thing on the gas side.

With the oil side, the price of Brent has taken a hit with the deal with Iran that may or may not have happened. I've heard this 10 times. So you're going to have a range of where Brent is going to be, but the fact is all our input costs are in New Zealand dollars, all your output revenue is in USD so you're making good margins. Now that we've funded the first number of workovers, five now, we really have no liability going forward because it's a royalty structure. So for the history of history, we just get our royalty on those, but then for the new blocks you've applied for, it'll be more of a fifty fifty structure. So obviously a bit more risk to us, but more revenue going forward. I'm looking at this business over the next 12 to 24 months on how we generate shareholder wealth.

Gerardo Del Real: No, listen, again, I think you're in a sweet spot. I think you've done a really good job mitigating risk for shareholders, navigating through some tough, tough, tough weather there for quite some time. Anything to add to that, Max?

Max Sali: Yeah. So I think now that we kind of building the business model, there's kind of four pillars of success that I see here. I speak to a lot of successful business entrepreneurs on what the four pillars are. It's like building a house. The first pillar is people. If you don't have the right people, it doesn't matter how good your asset is if you can't make it work. And so we've restructured things. We've got new individuals in, the best of the best, to really manage these assets.

And the second pillar is the actual asset. You can have a Ferrari and if you can't drive standard, it doesn't do anything, right? So you need the quality of the people and the asset. The third pillar is cash management and revenue. Right away, we put a bunch of our capital into a GIC. I was able to get a very good rate, 3.5%. And then the fourth is communication. How do we share the story with people? And that's one of the reasons I'm speaking to you is obviously you're very well respected and being able to share the story with you is something that gets to other people.

Gerardo Del Real: I appreciate that, Max. The respect is relative to whoever you're speaking with, but I do appreciate the comment and then clearly we have some great followers, readers and subscribers that come from all walks of life and like exposure to a bunch of different commodities, including the energy space. So again, a lower risk approach to it. You've done well setting the business model up, looking forward to having you back on and congrats again, strengthening the board. I think that's going to be important moving forward as well.

Max Sali: Yeah. I think I have had a few shareholder comments. The stock is under pressure. So are most stocks. I follow CEO.ca and $2 billion worth of junior companies, resource stocks came trading last week and this week so you're seeing the pressure in the summer doldrums, but it's all about building the business over the next three months and then going into the fall really pushing the company harder.

Gerardo Del Real: Looking forward to getting you back on. Summer goes quick, so enjoy it. Have a good one out there, Max.

Max Sali: Thank you. Have a good day.

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