3. MR’s current management team, including yourself, would continue to exercise full control of MR’s day-to-day operations for a period not less than 2 years.
4. MR would utilize a portion of Petromica’s investment to completely eliminate its existing debt, improve MR’s objective net worth and make the firm a more attractive target for outside investors.
5. MR’s current ownership would have an option to repurchase Petromica’s 49% equity stake in the firm at the end of 2 years for the sum of $31,750,000, which would constitute an annual return on our investment roughly equal to 12%.
Please be advised we are currently exploring other investments in the Appalachian Basin and we intend to finalize a deal to expand into that region as quickly as possible; if not with your firm, then with another. If you can confirm the accuracy of our financial data on MR and would like to discuss this proposal further, please contact me at your earliest convenience via email. Or you can reach me on my cell phone at (703) 925-1420.
Sincerely,
Alex Beria
Executive VP, Mergers & Acquisitions
Petromica, LLC
Rikki laid the email down and looked at Jack. He was staring back at her, tight-lipped and awaiting her response.
“So have you done any research on these guys?” she asked.
“Just a little. Not much on this Beria guy, but Petromica looks like it’s the real deal.”
Rikki opened her laptop and banged on the keys. “Let’s have a look-see at their website,” she said. Jack stood behind her, staring down at the screen.
Petromica’s easily identifiable black and gold logo was prominently featured at the top left corner of the company’s homepage and the entire layout oozed with professionalism. Quickly clicking through the website, Rikki found it easy to navigate and full of detailed information, including financial data and several recent press releases.
Satisfying her urge to double-check the veracity of Petromica’s claims, Rikki swiftly ran two of the press releases through her favorite internet search engine. Much to her surprise, the information touted in the releases was consistently reported elsewhere in the mainstream media.
Rikki spun around to face Jack. “Okay. It looks like Petromica is legit and could come up with that kind of cash. The bigger question for me is why would they contact Jack McCallen out of the blue with a business proposition?”
“I have no idea. But they’ve done their homework: That spreadsheet is identical to the one I’ve given to banks with my loan applications for the past three months.”
“Is it accurate?”
McCallen looked offended. “You think I want to go to prison for bank fraud?!”
Rikki swatted him on the thigh and laughed. “Heck, no, doofus! You’d look downright awful in an orange jumpsuit, and I don’t think you’d like the food much either.”
A smirk emerged on Jack’s face and he shook his head amusedly. “Leave it to you to find humor in the thought of me going to jail.”
Rikki shrugged, playfully feigning a lack of concern. “That’s what friends are for, Jack. So tell me this: From a financial standpoint, does their proposal make good business sense?”
“For them or for me?”
“Both.”
Jack paused, mulling the question. “For me, it’s a double-edged sword. On the one hand, it would give me a huge cash infusion when I’m teetering on the hairy edge of bankruptcy and have no other realistic options. On the other hand, my dad built McCallen Resources from the ground up. It’s always been a family-owned business, and the thought of having outsiders involved in it makes me want to puke.”
“But you’d still own a majority interest in the company,” Rikki responded. “They’re willing to let you run things for the next two years and give you an option to buy back their shares. To me, it looks like they’re basically offering to give you a twenty-five million dollar loan at 12 percent interest, secured by stock in your company.”
“To an extent, that’s true,” Jack conceded. “But they’d be receiving half the profits we earn between now and then. That could make it pretty damn hard for me to come up with the extra 7 million bucks I’d need to buy those shares back.”
Rikki silently digested the information. “You tell me you can’t find a single bank willing to loan you 3 million bucks, without which cash your company will go belly-up within six months. So why would this company – from the Bahamas of all places – offer to give you eight times that much money for roughly a half-interest in your firm?”
Jack’s smile turned positively predatory. “Because if my geologists are right, I’m sitting on a proverbial gold mine worth far more than that.”
Rikki leaned back, twisting the chair clockwise, then counterclockwise, deep in thought. “Forgive me for not remembering the details of those big old geology reports, but you’re not my only client and I’ve been kinda busy on the campaign trail. Refresh my memory.”
