ITEM 1. BUSINESS.
Sale of Oil and Gas Equipment
Our business objective is to locate and sell
to oil and gas field related equipment to oil and gas producers. Examples are: Handling tools such as power
tongs, manual tongs, elevators, spinners, spiders, rotary tables, and bushings; spools; valves; wire line equipment; wellhead equipment;
blowout preventers; metering equipment; pumps, engines; nuts, and bolts.
Suppliers of such equipment is almost endless. Size
of suppliers is also almost endless, from manufactures of sophisticate equipment for large off-shore projects to second retailers
of specialty nuts and bolts. We have not entered into any agreements with any as of the date hereof. We intend
to enter into agreements on an ongoing basis as representation of a client requires us to contact such suppliers. While
we have not entered into any agreements with any of them, we believe a discussion of such is necessary to educate the public with
respect to the almost unlimited number of suppliers. A brief review of Google will supply an almost endless list of
suppliers that are all willing to pay fees and commissions in connection with a sale of such equipment.
Equipment can be new, used, and repossessed.
We will be completing in this market with the
added function of seeking out the cheapest equipment that will do the job.
Mr. Nagy has filed an application for membership
in the Petroleum Equipment Supplier Association.
Website
We intend to retain the services of a website
developer to create the website. Mr. Nagy has agreed to advance funds for the development of the website. The
website is intended to be a destination for oil and gas companies seeking specialized equipment for their operations. We
intend to continually source out and negotiate strategic relationships with individual suppliers and manufacturers to offer their
products on our website. We intend to negotiate favorable pricing from the manufacturers in exchange for offering them
direct access to the database of potential buyers that we intend to develop and maintain through our marketing program. If
a customer is looking for a particular item of equipment, we will find it for a fee.
Database
We intend to develop and maintain a database
of all current customers and suppliers. It will include the customer’s name, address, telephone number, item purchased
and additional information we hope to obtain through the use of a questionnaire. The more information that we can obtain
from a customer, the more we can know the customer and the more information we will have in order adjust our marketing and sales
programs.
We also believe that the lack of financial
security on the Internet is hindering economic activity thereon. To ensure the security of transactions occurring over the Internet,
U.S. federal regulations require that any computer software used within the United States contain a 128-bit encoding encryption,
while any computer software exported to a foreign country contain a 40-bit encoding encryption. There is uncertainty as to whether
the 128-bit encoding encryption required by the U.S. is sufficient security for transactions occurring over the Internet. Accordingly,
there is a danger that any financial (credit card) transaction via the Internet will not be a secure transaction. Accordingly,
risks such as the loss of data or loss of service on the Internet from technical failure or criminal acts are now being considered
in the system specifications and in the security precautions in the development of the website. There is no assurance that such
security precautions will be successful.
Other than investigating potential technologies
in support of our business purpose, we have had no material business operations since inception on April 24, 2013. At
present, we have yet to acquire or develop the necessary technology assets in support of our business purpose to become an Internet-based
wholesaler of oil and gas related equipment. As such, we are a “shell company” as that term is defined in Reg.
405 of the Securities Act of 1933, as amended. As such Rule 144 of Act is unavailable for the resale of our restricted stock.
Currently, 100,000,000 shares of our common stock are deemed “restricted securities”. The 100,000,000 shares
are all owned by Zoltan Nagy, our president. The remaining 20,850,000 were registered on our Form S-1 registration statement
are “free trading” and do not contain any restrictions on resale.
Customer Service
We intend to provide a customer service department
via email where consumers can resolve order and product questions. We intend to pass on to our customer any warranties
that suppliers make to us.
Shopping on our Website
Our online store will be located at www.blackrockpet.com. A
customer will be issued a password. With this password, the customer will fill out an application and describe the piece
of equipment he is interested in acquiring. From that information, a contract will be prepared which will be forwarded
to the customer for execution and payment of the equipment.
