The Company’s origins date back to the founding in 1987 of a predecessor company, Fremont Energy Corporation. Fremont Energy focused on small acquisitions and low risk exploration during the late 1980's and early to mid 1990's. When sold in January, 1996 to Amerac Energy Corporation, a Houston based public company, Fremont Energy owned interests in 135 producing oil and gas wells, primarily in Oklahoma and Kansas, and operated 90 of the 135 wells. At the time of the sale the Company’s net proven developed producing (“PDP”) reserves totaled nearly 1.8 million BOE (barrels of oil equivalent). In 1995, prior to but in anticipation of the sale of Fremont Energy, Fremont’s principals formed Fremont Exploration, Inc. and shifted their building efforts to the new company. Fremont Exploration’s strategy was to pursue growth through both exploration and acquisitions. In late 1998, due to the retirement of one of the founding principals, the Fremont partnership was dissolved. The oil and gas assets of the Company were liquidated by direct assignment to the shareholders, leaving the Company an empty shell. Under the leadership of the sole remaining founding principal, Fremont returned on October 1, 1998 to a strategy of growth through oil and gas acquisitions and exploitation. During the fourth quarter of 1998 and the first quarter of 1999, the Company made a few small acquisitions. By March 31, 1999 Fremont had acquired interests in approximately 100 producing properties (mostly minor interests in properties operated by other companies) and owned a net 200,000 BOE of PDP reserves.
On April 1, 1999 a new Fremont Exploration, Inc. partnership was formed. At that time the remaining founding principal of the original Fremont and another seasoned energy industry executive, having agreed to pool their talents and resources to build a meaningful energy company using Fremont Exploration, Inc. as the growth vehicle, embarked upon a focused value creation growth program.
Fremont Exploration, Inc. has enjoyed considerable success in the execution of its business plan from 1999 through 2004. The Company increased its base of total proved reserves from 200,000 BOE at April 1, 1999 to approximately 2.3 million BOE at December 31, 2004. In addition the Company acquired and subsequently re-sold three additional oil and gas properties (fields) during the 1999-2004 time period. The three fields were acquired in 1999 and 2000. Reserves assigned to the three acquisitions as of the date of each acquisition totaled 1.2 million BOE. Each of these fields was re-sold in separate opportunistic divestitures between 2002 and early 2004. At the time of each divestiture each project had achieved payout and in each case the re-sale price exceeded the Company’s purchase price by a minimum of 50% up to over 100%. By virtue of enhancements achieved in these fields by Fremont during its ownership, the Company estimates that the 12/31/04 reserve assignments for the three fields would still equal and perhaps exceed the reserves assigned at the time of their acquisition by Fremont.
Fremont plans to build an oil and gas reserve portfolio with a net asset value of at least $100 million within five years. The reserves will be concentrated in the Utah Project and in conventional oil and gas properties located primarily in Texas, Oklahoma and Kansas. This growth will be achieved by acquisitions of small independent companies as well as individual property sets from larger independents and majors and through the Company’s drill bit projects.