White says he prof­ited from trou­bled oil com­pany

Austin American-Statesman - - LOCALBRIEFING -

Demo­cratic can­di­date for gover­nor Bill White, in his first pub­lic ac­knowl­edg­ment, has con­firmed that he has made a profit from his in­vest­ment in an oil ex­plo­ration com­pany he founded that ran into fi­nan­cial trou­ble af­ter a Cen­tral Asian re­pub­lic de­manded more money.

In a story in Sun­day’s edi­tion of The Dal­las Morn­ing News, the for­mer Hous­ton mayor con­firmed that he has made $1.7 mil­lion in cap­i­tal gains and $1.1 mil­lion in net profit from the sale of more than 1.4 mil­lion shares of Hous­ton­based Fron­tera Re­sources over a four-year pe­riod be­gin­ning in 2006. He still owns al­most 96,000 shares but re­signed his chair­man­ship in 2001.

Dur­ing his 2003 may­oral run, he told the Hous­ton Chron­i­cle that he hadn’t “made a penny” on his in­vest­ment in the com­pany he founded in 1996.

“I have some stock, but it is so sub­or­di­nated to the other in­ter­ests that I am told that it has lit­tle or no eco­nomic value,” he said.

Fron­tera fo­cused its early ac­tiv­i­ties on de­vel­op­ing fields in the for­mer Soviet re­publics of Azer­bai­jan and Ge­or­gia, oil­rich lands where White had cul­ti­vated con­tacts while in the Clin­ton ad­min­is­tra­tion. The com­pany op­er­ated un­der pro­duc­tion-shar­ing agree­ments with the two re­publics.

How­ever, the Azer­bai­jani fields pro­duced quickly, and that nation’s govern­ment de­manded a big­ger cut of the rev­enue. That si­phoned off a lot of Fron­tera’s rev­enue, forc­ing the com­pany into tem­po­rary de­fault on a $60 mil­lion loan and lead­ing it to sell as­sets to pay off the loan.

White told the Morn­ing News in late June that he thought he hadn’t prof­ited “very much” from the in­vest­ment “be­cause there were a lot of ex­penses.”

How­ever, fed­eral tax re­turns re­leased by White on June 8 re­vealed the prof­its from the stock sales. The news­pa­per re­ports Fron­tera was able to float a pub­lic stock of­fer­ing in 2005, which al­lowed White to sell his shares at an av­er­age price of more than $1 per share. The shares are worth 6 cents each now, the news­pa­per re­ported.

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