Tuesday, June 7, 2011

Who owns ashwoodresources.com? Light and mystery...

Northern Oil and Gas (NOG:AMEX) has divested small interests in ninety wells to Ashwood Resources. Ashwood is a company controlled by a realtor and founded by a hairdresser and its entire business is - as far as I can tell - to acquire and manage interests in wells sold by Northern Oil and Gas.

Brittany Reger - the wife Michael Reger - was an employee and the contact officer for Ashwood. 

Michael Reger is the CEO of Northern Oil.

So Northern Oil sold leases to a company where the contact officer was the CEO's wife.

The story was originally told in a blockbuster blog post by The Street Sweeper.

The appearance is not great.

However in Northern Oil's defense the interests sold to Ashwood were tiny (typically 0.5 percent interest in any individual well bore). 

Moreover Northern Oil has announced via SEC filing that "our management has concluded, and has confirmed with our outside legal counsel, that our agreement with this private company is not material to us and does not involve any related-party transaction".

Testing Northern Oil's claim that these are not related party transactions

I am a great fan of Ronald Reagan. His slogan when dealing with the Bolshys was "trust but verify". Channeling my inner Ronald Reagan I went about verifying.

I found the domain name ashwoodresources.com. The website is dead - but it was (a) first registered about the time Ashwood Resources (the company) was formed and (b) was originally registered to Tyler Cross of Billings Montana. 

Billings is the home town of the Regers and 840 miles from the hairdresser or estate agent.

The domain name was later re-registered to "domains by proxy" a standard way of hiding domain ownership. The change in domain name registration happened about the time The StreetSweeper started looking at Ashwood Resources.

I told the story in this blog post.

I tried contacting Tyler Cross to find out who really owned the site ashwoodresources.com. No luck. Several readers tried the same thing with the same "no comment" answer.

But my readers are resourceful. For instance one reader found that Tyler Cross's parents and Michael Reger's parents made donations to the same church in the name of the same person. The Reger and Cross families go to the same church and donate at the same funerals.

But that still does not prove that Ashwood Resources (the company) is associated with the Regers.

One reader went better. Using Domain Tools he found every website ever registered by Tyler Cross (tcash11@gmail.com).  There were 58 of them - mostly local businesses like yellowstonedrifterboats.com. But a few stood out, notably voyager-oil.com, voyageroil.info, voyageroil.mobi, voyageroil.net.

These are web domains for Voyager Oil - a company controlled by Michael Reger's brother JR Reger. 

Also all of these domain names for Voyager Oil have been re-registered. They are now registered to Domains by Proxy.

Again this does not prove that Ashwood Resources is related to the Regers but that hypothesis is looking pretty good. Brittany Reger was Ashwood's contact officer. Ashwood's web services (domain registration at least) was provided by the same person as Voyager Oil's web service (Tyler Cross). Cross's family probably knows the Reger family through their church and through attendance at the same funerals.

Tyler Cross can provide the definitive answer as to whether Ashwood and the Regers are related parties. Alas his answer is a firm "no comment". He has done nothing obviously wrong. All he did was register domain ownership and then shift those registrations to Domains by Proxy. 

Tyler Cross has the definitive answer.

I have again asked for Tyler's help. But really it is not my business any more. The SEC has the power to subpoena him and find the truth. 

They should use that power.



Nick said...

While I applaud your and your readers due diligence on the Ashwood Resources question, I am still puzzled by one thing.

Let's say Ashwood is a related party and the CEO just got bad legal advice.

Aren't those transactions genuinely miniscule? Relative to total ownership interests at NOG?

Of course, it shows the CEO is a moron but there is no crime in being a moron.

Is this really THAT big a deal?

I mean Harry M can point to the biggest Ponzi in history to find the SEC do nothing.
David E can provide reams of evidence of AFC misbehaviour and the SEC investigate HIM!

Is this really something they have time/inclination to look at?

John Hempton said...

If it is a related party transaction (hardly proven) then why should we believe the size of transactions is small?

Theory: there is never just one cockroach.

So have we found our first cockroach?

Anonymous said...

@ Nick
Well you may not see having a CEO who is a charlatan as a problem, but I suspect a lot of people who own the stock may.

The market definitely seems to have spoken on this one. The stock is down about 50% since you started posting on it. Getting pretty close to a triple on my puts. The devil on my shoulder is telling me that the charts are pointing towards a total collapse here, but I think prudence may win the day...

Anonymous said...

Got anything new, you allude to something new a couple of posts back.

Richard said...

"Aren't those transactions genuinely miniscule?" Nick

The question of materiality is an interesting one. Is someone who steals a $1 any less a thief than the person who steals $100?

There may be only one cockroach now, but they tend to breed. People who steal a $1 and get away with it usually end up stealing $100.

Panjandrum said...

I own June and September puts through Schwab. It looks as though the stick suspension is not going to be lifted in time to sell the June puts. Schwab says the stock is hard to borrow, cannot be found and in any event puts cannot be exercised in a 401k. Any thoughts on a class action suit against the company?

IF said...


I don't know why Schwab allowed you to buy the put in the first place in a 401k. Exercising the put makes you go short, which requires margin and IRS does not allow you to do.

Maybe call them, explain them nicely that you bought it in the wrong account (I hope you have a marginable non-retirement account with them with enough cash) and try to move the ownership of the options to the taxable account. (I have done mistakes when buying stuff that ended up on the wrong account, but I called the same day.)

Otherwise you might have to chalk it up as tuition. I mean, trying to do your taxes properly after a screwup with a retirement account is not fun.

Anonymous said...

So UTA just filed their 10-k. Auditor signed off on it.

Anonymous said...

@ Pajandrum,

Why not just sell the put before maturity?

Anonymous said...

Nice tip for the SEC. It seems possible that the SEC is investigating NOG based on the large dump of stock by CEO and huge stock decline, right? An investigation is not made public initially, right?

As for relevance, it seems that swapping out well interests may be a good way to keep your batting average high -- I know they boast about a 100% hit rate in Bakken. Also, this could be a way to feed wells to VOG -- there may be value for VOG at such an early stage --ie, raise money, etc.

Anonymous said...

Learning so much that I had to go back and read your old entries and links just to catch up. Don't stop educating!

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