Jack grew energetic. “Okay!” he exclaimed, gesticulating with his hands like a Pentecostal preacher at a revival. “Here we go … As you know, few of the gas wells in the Appalachian Basin extend deeper than 6,000 feet underground. It’s not been cost-effective to drill wells below that depth.”
“You do realize I’m the best oil and gas lawyer in this state, don’t you, Jack? It’s not like I’m a total idiot here.”
He ignored the wisecrack. “But technology has improved and developers are exploring ways to extract gas from deeper deposits. Some geologists believe large deposits may lie as deep as 20,000 feet below the surface, but it’s still not practical for us to drill that deep yet. The deeper we drill, the further back we go in time. In some areas, you’ll run into seams of coal that were deposited during the Pennsylvanian Period, between 320 and 290 million years ago.”
“Did I ask to sit through a freshman geology class, Jack? It’s Sunday afternoon, and it’s gorgeous outside. I’ve got better things to do than listen to you ramble on like some nerd on the History Channel, so wrap up your lecture and get to the point.”
Jack sighed. “Very well,” he said sullenly. “Below that level, around 6,000 feet or so, we find even older strata dating back to the Devonian. And at that depth, through a good chunk of West Virginia, you’ll find a seam of shale between 15 and 300 feet thick known as the Marcellus Shale.”
Rikki wiggled her right index finger in the air, a light of recognition in her pale green eyes. “Oh, yeah! You oil and gas boys get all hot and bothered talking about that stuff.”
“With good reason. Because trapped within the black sedimentary rock of the Marcellus lays an enormous amount of natural gas. Maybe 80 trillion harvestable cubic feet of it.”
Rikki’s eyes widened. “How much?”
Jack smiled. “You heard me. Eighty trillion cubic feet.”
Rikki whistled. “Wow.”
“And if the horizontal drilling methods prove as successful here as they were in Texas, we may be able to extract that gas from the Marcellus in a very cost-effective manner.”
“Horizontal drilling?”
“Crazy as it sounds, the well is initially drilled straight down. But once the drill bit reaches the depth of the Marcellus, the equipment can be operated to make a right angle and drill horizontally into the shale. They then use water pressure to create openings in the shale that allows the gas trapped there to pour into the new horizontal well at substantially high flow rates.”
“Sounds pretty complicated to me. Probably pretty expensive, too.”
The look on Jack’s face soured. “Unfortunately, you’re right. A conventional well would probably cost about two-fifty, maybe 300,000 dollars to drill. But for a horizontal well, it’s more like 3 million bucks.”
“Dear Lord! Why would you drop 3 million bucks to drill a horizontal well when you could get eight or twelve conventional wells drilled for the same price?”
“Because there’s so much gas believed to be trapped in the Marcellus Shale. And after people have spent the past 40 years fru
itlessly trying to pull it out of with vertical wells, it looks like horizontal drilling is the only way to do it. And if you bet right and hit a big reservoir of gas in the shale under one of your leaseholds, you’ll get a huge return on your investment.”
Rikki subconsciously tapped her fingers on the conference table like ocean waves. “Care to give me an example?”
“Similar horizontal wells drilled into a section of the Marcellus in Pennsylvania yielded flow rates around 4 million cubic feet per day,” Jack replied. “Per well. With gas prices as high as they are now, just one successful horizontal well – if it yielded a similar flow rate – would bring in about…”
“Forty thousand dollars per day,” Rikki finished.
“Or about fourteen and a half million dollars in one year,” Jack added. “A 500 percent return on your investment, less the one-eighth interest retained by the mineral owners? Sounds sweet to me.”
“But if that’s the case, why wouldn’t a bank around here loan you the money?”
