Petro One Energy Corp. (TSX.V:POP) recently announced that Korean Myanmar Development Corporation, a Korean sovereign-wealth backed investment firm, would invest ‘up to $100 million’ in Petro One’s drill program of up to 97 wells in the Western Canadian Sedimentary Basin. In an INTERVIEW published in the Korean daily Korean Securities Daily News earlier today and translated from Korean here, the Chairman of KDMC stated that his company was going definitely to be investing $100 million in the company.
The world’s oil reserves are gradually being depleted, and as such, there is worldwide competition for oil development. Representatives of OPEC are just one of many who are competing to get into developing resources, in order to grow the future of energy. Oil development can play a significant role in a nation’s economy. KMDC was the first Korean company to invest in equity and developing oil fields. The following is a Q&A session with Chairman Lee Young-Soo of KMDC.
KS Daily: Congratulations on the Joint Venture Agreement.
Lee Young-Soo: There is a global energy war. Many emerging countries are focusing on the oil business; for example, China is investing huge capital to secure oil fields and developing resources. While emerging countries must rely on monetary investments to secure oil business, large national oil companies are able to rely on their own skills and past experience. Korea is only now beginning to break into the oil business, and our company’s venture is a matter of national interest. After failing business in Myanmar, we are now moving forward with Canadian companies.
KS Daily: What was the agreement with Petro One?
Lee Young-Soo: KMDC will develop oil fields in southern Saskatchewan and Manitoba. A formal contract was signed with Petro One on July 28 in Seoul. Petro One is a junior oil development company that has recruited retired geologists and technicians from Exxon Mobil. The company has a wealth of experience in the oil development industry. KMDC will develop oil fields in southern Saskatchewan and Manitoba. A formal contract was signed with Petro One on July 28 in Seoul. Petro One is a junior oil development company that has recruited retired geologists and technicians from Exxon Mobil. The company has a wealth of experience in the oil development industry.
KS Daily: What is the direction of the business?
Lee Young-Soo: $100 million will be invested. Revenue shares will be 65:35 until the Pay Out; after Pay Out, revenue will be shared 50:50. $3 million will be invested in equity. Petro One is trading at 49 cents, but we have purchased at 25 cents. Looking at this, it is already successful.
KS Daily: What is the potential profit?
Lee Young-Soo: In Phase 1, we will be drilling 12 wells that are between 300 to 1000m away from other producing wells. Those wells are producing 200 to 500 barrels per day, and therefore we can expect similar numbers or higher.
KS Daily: After failing Myanmar, you have made it back.
Lee Young-Soo: The Myanmar business was a disappointment. At the time, we were not able to raise enough funds for oil development due to political attacks from the opposition party. In March of this year, A5 was bought from Chevron Global Energy, which we were involved with before. Also, A7 was bought by a consortium of British National Gas and Woodside, the national oil company of Australia. Those companies paid 10 times more than what had paid. We lost a great opportunity where we could have earned 10 times more.
A great opportunity was lost because of politics.
In August 2011, KMDC had the rights from the Myanmar government to be the first to conduct offshore gas development. Because the opposition told the public, “KMDC is a paper company,” and “Myanmar fields are dry,” we suffered the loss of millions of dollars in investments. We had to return the right to develop to Myanmar. After that, we filed and won a lawsuit against the opposition. However, it was already too late to get development rights back. The company was crucified for political gain.
KS Daily: What have you earned from your failures?
Lee Young-Soo: Failure opened doors for new business. In contacting other companies for resource business, we came into contact with Market One. And in April, we received a formal proposal from Market One. An MOU was signed on May 17 with Petro One.
KS Daily: You, Chairman Lee, were a backer of former President Lee and current President Park. What do you think about the idea that politics and business can work together?
Lee Young-Soo: I learned a lot from the Myanmar project. We were a political sacrifice and suffered defamation. Even though I won the lawsuit in the end, I believe that although business and politics can never be separate, these two should not be too close either. I am interested in politics, but I do not want to be a politician. Bringing resources to Korea is my service to the nation. It is my hope that politics will not interfere with this business venture in the way that it did with the Myanmar project. I want to help contribute to the nation’s economy and pave the way in this business.
KS Daily:You are very patriotic.
Lee Young-Soo: Having this patriotic mentality is how I am able to withstand failure. We were the victims of political scandal at the hands of the opposition members. I hope that this does not happen again in the future. Both the majority and minority parties should always act for the benefit of the country. The world is engaged in a resource war. If politics were to interfere in this, loss of business would also mean a national loss. In the future, political parties need to work together for national profit gains.
Source: Midas Letter