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EXHIBIT 99.1
DIVERSIFIED RESOURCES PROVIDES UPDATE TO SHAREHOLDERS
AND BIYA PROPERTY RESERVE REPORT
LITTLETON, COLORADO, NOVEMBER 25, 2014
Dear Shareholders,
As our fiscal year closed on October 31, I want to take this opportunity to
update you on the status of our company and share with you our plans for 2015.
A year ago this month we merged our private company, Natural Resources Group,
into Diversified Resources, Inc. We have worked very hard to establish a
foundation for growth measured in terms of people, assets, production and
reserves. Since our merger we have raised ~ $3 million in capital, added key
personnel, acquired a world-class property in the San Juan Basin of New Mexico,
purchased a highly prospective lease in the DJ Basin and have begun producing
our first meaningful amounts of oil.
Personnel
On the personnel side of things, we have added Jubal Terry as our Exploration
Manager and Abdul Kahn as our soon-to-be-anointed CFO. Abdul comes from a strong
background in public accounting, focused on the upstream oil and gas sector as
well as the midstream area. He brings hands-on experience in getting filings
completed in time and will also help to keep us focused on costs, AFE's and
everyday accounting issues. He has hit the ground running working with our
auditors, business development team and the integration of our new, wholly-owned
subsidiary, BIYA Operating. We expect to be adding more help in the accounting
area as we begin to grow our production and manage our cash flows.
Jubal Terry, our Exploration Manager, brings decades of exploration and
geological experience to Diversified. His experience and knowledge will continue
to pay great dividends to us in the form of knowing where, how, and when to
drill, explore and develop our significant assets in 3 Basins: The San Juan, The
Raton and The Denver/Julesberg.
Along with the BIYA Operating acquisition, we were very lucky to have added
Richard Baldwin as our CEO of BIYA Operating. Richard is in charge of a crew of
professionals that manage the day to day operations in the Horseshoe/Gallop
10,000+ acre property in the San Juan Basin. He brings a level of expertise in
keeping an oil field running and producing, working alongside Duane Bacon, our
seasoned Chief Operating Officer with long-term experience in the field. As we
re-work the field and begin a development drilling program on the acreage, I am
very optimistic that we have the best of the best working for us.
2015 Plans
As an "early stage" exploration and production company, the key to our success
has been to leverage first the assets of our people. Secondly, we have strived
to raise the capital necessary to acquire and develop a set of properties that
hold both developmental, bankable oil and gas reserves yet at the same time
expose us to some degree of upside potential. If we are successful in both
endeavors we can look forward to providing an above average return for all our
shareholders.
We have a detailed Plan of Development for 2015 which includes drilling in all 3
Basins in which we hold properties. We are still in the process of delineating
which of our properties will be drilled first and in which order we deploy our
limited capital, but I am confident that we will have plenty on our plate in the
upcoming fiscal year and ensure you we will have much to say as we roll out our
drilling/development programs
From a financial perspective, we have been in front of a number of bankers,
brokers and lenders and have established a well thought out plan to fund our
growth. As always I promise to keep an eye out for unnecessary dilution while at
the same time being cognizant of the fact that our future plans will require
capital. It's one of my jobs, along with our Board of Directors, to choose the
best solutions on how to fund our growth. We will certainly keep all of you in
the loop as we go along.
Along the lines of disclosure I want to share with you a Reserve Report we
commissioned on the recently acquired BIYA acreage. Keep in mind that this
report was prepared on a non-SEC compliant basis. The engineer used $70 oil
prices, a 3%/year price escalator and conservative lease operation expenses. The
idea behind the report is to get a number out there that we can use in our
financing efforts and to do so, we need to comply with full-disclosure rules.
What the Reserve Engineer came up with is a PV-10 (present value, discounted at
10% per year) of over $76 million. When added to the values of our other
properties, you can see why we are excited to get rolling on our development
efforts. As of the writing of this letter we have less than 23 million shares
outstanding and very little debt. I encourage you all to read all of our SEC
filings for more in depth disclosure and discussion. You can find links to that
information on our website: www.diversifiedresourcesinc.com or by going directly
to www.sec.gov.
As always, feel free to contact any of us with questions you may have. My fellow
board member and our director of capital markets and shareholders relations,
Roger May will be happy to get you the information you require.
Finally, I wish to thank you all for your investment in Diversified Resources,
and look forward to having you along as we endeavor to build our company.
Sincerely,
Paul Laird, CEO, President