Jack gritted his teeth and a vein in his neck grew visible. “Because bankers tend to be nutless, conservative sacks of crap. They don’t have an entrepreneurial bone in their bodies and the fact remains you never know what you’re going to run into underground until it hits you in the face. If the geologists are right, I’ll be filthy, filthy, filthy rich. If they’re wrong, the bank will have a gaping hole in the earth to show for the 3 million bucks it lent me and when risks like that go bad, bankers have a tendency to jump off high buildings.
“Hence, the sorry bastards won’t loan me any money. Which is a damn shame because even if the wells I drilled ended up as dry holes, at least I would have done the world a favor by reducing the number of bankers polluting its surface by one or two.”
Rikki chuckled softly. “Bitter?”
“Just a little.”
Turning her head slightly, Rikki stared out the window overlooking the courthouse parking lot. A pair of elderly women wearing sweatpants and lightweight jackets strolled across the lot, wearing guilty grins as if they were eagerly engaged in some juicy gossip.
“So what are you going to do?” she asked.
Jack grimaced. “My instinct is to say I’m willing to listen and see what else they have to say. I hate the thought of bringing outsiders into the company, but I don’t think I have a choice.”
Rikki nodded sympathetically. “It doesn’t hurt to listen. If they’re serious, they can put together a formal contract and I’ll look it over. In the meantime, we still need to finish these discovery responses.”
McCallen’s nose crinkled as he sat back down at the conference table. “Bluck,” he declared. By his tone, the sentiment came straight from his heart.
CHAPTER 22
PLEASANTS COUNTY, WEST VIRGINIA
SUNDAY, NOVEMBER 16, 9:45 P.M.
Leaning toward the monitor with his hand cupping his mouth, Jack scanned yet another article on Petromica. Printouts of news articles and reports culled from the web were stacked beside him. Everything he found corroborated the picture Alex Beria had painted in his email.
Beria himself was a mystery, however. Petromica’s website had no information on the man and a Google search yielded little. One guy by that name participated in a marathon in Shreveport, Louisiana five years ago. An undergrad at North Carolina State with the same name blogged about things only an undergrad would care about. Lots of partial hits that looked both inaccurate and irrelevant (e.g., “alex herbal Viagra tits beria”.) But nothing jumped out and told Jack, “This is the guy you’re looking for.”
The office was dark aside from the monitor and a small lamp. As Jack returned to Petromica’s homepage, he suddenly felt two warm hands brush against both sides of his neck.
“The kids are asleep,” Tabatha whispered sultrily, gently massaging his shoulders and neck. “Why don’t you come to bed, too?”
Staring up at her, he was struck by how beautiful she appeared in the dim light. Her blue eyes sparkled and her come-hither smile was loving and serene. She bore no resemblance to the combative, spiteful woman who spewed such venom at him just a week earlier, and he struggled once again to reconcile those polar-opposite images.
Jack often wondered if his wife was bipolar or had multiple personalities. He had no other explanation for her bewildering, wildly-fluctuating behavior. Her emotions seemed to turn as violently as the weather in June, when a warm sunny day could be suddenly chased away by the blackening skies and howling winds of an afternoon thunderstorm.
Unlike the weather, however, no barometer could predict when Tabatha’s emotional pressure would spike, leaving a wake of destruction in its path. And when that happened it was impossible to secure shelter from the storms that arose, breeding tornados that honed in on him, plucked him up and hurled him around helplessly in their wake.
As her hands kneaded into his tightened muscles, those turbulent thoughts dissipated and his stress evaporated. Closing his eyes, he relaxed and took a deep breath. The unmistakable floral aroma of Tabatha’s perfume wafted into his brain, subtly stirring his passions and putting a grin on his face.
“I’d love to, but I can’t,” Jack replied. “I really need to get some work done tonight.”
Tabatha stuck out her lower lip and playfully feigned sadness. “Are you sure? You have something more important to do than me?” Batting her eyelids, she ran the fingernails of her left hand along the side of Jack’s neck, causing goose bumps to arise on his skin, spreading up to his scalp and down his back.