Source of Products
We intend to purchase products from manufacturers
and distributors of oil and gas production equipment located anywhere in the world. A portion of the purchase price,
between 40% and 70%, depending on the prices we negotiate with the manufacturer, is used to acquire the product from the manufacturer
or distributor. Mark-ups on new products will range from 15% to 200%. The mark-up will be comparable with our
competitors. We will take each product on a case by case basis. The product will be shipped directly from the manufacturer
to the customer, thereby eliminating the need for storage space or packaging facilities.
We intend to source out and negotiate with
manufacturers and distributors to offer their products for sale on our website either directly or via a direct link to their websites. In
addition, we intend to locate and negotiate relationships with some manufacturers and distributors to offer their products on a
more exclusive basis. We have identified three potential suppliers however we have not entered into any agreements with the
suppliers until such time as we successfully complete our public offering. We have not requested any agreements because if
we do not complete this public distribution we will not be starting our operations. There is no assurance we will ever
enter into a binding agreement with any of the potential suppliers. We anticipate that terms of the agreements with
the suppliers will be very simple. The supplier will be paid by us prior to shipment. We will not order any
products unless our customer has paid us in full prior to placing our order with the supplier. We will require our customer
to pay us before we pay the supplier. We will place the order and direct the supplier to ship directly to the customer. The
cost of insurance and shipping will be included in the price we pay the supplier for the product. Based upon our cost,
we will mark up the cost to the customer. Zoltan Nagy our sole officer and director identified these suppliers.
Revenue
We intend to generate revenue from four sources
on the website:
Revenues will be generated
from the direct sale of products to customers. We will order products on behalf of our customers directly from the manufacture
or the supplier. At the time we are receiving an order from a customer, we will order the product from the supplier. That
way we avoid having to carry any inventory that can be costly and become obsolete. We would earn revenue based on the
difference between our negotiated price for the product with our suppliers and the price that the customer pays;
Revenues will be generated by fees received from the purchase of
the equipment. We will be able to link our customers to the manufacturer’s website directly from our site and
we would be paid a fee for directing the traffic that result in sales;
We plan to offer banner
advertising on our website for new manufacturers hoping to launch new products;
Finally, we plan to earn revenues for special
promotions to enable manufacturers to launch new products - we would sell “premium shelf space” on our website.
Premium shelf space will be eye appealing advertising space which will appear on the initial webpage of our Internet site.
We also intend to develop and launch an advertising
campaign to introduce our website to potential customers.
Competition
The oil and gas field equipment market is intensely
competitive. We expect competition to continue to intensify in the future. Competitors include companies
with substantial customer bases. There can be no assurance that we can maintain a competitive position against current or future
competitors, particularly those with greater financial, marketing, service, support, technical and other resources. Our
failure to maintain a competitive position within the market could have a material adverse effect on our business, financial condition
and results of operations. There can be no assurance that we will be able to compete successfully against current and future competitors,
and competitive pressures faced by us may have a material adverse effect on our business, financial condition and results of operations.
There are many companies offering the same
services as we intend to offer. Upon initiating our website operations, we will be competing with the foregoing.
Our industry is fragmented and regionalized. Our
competitive position within the industry is negligible in light of the fact that we have not started our operations. Older,
well established distributors of the products we intend to offer with records of success will attract qualified customers away
from us. Since we have not started operations, we cannot compete with them on the basis of reputation. We
do expect to compete with them on the basis of price and services in that we intend to be able to attract and retain customers
by offering a breadth of tasteful product selection through our relationships with manufacturers and suppliers; offer attractive,
competitive pricing; and, will be responsive to all our customers’ needs. We intend to offer the manufacturers’
and distributors’ access to our data base of customers that we hope to develop through our marketing and advertising campaign.
Marketing
We intend to market our website in the United
States through traditional sources such as trade magazines, conventions and conferences, newspapers advertising, billboards, telephone
directories and flyers/mailers. We may utilize inbound links that connect directly to our website from other sites.
Potential customers can simply click on these links to become connected to our website from search engines and community and affinity
sites.
Insurance
We do not maintain any insurance and do not
intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a product’s
liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered
against us, which could cause us to cease operations.
