Nov. 16, 2012 Wichita Business Journal

Page 1

wichitabusinessjournal.com

VOL. 27 NO. 46

INSIDE

NOVEMBER 16, 2012 $2.50

REAL CONCERNS

SandRidge pares oil forecast for Mississippian

DRIVEN IN DERBY City’s new chamber chief has determination in her DNA. P9

BY DANIEL MCCOY

FOCUS: WICHITA ARTS Business plan for the Orpheum; ‘tweet seats’ at local shows. P11

WICHITA EXECUTIVE CENTRE

EXCHANGE PLACE

SUTTON PLACE JOHN STEARNS / WBJ

DEEDS INTO ACTION

Real Development Corp.’s holdings in downtown Wichita are extensive and include these three high-profile buildings.

2012 Association of Fundraising Professionals honorees make philanthropy work for Wichita

SPECIAL PUBLICATION 2012 Corporate Citizenship. (subscribers only)

THE LISTS Busiest intersections and Accident-prone intersections Page 14

Downtown developers confident they’ll be cleared of state’s fraud allegations BY JOHN STEARNS

Real Development CEO Michael Elzufon this week passionately rebutted any implication that he, his company or partner David Lundberg are culpable in alleged securities violations outlined in a state cease-and-desist order last week. Quite the opposite. He suggested that he and Lundberg may be the victims of fraud themselves if life insurance policies they pledged as collateral for a bank loan prove to be invalid. “This isn’t a Real Development securities case,” Elzufon said in an interview. “I have no concern whatsoever about the outcome of any of it.” Lundberg, though, thinks the policies are valid based on his own due diligence. He said information given by one insurance company to state investigators was incorrect. He said a meeting was planned with the state today to straighten everything out. The order that emerged from an investigation by the Kansas Office of the Securities Commissioner listed Elzufon, Lundberg, Real Development, and seven other individuals and companies as respondents. Among those other respondents was Hy-

SandRidge Energy Inc. announced last week that it was seeing more natural gas and less oil than it expected from wells it has been drilling in Kansas and Oklahoma. Where it had expected to see wells producing 45 percent oil, it’s instead seeing oil outputs of about 40 percent on average. The company said it was still very optimistic about those wells, but the news did leave analysts wondering about the company’s plans to double down on its operations on the Mississippian Lime oil and gas play and shed some of its interests elsewhere. While oil prices remain relatively high, natural gas prices have been deeply depressed. “Is this the right time to be increasing concentration on the Mississippian play, when the play kind of just shifted on you?” equity analyst Charles A. Meade of Johnson Rice & Co. LLC asked during a conference call with SandRidge executives. SandRidge CEO Tom Ward replied by saying that the rate of return on Mississippian wells was so high that they remained a low-risk proposition even if they produce a higher ratio of gas to oil than expected. But the best bet for turning profits on the Mississippian remains finding the sweet spots

See MISSISSIPPIAN, Page 21

Dave Neal commits to commercial endeavor BY JOHN STEARNS

FILE PHOTO

David Lundberg, left, and Michael Elzufon are the “Minnesota Guys” behind Real Development. Elzufon said this week that he, Lundberg and the firm are victims, not perpetrators, in a fraud allegation by state regulators. brid Asset Management, from which Elzufon and Lundberg say the insurance policies were acquired. Three Hybrid individuals listed as respondents in the order are on probation for securities-related crimes.

See REAL DEVELOPMENT, Page 20

Dave Neal and Associates has formally launched a commercial division after 34 years of focusing almost exclusively on residential real estate. President and CEO Dave Neal likes the timing, pointing last Friday to a 435-point drop in the Dow over two preceding days and next-tonothing interest rates on CDs as examples that can leave people wondering where they can invest the cash on which more and more are sitting. For some, that could be commercial real estate, Neal says. That’s where he and Kent Criser come in, the latter tapped to work full time in the commercial division, which Neal formalized over the spring.

See NEAL, Page 18


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