Jack debated how much information he should share with Tabatha. But the smell of her perfume, the feel of her touch, the echo of her seductive words in his head, and the love and longing he felt in his heart brushed aside his concerns. “I’m doing some research on a company that wants to invest in McCallen Resources.” The words sounded surreal to him.
Tabatha abruptly stopped rubbing his neck. “Oh, really?” Resuming the massage, she asked, “When did this happen?”
Jack remained adrift in pleasant sensations. “I received their email this morning.”
Tabatha gazed over Jack’s head at the monitor. “What company? And what kind of an investment do they want to make?”
“It’s called Petromica. They’re out of the Bahamas. Nothing concrete yet, but if things pan out, they might invest the kind of cash we need to drill horizontal wells into the Marcellus.”
Tabatha gasped. “Wells? Plural? I thought those cost millions of dollars each!”
Savoring the massage, Jack’s eyelids remained closed. “Yep. Three mil a piece.”
“Oh, honey! That’s wonderful!” She leaned down, threw her arms around his neck and planted a wet kiss on his cheek.
Her reaction shook Jack from his dreamlike state. Wriggling free, he swung his chair around to face her. “Now hold your horses! There’s no contract yet and a deal this big could get spiked by all kinds of little things. So don’t go counting your chickens just yet.”
Jack watched as anger momentarily flared in his wife’s eyes. But her tranquility re-emerged, combined now with an air of giddiness. “Okay, okay. But I can’t help being excited. And I just know you’ll find a way to make this deal happen, baby. I just know it!”
McCallen snorted. “Oh, really? Just a few days ago, you said I wasn’t man enough to take care of my family.”
Tabatha’s lips tightened. Squatting down so that their faces were on the same level, she ran her fingers along his jaw line and kissed him softly on the lips, dropping her gaze. “I am sooooooo sorry.” After a few moments of silence, she raised her head and looked him square in the eyes. “Why don’t we go upstairs and you can show me how wrong I was.”
Taking his hand in hers, she slowly pulled her five-feet-ten frame erect. Never breaking eye contact, Jack could feel her simply willing him to rise from his chair. His pride screamed at him to defy Tabatha’s wishes, but his love for her begged him to accept her apparent change of heart at face value.
It felt like an out-o
f-body experience seconds later, when Jack stood and followed her to their bedroom. He was an extremely proud man, but at the moment of truth in this battle between his strongest passions, it was love that carried the day.
CHAPTER 23
ST. MARYS, PLEASANTS COUNTY, WEST VIRGINIA
MONDAY, NOVEMBER 17, 7:05 A.M.
After another morning bout with the treadmill, Rikki poured fresh coffee into her favorite porcelain mug, mixing in cream and sugar. Mug in hand, she trudged through the dining room and into her office, where a twenty-five inch television was already tuned to CNN.
“The eyes of the world are turned to Williamson, West Virginia, today,” an attractive Asian woman in her mid-thirties declared. She stood beneath an umbrella with the now famous boxy-looking courthouse rising behind her. “At one o’clock, the Mingo County Commission will convene to conclude its post-election canvass and determine whether Governor Royal retains his slim lead in this state, which now stands at only 140 votes.”
The glorious weather from the previous day seemed a distant memory. Rikki peered through her open blinds and the dark, gloomy-looking images being broadcast from Williamson were duplicated here. Situated atop a hill overlooking a bend in the Ohio River, the view from her house generally was quite pleasant. But not today. Placing her palm on the window pane brought a cold sensation that made her scowl.
“At issue here are the memory cards from nine voting machines that apparently malfunctioned on Election Night. Sources from both campaigns say they expect the legal wrangling to continue regardless of the Commission’s decision this afternoon. But according to CNN’s legal experts, the future landscape will be framed by this vote because it will determine which side gets to defend its margin of victory, and which side has to bear the burden of proof when this battle shifts to the courts.”
Rikki muted the television and focused on her email. The first message that grabbed her attention was sent by Jack an hour ago.
Sheez! He was up and at ‘em awfully early this morning!
The Dirty Secret Page 10