Acquisition and Drilling of Undeveloped Prospects
We have not pre-selected any prospects. We
have targeted Stafford County, Kansas. Stafford County is located in north central Kansas. The county seat
for Stafford County is St. John. Stafford County is an old producing area and production is found at shallow depths
at approximately 1,500 to 2,000 feet. With the fluctuation of oil prices over the last 50 years, many wells have been
capped and plugged as a result of a drop in oil prices in the 1970s and 1980s. We believe it would be economically
advantageous to us to attempt to negotiate new leases with mineral owners and reopen old wells. Mr. Nagy, our president,
has not travelled to Stafford County, Kansas. Oil and gas is not prevalent in the State of Washington and Washington
can be said to be a non-producing state.
We may enter into agreements with major and
independent oil and natural gas companies to drill and own interests in oil and natural gas properties. We also may
drill and own interests without such strategic partners.
It is anticipated that all prospects will be
evaluated utilizing data provided to us, including well logs, production records and others’ wells, seismic, geological and
geophysical information, and such other information as may be available and useful. In addition, prospects will be evaluated
by petroleum engineers, geophysicists, and other technical consultants retained by us.
Regardless of drilling location, we will evaluate
all prospective acquisitions on the basis of their oil and natural gas producing potential. We will target properties that we believe
have multi-pay horizons, predictable costs, and quick pipeline hookups. We intend to seek properties that are within or offsetting
proven producing oil and natural gas fields and that have the potential, if successful, to generate cash distributions to our investors.
Prospects will be acquired pursuant to an arrangement
in which we will acquire part of the working interest. For purposes of this prospectus, a working interest includes any interest,
which is subject to some portion of the costs of development, operation or maintenance. This working interest will be subject to
landowners’ royalty interests and other royalty interests payable to unaffiliated third parties in varying amounts. We
may acquire less than 100% of the working interest in each prospect in which we participate. We may sell or otherwise
dispose of prospect interests or may retain a working interest in the prospects and participate in the drilling and development
of the prospect.
In acquiring interests in leases, we may pay
such consideration and make such contractual commitments and agreements as we deem fair, reasonable and appropriate. For purposes
of this prospectus, the term “lease” means any full or partial interest in:
· undeveloped
oil and natural gas leases;
· oil
and natural gas mineral rights;
· licenses;
· concessions;
· contracts;
· fee
rights; or
· other
rights authorizing the owner to drill for, reduce to possession and produce oil and natural gas.
We will acquire the leases and interests in
the leases to be developed us. The actual number, identity and percentage of working interests or other interests in
prospects to be acquired will depend upon, among other things, the total amount of capital contributions, the latest geological
and geophysical data, potential title or spacing problems, availability and price of drilling services, tubular goods and services,
approvals by federal and state departments or agencies, agreements with other working interest owners in the prospects, farm-ins,
and continuing review of other prospects that may be available.
Title to Properties
We will own the leasehold interest in the lease. Investors
must rely on us to use our best judgment to obtain appropriate title to leases. We will take such steps as we deem necessary to
assure that title to leases is acceptable for our purposes. We are free, however, to use our judgment in waiving title requirements
if it is in our best interests and will not be liable for any failure of title to leases we acquire, unless such mistakes were
made in a manner not in accordance with general industry standards in the geographic area and such mistakes were the result of
our negligence. Further, we will not make any warranties as to the validity or merchantability of titles to any leases to be acquired
by us.
Drilling and Completion Phase
We will enter into an agreement with a drilling
contractor to drill one well on our lease. Assuming we are success and complete a producing oil and gas well, we will
retain an operator engaged to conduct and direct and have full control of all operations on the lease, post completion of the well. A
completed well is one that is producing oil and gas in paying quantities. We also may act as our own operator. If
we do not act as our own operator, the operator we retain will be a non-affiliate and its fees will not exceed the competitive
rate in the area, during the drilling and production phases of operations.
The operator’s duties include testing
formations during drilling and completing the wells by installing such surface and well equipment, gathering pipelines, heaters,
separators, etc., as are necessary and normal in the area in which the prospect is located. We will pay the drilling and completion
costs of the operator as incurred, except that we are permitted to make advance payments to the operator where necessary to secure
drilling rigs, drilling equipment and for other similar purposes in connection with the drilling operations. If the operator
determines that the well is not likely to produce oil and/or natural gas in commercial quantities, the operator will plug and abandon
the well in accordance with applicable regulations.
