Bridge Under Troubled Waters: Payette County Natural Gas Company Faces Uncertain Future 

Drilling into the company that hopes to bring the natural gas industry to Idaho

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Bridge's stock value continued to bleed. As of Oct. 4 Bridge shares were trading at 2 cents on the Toronto Stock Exchange.

"They should have been informing investors on what their next steps were going to be," said Zelenkova. "Although Durango and the company's North Sea assets were sold, the funds they received simply weren't enough to cover their debts. And according to the loan with the Royal Bank of Scotland, the syndicate has the right to require immediate return of funds. They need to restructure and they need more cash. Not one or the other. They need both."

An Aug. 2 corporate update from Bridge's Canadian office confirmed Zelenkova's analysis.

"Bridge does not currently possess the financial resources to satisfy principal and interest payments due on its existing debt facilities in 2011," read the statement. "The Company expects any restructuring options will be subject to review of the submitted Field Development Plan to produce the Idaho reserves, joint venture participation, as well as other considerations. Bridge anticipates furthering negotiations with the Senior Lending Syndicate (Royal Bank of Scotland) during this calendar quarter, however, there can be no assurances of continued financial support from the Senior Lending Syndicate."

Zelenkova said renegotiating its debt could provide some relief to Bridge, but the immediate need was simpler.

"Cash is the turning point," she said. "The company definitely needs cash to further operate."

As for restructuring Bridge's management, Zelenkova said she wasn't surprised at all on Sept. 20, when the company's top three executives handed in their resignations. When Davies, Stewart and Parsons announced that they were no longer a part of Bridge's future plans, the big question was, who was in charge?

In the Nick of Time

No one BW spoke to knew much about Nick Clayton but that will probably change quickly. Clayton is the new face and voice for Bridge Resources. In the same press release stating that Davies, Stewart and Parsons had resigned, Bridge announced that Clayton would act as interim CEO.

Clayton, 48, joined Bridge as its non-executive chairman of the board in December 2010 and has a resume packed with energy and finance experience. After graduating in 1985 from Portsmouth Polytechnic in Hampshire, England, Clayton began his career at British Petroleum. He went on to work for German investment bank Dresdner Kleinwort Wasserstein and Canadian investment firm Canaccord Adams. He has been a self-employed corporate finance consultant since January 2007, serving on the boards of Sterling Energy in London and Bridge Resources.

"It's not in our industry's interest to have fly-by-night people coming and going," said Idaho Petroleum Council's Budge when asked about Bridge's change at the top.

"They're going to need to get a new team in place, and I assume that's what they're going to be doing," said Michael Christian, attorney with the Boise law firm of Marcus, Christian and Hardee.

Christian represents Snake River Oil and Gas, another company with hopes of producing natural gas in the Idaho basin. Snake River is a subsidiary of Weiser-Brown Oil Company, which has been drilling and producing oil and gas in Arkansas, Louisiana and Texas for nearly 50 years. The principal owners are Richard Brown--who owns a home in Sun Valley--and his cousin Chris Weiser. For the better part of a year, Snake River has been signing leases with private landowners in Payette and Washington counties, not unlike Bridge.

"I think Snake River has a significant amount of acreage already leased," said Christian. "But certainly not as much as Bridge, which has more than 100,000 acres."

Christian said he expects Idahoans to hear a lot more about Snake River in the near future.

"My understanding is that their intent is to be drilling within the next year," he said. "My clients aren't here as a hobby. They're not going anywhere."

Though his clients would be direct competitors with Bridge, Christian said there was no reason to kick Bridge while it was down.

"We were certainly aware that they faced certain challenges," said Christian. "Was I aware that the specific chain of events was going to occur? No."

Budge, whose organization's members include both Bridge and Snake River, echoed Christian.

"Members of the industry, although they're competitors, are very much in Bridge's camp, wanting them to be successful. It is in the industry's interest for Bridge to succeed."

Creating a positive first appearance is key for the natural gas industry.

"Bridge was the first Idaho mover in this industry," said Christian. "And for the industry to develop and become healthier, it's far better off having your first participant being better than not."

But through the course of Budge's conversation with BW, she said on several occasions that she would have advised Bridge differently.

"My view of it is that Bridge could have done a better job," she said. "I would have done it differently if I was advising them as to how to come into a community and work through the process--with local officials, with regulators and with neighbors. It's easy to handicap from a distance, but yes, I would have had a different approach than they did."

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