After drilling, the operator will complete
each well deemed by it to be capable of production of oil or natural gas in commercial quantities. The depths and formations to
be encountered in each well is unknown. We will monitor the performance and activities of the operator.
Production Phase of Operations
General. Once a well
is “completed” such that all surface equipment necessary to control the flow of, or to shut down, a well has been installed,
including the gathering pipeline, production operations will commence. We will be responsible for selling oil and natural gas production.
We will attempt to sell the oil and natural gas produced from a prospect on a competitive basis at the best available terms and
prices. Domestic sales of oil will be at fair market prices. We will not make any commitment of future production that does not
primarily benefit us. We will sell natural gas discovered by it at spot market or negotiated prices domestically, based
upon a number of factors, such as the quality of the natural gas, well pressure, estimated reserves, prevailing supply conditions
and any applicable price regulations promulgated by the Federal Energy Regulatory Commission (“FERC”).
We may sell oil and/or natural gas production
to marketers, refineries, foreign governmental agencies, industrial users, interstate pipelines or local utilities. Revenues from
production will be received directly from these parties or paid to us.
Oil and natural gas production in Kansas, areas
in which we may conduct drilling activities, is a mature industry with numerous pipeline companies and potential purchasers of
oil and natural gas. Because of competition among these purchasers for output from oil and natural gas producers, we generally
will not enter into long term contracts for the purchase of production.
As a result of effects of weather on costs,
results may be affected by seasonal factors. In addition, both sales volumes and prices tend to be affected by demand factors with
a significant seasonal component.
Expenditure of Production Revenues.
Our share of production revenue from a given well will be burdened by and/or subject to royalties and overriding
royalties, monthly operating charges, and other operating costs. These items of expenditure involve amounts payable solely out
of, or expenses incurred solely by reason of, production operations. We intend to deduct operating expenses from the production
revenue for the corresponding period.
Competition
There are a large number of oil and natural
gas companies in the United States. Competition is strong among persons and companies involved in the exploration for and production
of oil and natural gas. We expect to encounter strong competition at every phase of business. We will be competing with
entities having financial resources and staffs substantially larger than those available to us.
The national supply of natural gas is widely
diversified, with no one entity controlling over 5%. As a result of deregulation of the natural gas industry by Congress and FERC,
competitive forces generally determine natural gas prices. Prices of crude oil, condensate and natural gas liquids are not currently
regulated and are generally determined by competitive forces.
There will be competition among operators for
drilling equipment, goods, and drilling crews. Such competition may affect our ability to acquire leases suitable for development
and to expeditiously develop such leases once they are acquired.
Geological and Geophysical Techniques
We may engage detailed geological interpretation
combined with advanced seismic exploration techniques to identify the most promising leases.
Geological interpretation is based upon data
recovered from existing oil and gas wells in an area and other sources. Such information is either purchased from the company that
drilled the wells or becomes public knowledge through state agencies after a period of years. Through analysis of rock types, fossils
and the electrical and chemical characteristics of rocks from existing wells, we can construct a picture of rock layers in the
area. We will have access to the well logs and decline curves from existing operating wells. Well logs allow us to calculate an
original oil or gas volume in place while decline curves from production history allow us to calculate remaining proved producing
reserves. We have not purchased, leased, or entered into any agreements to purchase or lease any of the equipment necessary to
conduct the geological or geophysical testing referred to herein and will only be able to do so upon raising additional capital
through loans or the sale of equity securities.
Market for Oil and Gas Production
The market for oil and gas production is regulated
by both the state and federal governments. The overall market is mature and with the exception of gas, all producers in a producing
region will receive the same price. The major oil companies will purchase all crude oil offered for sale at posted field prices.
There are price adjustments for quality difference from the Benchmark. Benchmark is Saudi Arabian light crude oil employed as the
standard on which OPEC price changes have been based. Quality variances from Benchmark crude results in lower prices being paid
for the variant oil. Oil sales are normally contracted with a purchaser, or gatherer as it is known in the industry, who will pick-up
the oil at the well site. In some instances, there may be deductions for transportation from the well head to the sales point.
At this time the majority of crude oil purchasers do not charge transportation fees, unless the well is outside their service area.
The service area is a geographical area in which the purchaser of crude oil will not charge a fee for picking upon the oil. The
purchaser, or oil gatherer as it is called within the oil industry, will usually handle all check disbursements to both the working
interest and royalty owners. We will be a working interest owner. By being a working interest owner, we are responsible for the
payment of our proportionate share of the operating expenses of the well. Royalty owners and over-riding royalty owners receive
a percentage of gross oil production for the particular lease and are not obligated in any manner whatsoever to pay for the costs
of operating the lease. Therefore, we, in most instances, will be paying the expenses for the oil and gas revenues paid to the
royalty and over-riding royalty interests.
Gas sales are by contract. The gas purchaser
will pay the well operator 100% of the sales proceeds on or about the 25th of each and every month for the previous month’s
sales. The operator is responsible for all checks and distributions to the working interest and royalty owners. There is no standard
price for gas. Prices will fluctuate with the seasons and the general market conditions. It is our intention to utilize this market
whenever possible in order to maximize revenues. We do not anticipate any significant change in the manner production is purchased;
however, no assurance can be given at this time that such changes will not occur.
The marketing of any oil and natural gas produced
by us will be affected by a number of factors that are beyond our control and whose exact effect cannot be accurately predicted.
These factors include:
· the
amount of crude oil and natural gas imports;
· the
availability, proximity and cost of adequate pipeline and other transportation facilities;
· the
success of efforts to market competitive fuels, such as coal and nuclear energy and the growth and/or success of alternative energy
sources such as wind power;
· the
effect of United States and state regulation of production, refining, transportation and sales;
· the
laws of foreign jurisdictions and the laws and regulations affecting foreign markets;
· other
matters affecting the availability of a ready market, such as fluctuating supply and demand; and
· general
economic conditions in the United States and around the world.
The supply and demand balance of crude oil
and natural gas in world markets has caused significant variations in the prices of these products over recent years. The North
American Free Trade Agreement eliminated trade and investment barriers between the United States, Canada, and Mexico, resulting
in increased foreign competition for domestic natural gas production. New pipeline projects recently approved by, or presently
pending before, FERC as well as nondiscriminatory access requirements could further substantially increase the availability of
natural gas imports to certain U.S. markets. Such imports could have an adverse effect on both the price and volume of natural
gas sales from wells.
Members of the Organization of Petroleum Exporting
Countries establish prices and production quotas for petroleum products from time to time with the intent of affecting the current
global supply of crude oil and maintaining, lowering or increasing certain price levels. We are unable to predict what effect,
if any, such actions will have on both the price and volume of crude oil sales from the wells.
In several initiatives, FERC has required pipeline
transportation companies to develop electronic communication and to provide standardized access via the Internet to information
concerning capacity and prices on a nationwide basis, so as to create a national market. Parallel developments toward an electronic
marketplace for electric power, mandated by FERC, are serving to create multi-national markets for energy products generally. These
systems will allow rapid consummation of natural gas transactions. Although this system may initially lower prices due to increased
competition, it is anticipated to expand natural gas markets and to improve their reliability.
Company’s Office
Our principal executive office is located at
1361 Peltier Drive, Point Roberts, Washington 98281. Our telephone number is (604783-9664 and our registered agent for
service of process is the National Registered Agents Inc. of NV, located at 1000 East William Street, Suite 204, Carson City, Nevada
89701. Our fiscal year end is April 30.
Employees
We are a start-up stage company and currently
have no employees other than our sole officer and director. We have no employment agreements with our sole officer and
director. Our officer and sole director has decided that he will only devote 10% of his time or four hours per week
to our operations and as a result our operations may be sporadic and occur at times which are convenient to him. Since
he has no experience in oil and gas operations, he intends to hire at least one person who has experience in operating oil and
gas leases. The additional employee will not be hired until such time as we are ready to acquire an oil and gas lease.
He will hire an additional person until we raise additional capital to support the employment of such individual.